Torts II, Week 1
Week 1, Torts II, Professor Richard C. Henke
Torts I is a very organic course – Torts II is the antithesis.
FINAL EXAM: Roughly 30 multiple choice and either one or two essays. The final exam in this class is most predictable. We will spend 4 weeks on products liability. That’s my thing. That’s what I did, that’s what I write about, and that’s what I’m interested in. It is inconceivable to me to teach Torts II and not have a significant products liability essay on the final exam.
Week 7 (mid October): Will hold Q&A Periods after class.
Anecdote: Numbers have dropped off for the Q&A. They are a cumulative experience.
Week 13 – Begin Review for 1 hour
Week 14 Comprehensive Review of the entire course – ABSOLUTELY ESSENTIAL 3 HOURS.
Notes after cases are a big factor.
Misrepresentation section needs to be revamped and is a weak area of the casebook.
Be familiar with the Restatement (Third) of Torts – some sections are in handout.
Punitive damages are important.
What is life worth? By Ken Feinberg, Page 537. Money is a substitute for a lost limb or for a wrongful death or for pain and suffering.
I object strenuously to people who say that damages put the person in the position they were in before the tort – that’s crap. You don’t come back to life, you don’t get your arm back.
When does the cause of action accrue? That’s often going to be the thorn here. Most vexing thing is attempting to define when the SOL begins.
Restatement Sections 519 and 520
Restatement on Products liability 402A
Electives: INSURANCE LAW for tort laws is a must and WORKERS COMP
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PRODUCTS LIABILITY
Most jurisdictions require that the alteration of the machine be not only substantial but it has to be unforeseeable.
DEFAMATION
Can be delimitated as pre 1964 and post 1964. US Supreme Court decided that it is no longer a state matter in tort law. In addition to your reputational interest we also needed to consider First Amendment concerns.
DAMAGES
Nominal, Compensatory and Punitive. Nominal Damages are awarded in circumstances where a defendant has engaged in some sort of wrongdoing and yet luckily for the plaintiff, little if any harm has ensued. Yes the defendant has done something wrong and we want to acknowledge that fact by imposing damages but luckily the plaintiff has not been injured in a bad way – he’s literally going to get a slap on the wrist.
Carey v. Piphus
Supreme Court, 1978
A 9th grade kid who may or may not be smoking a joint. He is summarily expelled from school without a hearing. His procedural due process rights were violated but could not show actual harm. $1 in nominal damages. Unless he could show actual harm he was entitled to nominal damages.
PUNITIVE DAMAGES
Punitives are awarded in a statistically small number of cases to punish a D for some past outrageous misconduct and to deter them from ever engaging in such conduct in the future. They are all about punishment and deterrence.
If you are fortunate to receive Punitive Damages will get knocked down. Remittitur – it will be remitted.
COMPENSATORY DAMAGES
The heart and soul of Torts. It is the most typical remedy in a tort case. Henke takes exception with note 2, page 520. Compensatory damages DO NOT TO MAKE THE PERSON WHOLE. It’s sloppy, it’s inaccurate and it’s wrong. If you are discussing compensatory damages, I want you to think of compensatory damages as a substitutionary remedy that attempts to restore the plaintiff to his or her rightful position. It doesn’t make them whole again. It is an attempt thru money to somehow imperfectly put them in their rightful position.
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Anderson v. Sears, Roebuck & Co.
LA, 1974
1. Products liability and Remittitur; and
2. Judicial limitations on damages.
This court applies a technique called the Maximum Recovery Rule. This is a good and sound technique. From Richardson case – classic buzz words of remittitur – does this verdict “shock the judicial conscience”?
The Maximum Recovery Rule is an attempt to give meaning to the generic phrase “shock the judicial conscience”
What the court in the Anderson case does is takes each measure of compensatory damages, past pain and suffering, future pain and suffering, past medical bills, future medical bills, emotional distress, etc. The court breaks compensatory damages into all these categories, then the judge says to himself, based upon my experience, what is a maximum number that I think is reasonable for each category of damages. And the court goes thru it here.
The court feels that the highest number that these facts could have supported was a verdict of $2,980,000.00. Therefore the jury’s verdict of $2,000.000.00 was well within reason and under the Maximum Recovery Rule, If the jury verdict is equal to or less than what the court thought was a reasonable maximum was the motion for remitter is denied. The court felt that this course could have approached $3 million dollars and still would have been reasonable.
Henke: Let me return to page 519. This is not a remedies class. You will not be asked to breakdown compensatory damages into these five categories. The categories I’m looking for are General Damages, and Special Damages.
This is a catastrophic burn case. Point number 12, permanent hand print on stomach. If you are defending Sears, are you really going to roll the dice on this one?
The defendant tried to argue on page 523 that photographs were inflammatory. Somebody in this case dug their feet in and one parties unreasonableness prompted this case to be tried.
A step further on Remittitur: A second technique is to basically compare and contrast verdicts. Do a search of catastrophic burn cases. You look at the facts, look at the numbers. How does this number look visa vie the other cases? In the Richardson case, the court actually rejects that technique – page 527. If the courts grant remittitur, what happens then? Your verdict has been reduced. What are your options? Option #1 is to take the reduced number and go home. Option #2 is a retrial. We have to make two
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branches under that second option of a retrial: the court will either make you retry the case on liability and damages or the court may allow you to only retry damages. The most prudent thing to do is to recommend your client to take the reduced number.
Page 538, Note 23: The flip side for being so low. This shocks the judicial conscience the other way. Plaintiff makes a post verdict motion for Additur. The US Supreme Court has spoken on this issue (page 539) and not all states permit it.
Smoker and Asbestos example: Increase your risk 50 fold.
Richardson v. Chapman
IL, 1997
Another Remittitur case, doesn’t add a whole lot.
One important point in this case: The plaintiff hires experts for the future economic loss. Henke: If you are trying a catastrophic injury case like this, you will have a team of experts that you hire to testify at trial. Without them you will never get to a jury.
Expert testifies an upper and lower bound on future medical expenses. The jury’s verdict exceeded the plaintiff’s expert’s upper bound by about 1.5 million. This judge said in essence that part of the jury’s verdict that exceeded the upper bound limit of the plaintiff’s expert should be at least partially remitted.
Expert testimony is not Bible. It is suggestive; it is clearly an attempt to reign in a jury. Here’s some guidance for you to come up with a number. (Dissenting opinion) The verdict does not have to mimic expert testimony. What shocks your conscience may not shock mine. It’s a very subjective standard. So the judge knocks down Ms. Richardson’s verdict by 1 million dollars. Then he turns to the other V who gets $102,000 – much of which is for pain and suffering for the laceration on her forehead. The court cuts it down to $50,000.00. What is life worth? What are missing limbs worth? What are lacerations worth? This why you use the term substitutionary remedy.
Henke: Why I have such disdain for Tort Reform is the categorical notion that across the board the most you can get for pain and suffering is X amount. At least with Remittitur we have judges that are in the trenches. These are the men and women in these court houses around the country who know what cases are worth. You get to know what cases are worth.
Note 14 on page 535: Interest on an award. Not allowing the plaintiff to collect interest has been criticized as discouraging settlements because the defendant keeps money as long as possible without having to pay interest on it. Some states (like NV) allow for interest on the amount from the date of injury, the date of a demand, the date of cause of action or the date the expense actually occurred. Putting the insurance company’s Feet to the fire.
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Henke: When you’re talking about compensatory damages in tort, what I want you to do is to break compensatory damages into general or so called non-economic damages (they are synonyms) and special damages also referred to at times as economic damages.
GENERAL DAMAGES – Pain and Suffering, Emotional Distress
Note 16 page 536: Hedonic Damages – Quality of life (hard to quantify).
Jackson township example: Due to contaminated water, the township housed water in containers and forced elderly people to schlep water to their homes. What is the quality of life to be tethered to an oxygen tank due to asbestos exposure?
Note 8 page 532: Put these under general damages as well. Juxtapose this note with notes 4 and 5 on page 455: 4C: A person exposed to asbestos or a toxic substance today that increases your risk of a future illness, is that compensable today? Yes, if you can find expert testimony that suggests that it is more probable than not that in fact you will one day get that illness. When we talk about increased risk, we also talk about probabilities.
Also in note: Medical Monitoring. You’re exposed to some toxic substance, you’re at an increased risk of future disease, no physical manifestations yet. The court might put aside a medical monitoring fund of money from which the P’s can draw a yearly check to get a full physical. It has caught on as a general damage.
What about fear? Note 8 page 532: It’s tough but extremely real. Is that reasonable fear compensable? The movement has been yes. Do you need a physical manifestation to support that fear? Maybe. These all fall within General Damages. They are subjective in nature. What is emotional distress worth? What is quality of life worth?
General damages have been heavily impacted by the Tort Reform movement. In a lot of jurisdictions, General Damages are capped. General Damages are a fertile source of Tort Reform.
Tort Reform Notes: 24 and 25 on page 539.
Be sensitized to two things:
1. One part of Tort Reform is legislative enactments.
2. The other part is public perception. Tort Reform impacts all lawyers. If I’m not filing a complaint, you’re not filing an answer.
State legislatures have put caps. The second part of tort reform that may be more insidious: the public’s perception.
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SPECIAL OR ECONOMIC DAMAGES
These are your objective losses that can be reduced to a sum certain before trial, i.e. medical bills, lost wages – these are tangible, concrete. We know how much they are. We don’t have to worry about tort reform in the context of special damages. They are immune to tort reform.
Page 537, Note 17: One way to try to give the jury some guidance for general damages is to allow a Per-diem argument. It is not allowed in NJ. You break pain and suffering into days, hours and even minutes. A day in the life of Ms. Richardson. Her pain and suffering per day is worth X. And she has had pain and suffering for X number of days.
I am much more comfortable with judges in individual cases entertaining motions for Remittitur – the folks who are in the trenches. That to me is a much more comfortable situation than state legislatures who are captive to all kinds of influences sitting in their offices in a state capitol saying that no med mal case is worth more than $400,000.00 The influence is suspect.
Montgomery Ward & Co., Inc. v. Anderson
AR, 1998
If the Collateral Source Rule is in effect, then there is no limitation on damages.
Collateral Source Rule: Prohibits a tortfeasor from receiving any credit for collateral sources that have been paid to the V during the pendancy of the litigation.
Slip and fall in store example. The plaintiff gets discounted services but is seeking the full value of her medical expenses. The defendant wants credit for discount. A classic Collateral Source Rule is with private health insurance. If the Collateral Source Rule is in effect, the defendant does not get any credit or reduction. The plaintiff gets totality for loss.
The Collateral Source Rule has been abolished in New York. (9/11 example – get smaller awards because they had life insurance – a collateral source).
Subrogation: Must pay back for specials out of a tort. A good P’s lawyer can get the insurance company to compromise.
Note 6, page 543: Over half of the states have modified the common law collateral source rule by statute. The Collateral Source Rule is under attack.
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We introduced the notion of Compensatory Damages – the heart and soul of tort cases, designed to restore plaintiffs to their rightful position. Henke: It is a substitutionary remedy. You substitute money for pain and suffering and for wrongful death. It is not a perfect remedy but it’s what we are stuck with.
General Damages: Subjective losses. Things like pain and suffering, emotional distress, quality of life issues. General Damages are very, very ripe for tort reform. This is where we see caps in a number of jurisdictions. Note 17 (per diem argument) where a number of jurisdictions allow the lawyer to make a so-called per diem argument in an attempt to more principally quantify a person’s pain and suffering. What is a day in my client’s life worth in terms of pain and suffering?
Special Damages: Objective losses. Lost wages, medical bills, and hospital bills – things that are more tangible, more concrete and not surprisingly there’s no tort reform of Special Damages.
FIRST LIMITATION ON COMPENSATORY DAMAGES
1. Remittitur. The first limitation that we talked about was the Richardson and Anderson cases. They both talk about Remittitur which is a judicial limitation on damages. If a verdict comes down that is so excessive that it “shocks the judicial conscience”, the defendant can make a motion for a remittitur asking the judge to reduce the number to something more appropriate.
TWO TECHNIQUES FOR REMITTITUR:
1. Maximum Recovery Rule. Anderson v. Sears In order to determine if Remittitur was proper. Under the Maximum Recovery Rule, the trial judge takes each measure of damages, tallies them up and if the jury’s verdict is at or below what the court feels is a maximum recovery, then the motion for remittitur will be denied. On the other hand, if the number goes above what the court feels is a reasonable maximum; the court will remit it appropriately.
2. Comparing and Contrasting Prior Verdicts from the Same Jurisdiction. Richardson v. Chapman. The Richardson court rejects this technique. The court looks at the last 10 years of amounts awarded in other cases and how does the present case stack up. Page 527 expressly rejects the notion of using other case values as a way of measure compensatory damages. Plenty of jurisdictions do allow for it.
If writing about remittitur on my exam, I would want you to suggest that it is a viable way for a court to determine whether a number shocks the judicial conscience.
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SECOND LIMITATION ON COMPENSATORY DAMAGES
2. Tort Reform. Works on two levels: 1) Legislatively – in terms of caps and limitations; and 2) Psychologically – the insurance industry had done a very good job of making many people in the public feel that in fact the tort system has run amuck and whether that is really true I don’t know. Tort reform may implicate where you file a lawsuit. In what state based upon favorable or unfavorable climates.
Accutane Example: An acne drug which has a host of problems. Side effects include depression, suicidal tendencies and so forth. A Michigan resident took Accutane and hurt himself. The manufacturer, Hoffmann-La Roche, is a New Jersey corporation. He tries to bring his lawsuit in New Jersey jurisdictionally claiming that’s where the company is, that’s where the economic interest is, etc. The company tries to dismiss the case arguing that it’s properly venued in Michigan. Why does anybody care? Michigan has a statute that says that if the FDA approves a pharmaceutical product’s warning label, you have no case (federal preemption). In most other jurisdictions including New Jersey, if the FDA approves the warning label, a rebuttable presumption arises that the warning is adequate and the plaintiff can still attempt to rebut the presumption of adequacy. If this claim is a Michigan claim, he has no claim. If he can get his case in a New Jersey courthouse, he can at least present his case to a jury. This is an amazing example of the day-to-day impact of tort reform.
THIRD LIMITATION OF COMPENSATORY DAMAGES
3. Collateral Source Rule. Montgomery Ward v. Anderson A very important rule. If the Collateral Source Rule is in effect, then the defendant is not entitled to any set-off, credit or reduction for those collateral sources that the plaintiff has received during the pendency of litigation. They’ve got to pay you the whole tort judgment. They don’t get credit for the monies you got from your carrier. But as we know, pursuant to tort reform, a number of jurisdictions have tinkered with Collateral Source Rule. New York in 2004 abolished the Collateral Source Rule. It has a tremendous impact on how you might settle a case. In Arizona the information concerning the collateral source is admissible in evidence without indicating what the jury is to do with that information. It is ripest for tort reform.
Note 9 Page 544: Contingency Fee for plaintiffs – a percentage of the settlement. Every incentive to finish cases because until you do, you don’t get paid.
Note 10 Page 544: Bill by the Hour – an irreconcilable tension between lawyers in the way we litigate cases. Every incentive to litigate in a more relaxed fashion, extending things over time.
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FOURTH LIMITATION ON COMPENSATORY DAMAGES
4. Duty to Mitigate/Avoidable Consequences. Zimmerman v. Ausland. Henke: I prefer the term Avoidable Consequences. This is a classic case. The plaintiff doesn’t have a duty to do anything. Nobody is going to force them to have that surgery. But the point of the matter is and the heart of the defense is: If the defendant can prove that the reasonable person in the plaintiff’s position would undergo such treatment, then the plaintiff is not entitled to the same quantum of compensatory damages. No one is going to force you to have that surgery but you’re not going to recover $750,000 for permanent loss if you could have arthroscopic surgery and be in good shape. It’s an affirmative defense. The defendant has the burden of proof to show that the reasonable person in the plaintiff’s shoes would undergo such a treatment.
Note 1 Page 547: Distinguish this from Contributory Negligence, which is unreasonable conduct on the part of the plaintiff that contributes to the happening of the accident or injury in the first place. This will limit the plaintiff’s recovery because the plaintiff contributed to the happening of the accident. Avoidable Consequences concerns itself with post accident failure to act appropriately. Each of them is a limitation on damages certainly but comparative fault is pre accident, Avoidable Consequences is post.
Note 3 Page 547: Reasonable person standard with religious beliefs or psychological eggshell plaintiff – somebody who is terrified or paranoid of undergoing surgery. Will those sorts of subjective factors be taken into account when determining the reasonable person? Some jurisdictions do take that into account, most do not.
PROPERTY DAMAGE
Usually get compensatory damages for the diminution of Fair Market Value in your property. You tend not to be compensated for sentimental value or other subjective loss.
PUNITIVE DAMAGES (Joker in the Deck)
Punitive Damages are handed out in a very small number of cases but it is a very significant topic. 30 years ago Ford made the Pinto which was designed to blow up. During the punitive damage phase of the trial, the plaintiff’s lawyers found documentary evidence suggesting that Ford calculated the cost to redesign the car vs. what it might cost them in wrongful death and burn verdicts. And they determined that it would be more cost effective to pay lawsuits than to make a safer car.
If you want to want prevent that kind of cold economic analysis, you whack them with punitive damages because they are the Joker in the Deck. The thing you never know is what is going to happen in a punitive damages trial. Gore v. BMW. Punitives were $4 million dollars for a doctored-up paint job. If a company like Ford is willing to make a car like the Pinto in the face of the Joker in the Deck, ask yourself if you have the
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temerity, what would a company be willing to do if punitive damages are not in existence?
The threat is stronger than the execution. The prospect of punitive damages keeps everyone on their toes. If you’ve got punitive damage documents in your briefcase, you don’t want to take them out. But as the settlement conference is breaking down, you say I’ve got no choice, I’m going to have to put on that punitive case, the defense makes another call for more authority. The threat of punitive damages often drives the settlement of cases. Once you take the documents out of your briefcase, all bets are off.
Any discussion of punitive damages starts off with the dual goals of punishment and deterrence.
1. Punishment & Deterrence: An amount of money above and beyond compensatory damages that serves to punish the defendant for past outrageous conduct and to deter the defendant from acting this way in the future. This is the heart and soul of punitive damages.
2. In determining an appropriate amount: Most jurisdictions do take into account the wealth of the defendant. This is one of the only areas of tort law where the jury is actually given information about the wealth of the defendant as they deliberate an appropriate number.
3. Outrageous misconduct: You have to be clear that punitive damages are awarded not for negligent conduct, not even grossly negligent misconduct. We are talking about outrageous misconduct, willful and wanton disregard for people’s safety, conduct that will result in either catastrophic personal injury or in wrongful death – it’s bad stuff and that’s important to keep in mind. If all you’ve got is negligence, then that’s not going to be a threshold to get you into punitive damages. In most jurisdictions, you have to prove outrageous misconduct thru clear and convincing evidence – an elevated burden of proof. Colorado uses beyond a reasonable doubt in punitive damages which is the criminal burden of proof.
4. Vicarious liability: When will a principle be vicariously liable for the outrageous misconduct of his agent? Section 909 of the Restatement (Second) indicates that if the principal has in anyway ratified, sanctioned, approved the activity of its agent, then vicarious liability will extend. If the agent is acting in a managerial capacity, the principal will be held liable. The wealth of the defendant may be considered.
5. Insurability: Should punitive damages be insurable? Most insurance policies insure you against a risk. If you engage in outrageous misconduct, or if you engage in an intentional tort that leads to punitive damages, should an insurance policy cover that type
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of conduct? Jurisdictions are evenly split. On the one hand if you get a punitive damages
verdict, it’s nice to be paid but on the other hand – the Joker in the Deck – if it’s insurable is outrageousness just another cost of doing business?
6. Dynamics of Mass Torts: Vioxx lawsuits. Two states, Texas and New Jersey where they’ve had punitive damages awards, they are capped by ratios. If Merck continues to get clobbered, there won’t be anything left for claimants down the road.
Asbestos lawyer example: In 1990 a potential client comes into your office diagnosed with mesotheleoma and he’s dying. He was exposed to Owens-Corning Kaylo insulation and you get a good punitive damages award. You also know there are people continuing to get sick for another two to three decades. You get $14 million in punitive damages. Years from now you get another client with the same disease and nexus to Owens-Corning. He hopes that you can do the same for him as you did his friend. Owens-Corning Fiberglass is now bankrupt and his case is worth $300,000. You have an ethical obligation to zealously represent your clients. But what a fascinating dynamic knowing that it is going to jeopardize any available remedy to a future client.
Henke’s favorite punitive damages story: Attorney Karl Ash found the Sumner-Simpson papers showing a cover up on part of the Asbestos manufactures.
Cheatham v. Pohle
IN, 2003
Typical of what a number of states are doing. IIED case and a compensatory verdict of $100,000 and punitive damages of $100,000. Indiana as many states have done has passed a statute that requires the plaintiff to pay a percentage of their punitive damages verdict into a state fund. The plaintiff challenges the constitutionality of this statute claiming it is a violation of the Fifth Amendment’s taking clause. The Indiana Supreme Court rejects the takings argument. Their analysis is interesting. Page 553: punitive damages are a remedy above and beyond compensatory damages and a plaintiff does not have any sort of vested property interest in property damages. Query your incentive to try a punitive damages case.
The US Supreme Court has setup a series of Procedural Due Process protections that a defendant is entitled to in a punitive damages case. It really breaks down into three steps:
1. The judge has to give a good jury instruction. We don’t want the jury to go into the jury room without guidance. If not it is grounds for an appeal.
2. If a verdict is rendered, the Supreme Court in Pacific Mutual and more recently in Cooper, the trial judge is to do a de novo review (a fresh look) of the jury’s result. The
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Supreme Court has made a suggestion that the trial judge make a “probing review” to make sure that the jury listened to their instructions.
3. The appellate court also does a de novo review. In terms of process, the defendant gets two de novo bites at the apple – one from the trial judge and one from the appellate court.
Pacific Mutual v. Haslip: The Supreme Court said there is no bright mathematical line between what is constitutionally acceptable and what is constitutionally confirmed. The court refused to make a formula or ratio. Also a vicarious liability case as an agent was pocketing premiums.
TXO Production Corp v. Alliance Resources: The ratio of compensatory to punitive damages was 526 to 1. Really bad misconduct. You could feel the court squirming in their seats. No bright mathematical line.
Honda v. Oberg: This case was sent back because the trial judge and the appellate court did not comply with the procedural due process requirements of Pacific Mutual. The case was remanded.
Gore v. BMW: A misrepresentation claim against BMW. Compensatory damages are $4000 with the diminution in value. $4 million in punitive damages. The court creates three constitutional guideposts: BMW did not have fair notice of the severity of its punishment. Gore gives us three guideposts:
1. The degree of reprehensibility of the nondisclosure;
2. The disparity between the harm or potential harm, suffered by Gore (P) and the award (ratio of compensatories); and
3. The difference between this remedy and the civil penalties authorized or imposed in similar cases (least important).
1. Reprehensibility: In Gore it was not all that reprehensible because the harm was economic, not personal injury. Does the conduct result in economic harm or injury or death?
2. How profitable is misconduct: Ford is profiting from making a car that was less safe than it should be. Was BMW profiting here? Yes, but not wildly.
3. Isolated or are thousands impacted?
4. To what degree are other states admissible: To what extent can Dr. Gore introduce the fact that BMW is doing this all over the country? That was critical in the Gore case. Out of state information cannot be used as a multiplier.
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FACT PATTERN IN AN EXAM
In a punitive damages case, if I give you a statute that says: under the consumer fraud act, a misrepresentation resulted in a $10,000 penalty. You might discuss that in terms of your overall punitive damages analysis. Is this an appropriate number when a state legislature says that this should be a $10,000 issue?
Footnote to Gore: ultimately Gore got $56,000. There were 14 touch-ups in Alabama. 14 X $4000 = $56,000.
Cooper clarified Pacific Mutual. The trial judge and the appellate court do a de novo review.
State Farm v. Campbell
Supreme Court, 2003
In 1981, defendant Curtis Campbell was driving with his wife, Inez Preece Campbell, in Cache County, Utah. Campbell decided to pass six vans traveling ahead of them on a two-lane highway. Todd Ospital was driving a small car approaching from the opposite direction. To avoid a head-on collision with the Campbells, who by then were driving on the wrong side of the highway and toward oncoming traffic, Ospital swerved onto the shoulder, lost control of his automobile, and collided with a vehicle driven by Robert G. Slusher. Ospital was killed, and Slusher was rendered permanently disabled. The Campbells escaped unscathed. Plaintiffs sued in wrongful death and tort. The defendant insisted he was not at fault. A consensus was reached early on by the investigators and witnesses that defendant’s unsafe pass had indeed caused the crash. State Farm Mutual Automobile Insurance Company, defendant’s insurance company, nonetheless decided to contest liability and declined offers by Slusher and Ospital's estate to settle the claims for the policy limit of $50,000 ($25,000 per claimant). State Farm ignored the advice of one of its own investigators and took the case to trial, assuring the Campbells that "their assets were safe, that they had no liability for the accident, that State Farm would represent their interests, and that they did not need to procure separate counsel." The jury found defendant was 100% at fault, and a judgment was returned for $185,849, far more than the amount offered in settlement. State Farm refused to cover the $135,849 in excess liability.
Remarkable fact #1: The Campbells have per occurrence limits of $25,000. The lawyers for Ospital and Slusher say, we’ll take the policy limits ($25,000 each) and go home. Presumably because the Cambells have no assets.
Remarkable fact #2: State Farm says we’d rather litigate these cases. State Farm can buy these cases for $50,000. They are ultimately hit for $45 million.
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Remarkable fact #3: The relatively modest verdicts that are rendered. The combined verdict on these cases is only $185,849 for a wrongful death and catastrophic injury case. The numbers are not that great.
Remarkable fact #4: State Farm who first told the Campbells they have nothing to worry about says “you better think about selling your house.” Like a good neighbor, State Farm is there.
The nature of this case changes. It began as a simple personal injury case. Now Campbell is approached by the lawyers for Ospital and Slusher who start a bad faith claim against State Farm. If we get a verdict, we’ll take 90% and give it to the estates of the Ospitals and Slushers and you can take 10%
Ultimately $1 million in compensatory and $9 million in punitive damages. A case that could have gone away for $50,000.
The case goes up to the Utah Appellate Court who grants remittitur and knocks the compensatory number to $1 million and knocks the punitive damages to $25 million.
The case goes to the Utah Supreme Court and keeps the compensatory damages at $1 million and goes back to $145 million in punitive damages.
The case arrives at the US Supreme Court. Justice Kennedy takes us thru the Gore guideposts. Where the Court really sees this case differently is on reprehensibility. Justice Kennedy acknowledges what State Farm is up to. State Farm’s conduct is not something that leads to catastrophic injury or death – it’s economic in nature.
J. Ginsberg’s Dissent: State Farm’s treatment of the Campbells typified its Performance, Planning and Review Program:
The claims adjustment process was a profit center.
It was an unlawful scheme to deny benefits owed consumers by paying out less than fair value in order to enhance profit targets.
Falsify or withhold evidence on claim files.
Unjustly attack the character, reputation and credibility of a claimant and make notations in the claim file if it ever came before a jury.
Made up stories about Todd Ospital that he was speeding to see his pregnant girlfriend. (There was no pregnant girlfriend)
Deliberately crafted to prey on consumers unlikely to defend themselves.
Destroyed damaging bad faith material under orders from an attorney.
Page 559: Out of state evidence – has to be substantially similar to what happened in Utah. It cannot come in as a multiplier. Henke: this is a severe limitation. It will be harder for plaintiff lawyers to get stuff in after Campbell.
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Acceptable Ratio: Decline a bright line ratio but let’s do it anyway. Single digit multipliers are more likely to comport with due process, while still achieving the State’s goals of deterrence and retribution, than awards with ratios in range of 500 to 1 or in this case 145 to 1.
When remanded to the Utah Supreme Court they awarded punitive damages yielding $9,018,780.75. Utah was annoyed.
WRONGFUL DEATH
A wrongful death claim is statutorily based cause of action brought by someone who qualifies as a beneficiary under the statute and compensates that person for the pecuniary loss that they have suffered as a result of the death of their loved one. Pecuniary is elastic in this sense. It is a derivative claim. The beneficiaries claim derives from the wrongful death of their loved one.
Selders v. Armentrout
NE, 1973
The wrongful death of child is tragic and very sad but what is it worth? If you lose your 5 year old, what is the pecuniary loss that you suffer? Page 574: The court points out coldly but accurately that the average child would have a negative worth. Henke: Here’s the bottom line – the critical term of art in most wrongful death statutes is pecuniary loss.
If a 40 year old man is killed and they are a lawyer or a doctor, clearly we know what pecuniary loss is; the amount of money he or she was putting into the family for shelter, maintaining, food, etc.
What courts have done is taken the term “pecuniary loss” and made it very elastic. They allow for loss of companionship, comfort, consortium, etc. All of that tends to fall under the heading of pecuniary loss and that’s what gives the wrongful death of children value – those subjective kinds of things.
Page 574: It has been recognized that even pecuniary loss may extend beyond mere contributions and there is now a decided tendency to find that the society, care and attention of the deceased are “services” to the survivor with a financial value which may be compensated.
We should also include comfort, companionship and so forth. Funeral and burial expenses are recoverable under wrongful death.
Unless the parents have some sort of financial dependency, a wrongful death case is worthless if the decedent is a single adult. Funeral expenses are covered but no subjective recovery.
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Elderly: Note 14 Page 572: Next of Kin. A nun was killed but the community lost $250,000 as a result of her services and income over her lifetime – not next of kin. Quality of relationships: if your 16 or 17 yr old was killed and was a juvenile delinquent – that evidence is admissible in some jurisdictions. Should evidence of exceptional talent be admissible? Can get expert testimony in some jurisdictions but it is too speculative in most.
Should evidence of remarriage be admissible on the extent of pecuniary loss you have suffered as a result of your husband’s death? Potential cross-examination problems. Most jurisdictions exclude that kind of evidence as well as problems in the marriage.
In order to have a wrongful death claim, the tort must be “a” proximate cause of the death.
From What is Life Worth? By Attorney Kenneth Feinberg: Wrongful death can reduce people to numbers, charts, statistics and tables.
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For EXAM: Need to have FULL analysis of the issues.
From last week: Article from New York Times – in a wrongful death case, character doesn’t count. When children survivors sue for the loss of their mother’s advice, guidance or counsel – a category of pecuniary damages, evidence of bad character is not admissible so said the New Jersey Supreme Court. Wrong to admit evidence of welfare fraud only if it was relevant in the relationship of parent/child could it be used. You cannot admit that the parent was lazy or had loose morals or was otherwise a person of bad character and hence would give bad advice.
WRONGFUL DEATH AND SURVIVORSHIP
Wrongful Death: A statutorily created action, in which someone who qualifies as a beneficiary of the decedent, brings this derivative lawsuit to recover for the pecuniary loss that the beneficiary has suffered as a result of the death of their loved one. The critical term of art is pecuniary loss.
Selders Case: Wrongful death of a child. If a pecuniary loss was limited to the true sense of that phrase – the amount of money that was lost because their child has been killed. If we limited that phrase to its literal meaning, the wrongful death of a child would be worthless if not have a negative value. Most jurisdictions have made the phrase pecuniary loss a little more flexible and it includes things like the comfort of the decedent might have given to you – aid, companionship and guidance.
Not included is emotional distress. The sorrow and grief of beneficiaries – that is not to be included under the general umbrella of wrongful death. A claim for emotional distress is separate and apart from any wrongful death action in the majority of jurisdictions. There is a good handful that does because courts have come to believe that no matter how much the judge instructs the jury not to include it, they do anyway.
For exam: If writing for wrongful death, do not include emotional distress of the beneficiaries.
Certainly monies for the maintenance of the family in the traditional sense. What percentage of the decedent’s income was going to maintain the family? Clothing, shelter, food, sustenance – that certainly comes under wrongful death. Must show that the tort was a proximate cause of the death. Must link the tort to the death or there’s no cause of action
Wrongful death is a statute of limitations issue. Most jurisdictions do not have a discovery rule that tolls the SOL for wrongful death. Do not apply the discovery rule for the purposes of SOL.
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SURVIVORSHIP
In a survivorship action, the person who is representing the interest of the decedent’s estate is an executor or executrix. The executor is the person who is bringing the survivorship claim. Because a survivorship claim is all about the continuation of the decedent’s lifetime claim. This is what about the decedent lost. What damages fall under the survivorship column? Whatever conscious pain and suffering the decedent had before he died, clearly falls under the survivorship column. You do not need proximate cause.
1. If someone dies instantaneously, there is no survivorship claim. The threshold prerequisite to a survivorship claim is to show that in fact the person had some conscious pain and suffering before they died. Expert testimony is needed to prove that they did suffer and what is its value e.g. airline crashes.
2. Personal Effects – Clothing falls under this category.
3. The percentage of the decedent’s lost income that they would have used for their own maintenance. Note 7 page 581: You take the total lost income over normal life expectancy, let the economists reduce that to its present value and then take whatever percentage of that that would have gone to the maintenance of the family, put that in the wrongful death column and whatever percentage of this person’s income that they would have used for themselves, that goes in the survivorship column.
This is where wrongful death and survivorship claims can become very unseemly. Often times we have very disparate interests here. Folks that qualify as beneficiaries for wrongful death they may be different people than who is in charge of the decedent’s estate. All of a sudden, somebody finds out they qualify as a beneficiary under a wrongful death statute and they realize they may come into some money. This makes for very interesting deposition testimony.
Loss of consortium: Money damages for loss of sexual relations
Page 582 and 583 notes 11 and 12: If the decedent contributed to the happening of his accident, if comparative fault could have been an affirmative defense to his lifetime claim that comparative fault defense will carryover and impact the survivorship claim and the wrongful death claim as well.
Note 12: Defenses based on conduct of the beneficiaries. Teeter v. Missouri Hwy and Transp. Commission. Mother’s contributory at fault while driving killed daughter. Her percentage of recovery for wrongful death will be impacted due to her comparative negligence but that will not impact the husband’s claim. Be mindful of the decedent as well as any beneficiary.
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Note 14: Effect of Personal Injury Action Brought Before Death – Malpractice Trap! You represent somebody who is still alive but you know they have a terminal illness and will pass away in the next six months. You are negotiating the settlement of that claim and the D says – your case is worth $500K, I’ll give you $600K if you give me a full release. Not only any lifetime claim but a wrongful death claim.
Here’s the issue: No living person has heirs. Until you die, you don’t know who they will be. Beneficiaries in a wrongful death are analogous to heirs in a state statute of intestacy. So, if the decedent to be agrees to a full release, what is the legal impact of that release on those beneficiaries? Because we don’t know who they are, it’s impossible to approve the settlement. The living person is selling out the claim.
Even if you live in a jurisdiction that does allow the living person in essence to sell out that claim (full release), make sure that the language of that release is crystal clear. If the release language is ambiguous it will probably be resolved against the lawyer and in favor of the litigant.
Note 16: Two separate actions or two separate diseases.
Hypo: 25 year Amtrak employee exposed to PCB’s, gets polyps. You may have those due to unknown origin or exposure. If you can show that a proximate cause of this precancerous condition was due to exposure to PCB’s, Amtrak may want a full release not only for this condition but any related condition that might ultimately ensue. The polyps may be a marker for colon cancer; they are two distinct disease processes. You will want to give them a partial release. Release them from any and all surgical procedures that have to be done on these polyps but preserve a futuristic claim for a cancer or a secondary condition.
Note 19 page 537
9/11 examples: Spouses of undocumented workers received money but are afraid to spend it because they are here illegally also.
IMMUNITIES
A tort has occurred but either because of the relationship of the parties or because of the status of the defendant, we decline to asses liability. The book lays out the most common categories of tort based immunities.
Note 1 page 624: General Abrogation. Almost all jurisdictions have abolished interspousal immunity.
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Freehe v. Freehe
WA, 1972
Interspousal immunity has been largely abolished in most jurisdictions. Reasons for this immunity were preservation of domestic harmony, divorce laws, fear of collusion and fraud. The court rejects the arguments of the floodgates, slippery slope, etc.
Renko v. McLean
MD, 1997
1. Preserves immunity;
2. Parental immunity.
An otherwise adult child may not sue their parents for wrongful acts that occur during minority.
Example: Your mother is driving while we are on a play date and she gets into an accident and you and I are both injured. I can sue her but you can’t? This court decides to totally retain the immunity. This is a minority opinion. She owes a contractual responsibility to side with them but at the same time for her daughter.
Two fair points on insurance from case:
1. To allow a lawsuit is to put mom in a hell of a position. She owes a contractual obligation to her insurance company to cooperate in the case and in essence, side with them. Simultaneously she probably wants her daughter to be taken care of.
2. If the child’s damages exceed the policy limits, your lawsuit renders your brothers and sisters homeless.
Four jurisdictional points on this issue:
1. Retain the immunity – kids cannot sue their parents
2. Just the opposite – a full abandonment of the immunity
3. Partial abrogation – retaining it for parental supervision, day to day decisions. Courts are skeptical of inserting themselves in the day to day domestic household. Note 3 Page 631 and 632 Note 7: Joint tortfeasors.
4. Reasonable parent – the California standard
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CHARITABLE IMMUNITY
Basically dead. Page 635: Theory of the Implied Waiver Doctrine – impliedly agree to not assert a claim for wrong done. This is pure fiction. Charitable Immunity encourages sloppiness. If there is no specter to tort liability for your negligence, where is the incentive to exercise the best reasonable care possible if the failure to do so has no consequence?
Tort Reform Note 4 637: Partial immunity with caps on charities. Check state statutes.
EMPLOYER IMMUNITY
Employers are immune from tort liability under exclusive remedy. Employers are immune if they carry workers compensation insurance.
Ayala v. Philadelphia Board of Public Education
PA, 1973
1. Redistribution of money/risk;
2. An increase in property taxes;
3. Governmental liability; and
4. Ministerial v. Governmental.
An odd case – a products liability case. A student gets his arm caught in a machine in shop class and he is suing the school board in this products liability action. The first thing I say to myself is, “Where’s the manufacturer?” Most of these lawsuits would be brought against the manufacturer or maybe the person who distributed the machine. The defendant is the local school board and the allegations are a safety defect and a failure to maintain properly.
What this case really comes down to is this: property taxes where I used to live are crushing. You have to pay property taxes of $15,000 to $20,000 a year. Why is that? Property taxes fund everything – they fund school systems, personal injury lawsuits brought by kids injured in the school system. I think that this case is all about distributive justice and redistribution of wealth.
Let’s assume there was a design defect. The manufacturer is unavailable because they’re bankrupt. Do you feel better with this amputee victim not getting any remedy which would be to preserve the immunity of the school board OR do you think the more equitable result is to allow this kid to be compensated but when you get your property tax bill next year, it went up again.
That’s what this case is all about. How you feel about the answer to that question forms your opinion of this case. The court is honest about that. Page 639: “The King can do no wrong.” That’s the decision here. If you take this one step further on Page 640: the torts
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of public employees are properly to be regarded as a cost of the administration of government which should be distributed by taxes to the public. This court is willing to do it and the school has insurance. This court echoes the rationale of charitable immunity – Page 640: exposure of the government to liability for its torts will have the effect of increasing governmental care and concern for the welfare of those who might be injured by its actions.
Note 4(b): Ministerial functions contrasted with governmental functions are not very clear.
Example: This winter if you get in an accident due to inadequate snow removal and start a lawsuit against the city of Lansing for negligence, there’s a pretty fair chance they will try to claim that the way in which they distribute city monies for the removal of snow is a protected governmental function for which they should be immune. That’s a policy decision.
Note 7 Page 642: A lot of state tort claims acts prohibit you from collecting damages against a municipality. The state might cap damages. The state might impose a “notice of claim” requirement. In addition to a SOL, many states require that if suing a municipality or the state, you have to provide them with a notice of claim very early on. 90, 120, 180 days. Henke: One of the most important limitations that many states have put in their tort claims act – another malpractice trap.
GOVERNMENTAL IMMUNITY
Riss v. New York
NY, 1968
1. Duty and the foreseeability of harm;
2. A duty should arise based on specific foreseeability; and
3. A general duty is owed to everyone, a specific duty to no one.
In the absence of legislation or an assumption of responsibility, the government is under no general duty of care to protect its citizens from threatened personal harm.
In addition for foreseeability of harm, people sometimes say that the existence of duty is informed by a mixture of logic, fairness, common sense, the public’s interest and the proposed solution. We know in a case like Palsgraf that if we impose a duty on the Long Island Rail Road to not only foresee such a bizarre circumstance – it means that the next time you ride the Long Island Rail Road it cost $0.50 more to ride. The Long Island Rail Road is going to pass off that cost to the passengers. It’s not going to eat it. So maybe Palsgraf goes without a remedy for the greater good.
If a duty is found to Ms. Riss, do we need to be concerned about those same kinds of things? There is a specific foreseeability that should give rise to a individual duty to Ms.
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Riss. It is particular and individual and is the underlying justification for duty based upon specific foreseeability of harm.
Cardozo never got past duty. Andrews took it all the way out to causation. To conclude that one does not owe a duty is to conclude that the case is over. This case fails on that threshold inquiry of the existence of a duty – no duty to her.
When does a duty arise independent of any voluntary action?
If we were to confine our analysis of duty to foreseeable harm, do suppose she would have a remedy?
DeLong v. Erie County
NY, 1982
1. Assumption of a duty;
2. Discharge in reasonable fashion; and
3. Failure to do so elevates the risk
A 911 system gone terribly awry. Once you assume a duty, you must discharge it in a reasonable fashion. By not discharging the duty in a reasonable fashion, they have in fact elevated the risk. When does a risk get elevated?
Hypo: Planning a city, ask your attorneys about the level of police protection that you should supply. The attorneys find these two cases. What would be your inclination to start a 911 system? The cynical or cost efficient temptation might be a general duty to everyone but a specific duty to protect no one and I’ll take my chances. Take a case by case approach and find out whether or not the foreseeability of harm became so great that a duty arose as apposed to voluntarily assuming a duty and perhaps negligently hiring folks who are not fully qualified to take the information.
A more nuanced view of foreseeability: In the third Restatement on damages, there is a lot of talk about general vs. specific foreseeability. This distinction is being made as a limitation on liability. Like in the dissent, anything is generally foreseeable – things happen. Example: Page 776 Note 4: Larue: A kid riding a vacuum cleaner gets his penis caught in the fan. That is found to be a foreseeable misuse of a vacuum clean of which liability should flow. Henke: That’s a pretty damn broad interpretation of general foreseeability.
FEDERAL TORT CLAIMS ACT
On August 2, 1946, Congress passed the FTCA which overturned to a large degree the preexisting immunity that the federal government had enjoyed from tort liability. The FTCA governs the extent to which you can sue the government in tort.
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We are going to focus on a couple of exceptions:
1. Discretionary Function Exception. The federal government will still be immune if its agent is engaged in a discretionary function. It’s a sweeping exception. Many cases do not see the light of day because the Discretionary Function Exception swallows them up.
Deuser v. Vecera
8th Circuit, 1998
1. Discretionary Function Exception;
2. Governmental immunity; and
3. Social and Economic policy.
An intoxicated fair goer in St. Louis, Missouri gets arrested by park rangers and released in a parking lot, wanders onto the street and is killed. His beneficiaries try to bring a wrongful death claim against the United States Government. The government defends by citing USCA 2680(a) – the Discretionary Function Exception.
TWO ELEMENTS OF THE DISCRETIONARY FUNCTION EXCEPTION:
1. The government agent does in fact have discretion;
The threshold issue in this case was did the park rangers have discretion? They absolutely did. It was a chaotic event and these guys were given tremendous discretion.
2. Their discretion must go to things that matter, i.e. government policy, social policy.
To be protected, the ranger’s conduct must be grounded in the social, economic or political goals of the handbook’s discretionary enforcement guidelines. Your discretion must be in the furtherance of governmental objectives.
The government applies the Discretionary Function to this case and finds no liability on the federal government.
Note B page 656: Government is immune from False imprisonment. Note C page 656: Military cannot file a tort claim against the government – “incident to service” exception – LSD experiment, recruit held under water and dies.
Feres Doctrine example: Vietnam War decision to defoliate the country with Agent Orange. Agent Orange had a very high concentrate of dioxin which produced idiosyncratic cancers, chloracne, children born with birth defects, etc. A class action lawsuit was headed up by Jack Weinstein. Federal Rule 23(b)(3) allows for class actions
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where common questions of law and fact predominate over the individualistic claims of any given victim.
Because of USCA 2680(j) the victims of Agent Orange have no claim. So they start a lawsuit with the seven manufactures of Agent Orange. They raise the Government Contractor Defense – if it applies, the manufactures receive the same immunity as the government. This is a double-barreled immunity. Page 654: Note 3(c): The act provides that you do not get a jury trial. Case law seems to indicate that strict liability is not available against the federal government.
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Tobacco Industry: Legal blow to the industry in “lights” cases – people who smoke light cigarettes which were often marketed as a safer alternative to regular cigarettes are just as dangerous as regular cigarettes and the tobacco manufactures knew that. A fraud claim can now be brought as a class action. It does not claim that smokers suffered personal injury, instead the industry defrauded consumers as early as 1971 when Marlboro started selling the first light cigarette. The Department of Justice’s main theory was to look to unjust enrichment. How have these companies been unjustly enriched by their course of fraudulent conduct?
In order to get into class action status you need to show common questions of law and fact predominate over the idiosyncrasies of individual claims.
Mississippi (Attorney General Moore) came up with a subrogation claim in which the tobacco companies were sued on the theory that states thru Medicaid and other funds are paying out money to citizens harmed by big tobacco and the companies are unjustly enriched because they don’t have to pay for some of those expenses. The tobacco companies settled globally for $200 billion.
Proving fraud requires showing both that the companies lied and that consumers relied upon those lies which means that each individual class member has to show actual reliance on the fraudulent statements.
SIX ELEMENTS OF A MISREPRESENTATION CLAIM:
1. Prove a misrepresentation of
2. a material fact,
3. made to induce reliance,
4. actual reliance,
5. reasonable reliance
6. and damages.
From last week:
State Tort Claims Act: Govern the extent to which you can sue the state or municipality – see page 620. As a common law matter, some of the distinctions between discretionary functions or ministerial functions i.e. suing a city for snow removal is not a strong claim. Suing for a custodian failing to clean up a mess is a stronger claim.
STATUTE OF LIMITATIONS
Definition: A period of time within which a lawsuit has to be filed after the cause of action is said to have accrued. When does the cause of action accrue for purposes of the clock beginning to run? This is a defense to a claim that thwarts the plaintiff from asserting claims. Determining that moment in time is not always easy.
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Graves v. Church & Dwight Co., Inc. (Supplement)
NJ, 1989
In 1979 in an attempt to cure indigestion, mixes Arm & Hammer Baking Soda with water and drinks it. His stomach exploded. He brings the lawsuit in 1983, four and one half years after the cause of action.
The defendant files for summary judgment for blowing the SOL. When did he know?
Why do we have SOL? Memories grow dim, witness die or disappear. There should come a point in time when a company or entity can rest secure in the knowledge that they’re not going to be sued.
“Discovery rule”: A rule of equity that allows the tolling of the statute of limitations when a party is either unaware that he has sustained an injury or although aware that an injury has occurred, he does not know that it is, or may be, attributable to the fault of another. It is not always immediately apparent. It is essential to any latent claim and seen often in medical malpractice claims.
Fundamentally you are dealing with one of two fact patterns:
1 You are unaware you even have an injury – a latent condition eating away at your body that’s not going to manifest itself for a period of time long after the exposure or accident.
OR
2. You have an injury but you have no reason to suspect that the injury is of tortuous origin – as in this case.
The physicians spoke of the oddities of the case but never mentioned a nexus. Both the opinion and the dissent did not disagree about the facts. What they disagreed about are the inferences to be drawn from the facts.
You would argue that this is a products liability claim and you would argue that the product bore an inadequate warning. And you are going to argue that the inadequate warning was both cause in fact and a proximate cause of Mr. Graves’s injury.
When this case went to trial, Graves got $0. The plaintiff asked for a heeding presumption arguing that he should be entitled to an evidentiary presumption that had there been a better warning he would have read it, would have heeded it and would have acted differently.
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The defendant had to introduce testimony that Graves would have read the warning so they took Graves’s deposition. Mr. Graves smoked and was aware of the Surgeon
General’s Warning and smoked anyway speeding tickets, on and on. Page 6: “The public may have a greater interest in the outcome of his case than he.”
Questions to the jury:
1. Was the warning on this box inadequate? Yes.
2. Was the inadequate warning a cause in fact of his injury? No.
Graves was unable to prove a nexus between this bad warning and what happened to him.
Two other notes:
1. If you do tort work one of the first things you do is try to determine if there was some piece of information that this guy knew that should have made him file sooner.
2. This court really goes out of its way to give this guy his day in court. It would not be surprising for another court to look at this and say forget about it.
O’Brien v. Eli Lilly & Co.
3rd Circuit, 1982
DES (anti-miscarriage drug) case where the mother conspired with the doctors not to tell the daughter why she had a DES cancer at age 14 and a subsequent full hysterectomy.
In 1976 she reads in Newsweek an article regarding girls of mothers who took DES. Her mother denied/lied about taking DES. She interrogates the physician where he gives a non-committal answer. Her mother finally confesses and O’Brien files a lawsuit three and one half years after reading the article.
Eli Lilly said the clock started running when she read the article in Newsweek. That’s when she knew or should have known and her claim was dismissed. Liability was in the bank in this case and would have prevailed with a substantial settlement.
Courts have many interpretations of the Discovery Rule.
THIS IS VERY GOOD FODDER FOR TESTING
Page 617 Note 1: Henke: SOL is a threshold defense. If you blow it, you never get to the merits of the case. Note 2: Reference the case Spring Motors v. Ford
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SOL’s are malpractice traps in two ways:
1. You miss the statute.
2. Less obvious – Being ignorant of an alternative method by which you could preserve an otherwise time-barred claim. The tort SOL has ran but has a breach of contract action and the SOL has not run.
Accrual – Most courts have held that the statute begins to run when there has been an actual injury to plaintiff’s person or property
Notes 5 & Note 14: Statutes of Repose: A period of time after which a lawsuit cannot be filed even if the cause of action has yet to accrue. It can cut off your ability to sue after the passage of time. Making headway in product liability cases (John Deere lawnmower example: if it works for 10 years fine, manufacturer will be absolved of liability).
Note 5 talks about builders and architects. How long should these people subject to liability? If the building is in good order for 10 to 15 years, that’s it. If the door is closed on your face before a cause of action ever arises, that creates issues.
Note 11: Wrongful death actions: Most jurisdictions do not apply a discovery rule to wrongful death.
Note 12: Res Judicata and the second disease: If you begin to show symptomotology of a disease, do you need to file at the onset of the symptomotology or can you wait until the disease becomes more dramatic? Answer on 620: (applying Connecticut law) The statute begins to run when plaintiff discovers some form of actionable harm, not the fullest manifestation thereof.
Pressure to file a claim because of SOL: Not permitted to split claim even if claimant develops a more serious disease. Claimant must show that the secondary condition is distinct. Under Texas law only one suit may be brought from all injuries caused by asbestos exposure.
JOINT AND SEVERAL LIABILITY
This resonates across all tort law because most tort lawsuits have more than one defendant. It is very important to know the legal interrelationships between parties in a multi-defendant suit.
Definition: Joint and Several Liability recognizes that joint tortfeasors are severally liable for the actual percentage share of fault attributed to them by the jury but they are also said to be jointly liable for the whole of the injury.
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If you have a handful of tortfeasors in a case and you take a case to verdict and the jury says that one defendant is 30% at fault another is 20%, another is 40%, etc.
Joint and several liability allows the plaintiff to collect the entirety of the award against any tortfeasor who has been hit with a percentage share of fault. If you want to collect 100% of your verdict against the 20% player – go for it. And then that person who has overpaid will seek contribution from the other tortfeasors.
The jury is asked to ascribe fault to the various parties that equals 100% including the plaintiff perhaps if the plaintiff was comparatively at fault. Joint and several liability says if the plaintiff elects, they can take 100% of the verdict against any tortfeasor who has been hit for a percentage share. The several liability is the actual percentage share that the jury has ascribed to each individual tortfeasor.
Bierczynski v. Rogers
DE, 1968
Two actors racing in the streets, acting in concert. The court finds they are jointly and severally liable for bringing about the accident. Just because the one guy doesn’t hit him doesn’t mean he’s insulated from liability.
Coney v. J.L.G. Industries
IL, 1983
Reasons for joint and several liability:
1. Dividing an indivisible injury;
2. Plaintiff to bear loss if tortfeasor unavailable;
3. Plaintiff’s negligence: lack of due care for his own safety. Defendant’s negligence: lack of due care for the safety of others; and
4. Elimination of joint and several liability affects ability of plaintiff to obtain adequate compensation.
This is a products liability case and a wrongful death case. The employer has contributed to the accident by failing to assemble the platform and to reinforce it. The exclusive remedy against the employer is workers compensation (because he has workers compensation insurance he is immune). The employer, an equally culpable tortfeasor is nowhere on the scene because he enjoys the immunity.
The fundamental question: With the advent of comparative negligence, should joint and several liability still exist?
If a plaintiff were found to be even 1% responsible for the accident, his claim was barred. Overtime, most jurisdictions have abandoned old fashioned contributory negligence in
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favor of one form of comparative fault. Whether it be pure comparative fault or modified comparative fault in one of its two manifestations.
The argument continues as follows: Contributory Negligence makes sense with joint and several liability. If a plaintiff can get nothing when he is 1% at fault, why shouldn’t on the other hand, a plaintiff be able to collect 100% of their verdict even if the defendant is 1% at fault? Shouldn’t it go both ways? Joint and several liability was the historical quid pro quo to contributory negligence. If jurisdictions are now abolishing contributory negligence in favor of comparative fault, how is joint and several liability still defensible?
Page 596: The Tennessee court in 1992 adopted comparative fault. Note 5: Many jurisdictions abandoned joint and several liability around the same time they adopted comparative fault saying the quid pro quo is over.
The Coney case on the other hand takes the other view. On page 365: The Supreme Court of Illinois is going to retain joint and several liability. They are not going down the same road as the McIntyre court in Tennessee. The primary reason that they reject the McIntyre rationale is in point 1:
The feasibility of apportioning fault on a comparative basis does not render an indivisible injury “divisible” for purposes of the joint and several liability rule. A concurrent tortfeasor is liable for the whole of an indivisible injury when his negligence is a proximate cause of that damage.
When defendants are found to be responsible for an accident, the jury is asked to apportion fault for how the accident happened. But in most tort cases, the injury is indivisible.
Occasionally juries are asked to divide the injury.
Crash Worthiness Doctrine: You’re in an accident and the interior of your car is unsafe and in a rear-end hit, your seat collapses and you are paralyzed. You will bring a lawsuit against the manufacturer and your claim is not going to be that the defect caused the accident but that the defect enhanced your injury. In that case a jury will be asked to divide up your harm. What percentage of your enhanced injury is attributable to the fact that there was no reinforcing roll bar in your seat? We only ask the jury to ascribe fault for how the accident happened.
Henke: The very notion of proximate cause suggests to me that joint and several liability should exist because we know that more than one player may contribute to an indivisible injury.
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Bartlett v. New Mexico Welding Supply
NM, 1982
Empty chair case.
She suffers an injury as a series of events. Her back injury is indivisible. Juries are not asked to divide up a harm. They are asked to divide up the percentage contribution of the various parties to the happening of the accident.
The guy who hits her is 30% of the claim and the other guy who’s not even around (empty chair) is 70% liable. Why did that happen? Because the person who tried this case for the defendant kept talking about the absentee party and because he’s not there, he’s not defending himself. This is a horrible case for the plaintiff.
Bartlett gets a $100,000 verdict, what does she get to collect? This court believes that joint and several liability is no longer defensible and so she gets $30,000.
The guy who wasn’t even near her car gets 70%. Joint and several liability can lead to blackmail. Tuna example: Eat a can of tuna that has a piece of glass in it and you suffer a laceration. You sue both Starkist and Kroger’s. Starkist is the real tortfeasor but you happen to buy the product at Kroger’s – both are strictly liable. The jury will award 95% liability to Starkist and 5% to Kroger. But you read that Starkist is going to file for bankruptcy. You go to the settlement conference and tag Kroger for the entire thing.
The choices are these:
1. Either one defendant overpays
OR
2. The plaintiff is uncompensated/under compensated.
In this case, the court with under compensated. If you have joint tortfeasors and they all have money then joint and several liability yields the same result as no joint and several liability. When this becomes critical is in a case like Bartlett where you have an absentee defendant, bankrupt defendant or one who is immune from tort liability.
TORT REFORM OF JOINT AND SEVERAL LIABILITY
Note 9 page 370: In some jurisdictions joint and several liability has been abolished. What has happened in a number of jurisdictions is what I call threshold values. What the New Mexico court said in Bartlett was they were concerned about a 1% player paying 100%. What a number of jurisdictions have done is said, we’re not going to fully abandon joint and several liability but we’re going to require the jury to attribute some threshold value of fault before we hold you jointly and severally liable.
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Example: Many jurisdictions will say, unless a tortfeasor is found to be 50% or more, they are only severally liable. You can’t collect more than 50%. But if you tag them for 55%, you can collect 100%. At that point they are enough of a player in that case that if they overpay, that’s not as offensive as a 5% player paying the whole thing.
Some jurisdictions have kept joint and several liability for special damages so all of the tortfeasors will be jointly responsible for medical bills, hospital bills but then they have threshold value for joint and several liability for general damages. Unless you are 50% or more you are not jointly and severally liable for pain and suffering, emotional distress, etc.
Note 9: Some jurisdictions have limited it to certain types of defendants or certain types of lawsuits, e.g. intentional torts, hazardous waste, medical and pharmaceutical cases, etc.
VOCABULARY
Page 376 Notes 1-3. Satisfaction: The satisfaction of a tort case represents the totality of its overall value. You are entitled to one satisfaction of a tort case. That represents the total value of the case. The satisfaction is typically comprised of various judgments against each of the various tortfeasors. When you settle with a joint tortfeasor, a judgment is rendered against that tortfeasor and all of those judgments combined represent your satisfaction of the claim.
Release: When you settle with each of the tortfeasors, you reduce that settlement to judgment and that tortfeasor will be given a release, releasing them from any and all further claims arising from this particular tort. So one satisfaction comprised of perhaps numerous judgments and each time you settle with the defendant and you reduce that to a judgment, you will give them a release or in some jurisdictions you will give them a covenant not to sue (an antiquated phrase).
Note 5: Effect of Settlement. Page 372 Note 4: Very important for practicing lawyers. What will be the impact of settlements if you have to try the case against one or more tortfeasors? How will those settlements with the others impact what you receive from the person against whom you try the case? The answer boils down to whether your practice in a pro tanto or pro rata or percentage jurisdiction. Most jurisdictions apply the pro rata approach to settlements.
Here’s how it works: You’ve got two tortfeasors and you go to the settlement conference and settle with one of the tortfeasors for $20,000. It’s reduced to a judgment and you give them a release. Settlement negotiations breakdown with the other defendant so the case is tried and you get $100,000 verdict in the case. The jury decides that both tortfeasors were equally culpable and they apportion 50% to the trial defendant and 50% to the guy who settled.
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In a pro rata jurisdiction: You as a plaintiff’s lawyer have undersold your client’s case because in a pro rata jurisdiction, all that the trial defendant has to pay you is the percentage share that was assigned to them. They have to pay you $50,000.
Look at it two ways:
1. They only pay what was assigned to them;
OR
2. They get a credit for all the percentage points that were attributed to the other parties.
What that means unfortunately is that you had a jury tell you that your client’s case was worth $100,000 but because you took too little from the settling party ($20,000), you just got your client $70,000 on a case that was said to be worth $100,000.
That’s how a pro rata jurisdiction works – you only collect the percentage that the jury attributes to the defendant(s) who tried the case. They get a credit for all the percentage points that were sloughed off on the settled party. This gets back to the empty chair again. If you’re trying a case as a joint tortfeasor in a pro rata jurisdiction and you’ve got all those settled parties, your entire case is tried against them. You continue to tell the jury about how bad they are because nobody’s there to speak for them. And you know with each percentage point that’s sloughed off to them, that’s one less percentage point that’s going to be attributed to your client.
The point is this: As a plaintiff’s lawyer in a pro rata jurisdiction you’d better be damn sure you are taking enough money from those settling parties because you can bet your last dollar that a good defense lawyer is going to zero in on those settled parties (Henke: that’s why I focused on the Bartlett case so much) and it’s very typical – like the guy in Bartlett, that the guy who hit her was found to be 30% at fault. How did that happen? It’s because they did a great empty chair case. So it’s a real art to settle a lawsuit. You never know what percentage points will be attributed. You’ve got to be comfortable enough when you accept a number and you release a defendant, you are not settling to cheaply if you think the case will go to trial – don’t undervalue the claim.
Occasionally it can work the other way. Note 6: What if the jury’s allocation of fault does not match the amount of the settlement, plaintiff makes a really good deal and the ultimate percentage of negligence attributed to the settling defendant would have resulted in a judgment for less than the amount of settlement, plaintiff benefits by the excess.
Using the same hypo: If that party had settled for $75,000 instead of $20,000, and then the case went to trial – 50/50 split for a $100,000 verdict, this time you got $125,000.
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In a pro tanto jurisdiction: The defendant who tries the case, instead of getting a percentage set-off gets a dollar for dollar set-off. A is injured by the combined negligence of B and C. A takes $100,000 from B and gives him a release. A goes to trial against C and gets a judgment for $500,000. In a jurisdiction that provides a pro tanto set-off, C pays $400,000. Here the set-off as opposed to percentage is dollar for dollar. The trial defendant gets a credit for the actual monies paid by the settling tortfeasor. The majority of jurisdictions are pro rata.
Attorney judgment rule: Insolate lawyers from malpractice claims for things having to do with strategy, decision making, the day to day way you litigate a case. These are the considerations a tort lawyer takes into account when settling a case. You must ask your client’s permission before you accept any settlement.
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REVIEW – Joint tortfeasors and joint and several liability, Chapter 7.
This is one of the few topics that runs thru the entire course. Most of your tort cases will have more than one defendant so you need to know the legal interrelationships between joint tortfeasors.
If joint and several liability is still in effect and if tort reform has not impacted it, joint and several liability means fundamentally that each tortfeasor is responsible for their actual percentage share that the jury apportions to them. That’s their several liability and they are also jointly liable for the whole indivisible injury. So, if a plaintiff decides to collect 100% of a verdict against a 20% player, they can do that. And then that player that has paid too much will seek contribution from the joint tortfeasors.
Tort reform has impacted joint and several liability. For example, in New Mexico (Bartlett case) has flat out abolished joint and several liability. So has the state of Tennessee (McIntyre case). A number of other jurisdictions have created threshold values. They say for example that if a defendant is found to be 50% or more responsible (depending on the statute), they are also jointly liable. But if they are only 10% or 15% responsible then you can only collect the 10% or 15%.
Even I see some wisdom in creating threshold values for joint and several liability. Having worked in litigation for 10 years where minimal players were paying the share of major manufactures because they’re bankrupt. I’ve seen the mischief of full joint and several liability when some mom and pop company is suddenly paying the Owens Corning share. There’s something wrong with that. That was the concern of the New Mexico court in Bartlett. They said literally that a 1% player might be asked to pay 100% of the verdict and that really is blackmail.
However, we still run into the rather inequitable problem in a case like Bartlett A woman is told her case is worth $100,000.00, the person who hit her is found to be 30% at fault and the guy who is never found is 70% at fault. Is it more fair for a plaintiff in that case to only walk away with $30,000.00 or is it fairer to make a 30% player pay 100%?
I don’t know the answer to that question but that is the fundamental issue. That’s the thing about joint and several liability. These problems only arise when you either have an absent defendant (like in Bartlett) or if you have a defendant who is financially weak and can’t pay their freight. If all of the defendants are present and they all have money, this whole debate about joint and several liability is largely a moot point. Everybody pays, the plaintiff is made whole and no defendant overpays. That’s really the crux of the debate.
The other thing to keep in mind fundamentally – comparative fault describes how a jury apportions fault for the happening of an accident. Juries seldom are asked to divide up indivisible injuries. Many jurisdictions that have abolished joint and several liability I
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think go down that wrong road. They say that basically juries in apportioning fault are
dividing up the injury. I think the Coney court speaks about this very clearly – “Distinguish between comparative fault as to how an accident happened and the resulting indivisible harm.” Most tort injuries are indivisible.
What is the effect of settlements on the defendant who tries the case. We talked about the difference between pro rata and pro tanto jurisdictions. In the majority of jurisdictions the defendant who winds up trying the case will get a percentage credit for all of the percentage points that the jury attributes to the settling parties. Thus when the trial defendant is hit for the 20% of the verdict, that’s all they have to pay. They get a credit for the 80% that was allotted to the settled parties. That’s how most jurisdictions run the settlement system. When you’re in a settlement conference in a tort case, you’d better be very careful about how much money you’re receiving from those settling parties because you have to anticipate the amount of percentage points that the jury will slough off to those parties. If you underestimate that you could end up with egg on your face when you’ve taken too little money versus how many percentage points have been sloughed off.
In some jurisdictions the pro tanto approach prevails. In a pro tanto jurisdiction whatever money the plaintiff has received in settlement, that’s the setoff that the trial defendant gets. It’s a dollar for dollar credit as opposed to a percentage based credit. Most jurisdictions and many that you will practice in follow the pro rata approach on that issue.
In a pro tanto jurisdiction, the trial defendant is entitled to a dollar for dollar credit for the actual monies received by the plaintiff from the settling parties. We can say as a general rule, that if the plaintiff has taken too little money from the settlers, it’s the trial defendant who in essence is penalized because he is going to have to make up the difference.
Oftentimes in a pro rata jurisdiction it’s the plaintiff who in essence is penalized by not taking enough – it works just the opposite in a pro tanto jurisdiction where if those settlements were low, that’s the only credit that the trial defendant gets and the trial defendant may have to wind up paying in fact more than the actual percentage share that was attributed to them.
The only thing that a defendant can do in a pro tanto jurisdiction:
Example: Let’s say you have a $500,000.00 case and the plaintiff settles with one defendant for a minimal sum – $25,000.00, takes the case to trial, gets a $500,000.00 verdict and the jury says that 75% of the liability is attributed to the settled party and you only took $25,000.00 from them. In that circumstance the trial defendant can attempt to argue about the propriety of the settlement. He can try to say to the judge, I don’t know if there was collusion between these two parties or if they were in cahoots – but that’s the
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only way in a pro tanto jurisdiction for an aggrieved trial defendant to try to contest the appropriateness of the settlement if it’s that wildly low and they’ve got to make up all the difference.
VOCABULARY
A satisfaction of a tort claim represents the totality of its overall value. You are only entitled to one satisfaction of a tort claim – you can’t get double recovery. But that satisfaction will often be comprised of numerous judgments against various tortfeasors. You will settle with a tortfeasor, you will reduce that settlement to a judgment and then you will give the tortfeasor a release/covenant not to sue.
Cox v. Pearl Investment Co.
CO, 1969
1. The release of one tortfeasor is not the release of all.
The issue in this case: If you release one tortfeasor, does the release of one tortfeasor constitute the release of all? The answer in 2006 is a resounding NO. The argument in this case was, if you have an indivisible injury and you have settled and released a tortfeasor, shouldn’t that constitute a satisfaction of the entire case? The answer is absolutely not.
You can routinely in the modern context settle with one tortfeasor and then proceed to trial against the others or settle with the others so the very simple issue in this case is the release of one is by no means the release of all. You preserve your claims by simply releasing one tortfeasor.
I’m not entirely sure why this case remains in the case book. What is important are notes 8,9,10 on page 378:
Note 8: Suppose you only have one tortfeasor. You sign a release based upon an assumed injuries but it turns out your injuries were much worse. This is very significant. Most courts will not permit the plaintiff to avoid the terms of the release if the mistake is about the extent of the severity or its consequences.
Example: You sign a full release, releasing the defendant from any and all claims surrounding this particular negligence and then a year later this rather minor condition is suddenly exacerbated. In most jurisdictions, it’s over. That release has released that defendant from all present and future claims.
Note 9, even more important: Some courts will still enforce a general release even in favor of joint tortfeasors who didn’t participate in the settlement. Enos v. Key Pharmaceuticals, Inc., South Dakota, 1997, general release executed as part of settlement
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with physicians in medical malpractice case acted as a release against a product liability claim against the pharmaceutical companies. Henke: Wow!
Note 10: Legal malpractice for failing to advise a client that a general release forecloses lawsuits against other tortfeasors.
Example: In a case like Enos, if a plaintiff signed a general release in the med mal part of the claim and they did not realize that they were also releasing any defendants in a parallel products liability suit they might have – if they didn’t know that and they have a viable products liability claim which they have released in the med mal claim? That’s a slam dunk malpractice.
You have to be very careful as a personal injury lawyer when you are talking to your client about releases. Make sure your releases are well written, they are clear and understandable. You don’t want disgruntled former clients coming back at you saying they didn’t understand what I was giving up or you pressured me or whatever the case might be.
CONTRIBUTION AND INDEMNITY
Contribution and indemnity are often sloppily interchanged but they are very different things.
Contribution: The notion that a joint tortfeasor has been asked to pay more than the percentage share attributed to them by the jury and so they start an action for contribution against the other culpable joint tortfeasors asking them to pay for the amount that this tortfeasor has overpaid.
Example: A 20% tortfeasor is asked to pay 100%. So they start a contribution claim against the others for contribution of the 80%.
If you have a contribution case, the tortfeasor concedes they are a tortfeasor. They’re not saying they shouldn’t have paid anything, they’re just saying they overpaid based upon the percentages the jury racked up. Keep this in mind – if joint and several liability has been abolished, contribution is a moot point because you never overpay. You only pay like in Bartlett – you got hit for 30%, that’s what you pay.
For those of you who practice where joint and several liability is gone, there isn’t much you need to know about contribution. It will not be an issue.
Indemnification: A tortfeasor who has been asked to pay a share of the verdict argues that in fact they should not have paid anything and so they seek a full payback of every dollar they have paid out.
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It’s not unusual as was the case in Slocum for a defendant in an answer to ask for both contribution and indemnity. But unfortunately what you often see courts and lawyers doing is using the terms as if they were synonymous and they are very different concepts.
In terms of theory, contribution and indemnity are restitutionary concepts. If one tortfeasor has paid too much and seeks contribution – it means that another tortfeasor has paid too little and has been unjustly enriched! The theoretical foundation of contribution and indemnity is restitutionary. That somebody has paid too much, somebody has paid too little – somebody has been unjustly enriched.
Knell v. Feltman
DC, 1949
1. Defendant controls contribution.
Knell the driver of a vehicle collided with a taxicab driven by Feltman. The passengers only sue the cab company. The cab company says, we’d like to get some contribution back against the other driver. The plaintiff says, we didn’t name them as a defendant so you can’t get contribution from them. The court quite appropriately says, time out plaintiff – you don’t control the issue of contribution. It it’s a defendant who controls the extent to which a co-defendant will contribute to what they have to pay. Just because you didn’t name them as a defendant does not preclude the defendant from starting a contribution action against them. In fact that’s how it usually works.
Plaintiff sues D1 and for whatever reason does not sue D2 in this case because of a personal relationship. Just because the plaintiff made whatever strategic decision not to sue D2, that doesn’t impact D1’s ability to get contribution from D2. They control the right and that’s the teaching of this case.
Yellow Cab Co. of D.C., Inc. v. Dreslin
DC, 1950
1. Husbands and wives can sue each other.
2. This case is not good law anymore.
The cab company is seeking contribution for what they had to pay to the wife of the other driver. That’s the limited issue on appeal – are they entitled to contribution for her personal injuries? It’s 1950, interpousal immunity is still intact and so the court says, because the husband was immune from any claim, his immunity bars the cab company’s contribution claim. Fast-forward this to 2006 and in most jurisdiction the cab co would be able to get contribution for the wife’s claim.
I am a little bit puzzled as to why this case is here.
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Note 1: This is the majority rule: Non-immune tortfeasors may not seek contribution or indemnity from those who are immune. Henke: That’s good law. The cab company that is not immune cannot get contribution from the husband who was immune in 1950.
Note 2: (A better case than the above) A workers comp case and a fact pattern more relevant today. Here’s how it works: Products liability situation. The plaintiff is injured on a machine that has been altered by the employer. We know the employee cannot sue the employer unless he shows an intentional wrong. So he starts a case against the manufacturer of the machine. Let’s say he gets a verdict. The jury determines that the design defect was a proximate cause of his accident. Now, the manufacturer of the machine says, we all know the employer removed the safety guard so I’d like to start a contribution claim against the employer – No. In the overwhelming majority of jurisdictions, the workers comp immunity immunizes the employer from both the claim of the injured worker and from any contribution claim that the manufacturer of the machine might try to bring against the employer.
The non-immune defendant (the machine company) cannot get contribution from the immune party (the employer). It was a trade off in that it guaranteed a remedy.
Note 5, page 386: This would be a lovely multiple choice question on the bar exam. The traditional common law rule that contribution is not permitted amongst intentional wrongdoers has persisted.
Example: If you have a fact pattern with a couple of intentional tortfeasors and one seeks contribution from the other, choose the answer that suggests it is not allowed.
Note 6: Contribution neither necessary nor permitted in jurisdictions that have eliminated joint and several liability. Nobody overpays – each party pays exactly what the jury suggested they should.
Note 3, page 387: What if the plaintiff does not file against one of the tortfeasors before the SOL has run? Does that preclude that tortfeasor from starting a contribution claim?
Example: Plaintiff waits until the last day of the SOL to file a lawsuit. The defendant is served with a summons and complaint and you start doing discovery. Six months later in a deposition the plaintiff says, I was also exposed to the ABC product. The defendant says, why the hell aren’t they here? The question becomes, does the plaintiff’s failure to join that party in timely fashion now preclude the tortfeasor from starting their contribution claim? The Restatement (Third) actually permits contribution under these circumstances. It allows the main defendant to start what would be an otherwise time-barred claim against another party to seek contribution.
Note 4, page 388: The procedural methodology by which contribution claims are brought. In some jurisdictions you file a cross-claim, implead or by making a motion.
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Slocum v. Donahue
MA, 1998
This is such a classic dynamic of this case. The plaintiffs never made Ford a direct defendant. All of this money flows from Slocum thru Ford. It is Slocum who has brought Ford in. Just because the plaintiff didn’t amend their complaint – that’s what happens a lot of times. The defendant will start what we call a third party action against these other defendants and often times the plaintiff will amend their complaint to make the third party defendants direct defendants. That didn’t happen here but it doesn’t matter, the money still filters back to the plaintiff.
I guarantee you what happened here was the Ford lawyers came in. They are well dressed, they are powerful, they are aggressive and they take over this litigation. They essentially try to engineer this settlement deal. In fact the plaintiff’s agree to take a package that will be worth $300,000.00. $150,000.00 from Ford and $150,000.00 from the defendant whose policy limits are $125,000.00.
I would also bet my last dollar that from the plaintiff’s point of view it was very important that this guy feel a little bit of pain – cough up $25,000.00. In a typical lawsuit, quite frankly, if you wanted $300,000.00 to settle a case and the offer is $275,000.00, that case is going away.
Example: (Settlement conference with browbeating judge)
I really think that the settlement breaks down because the plaintiffs want the defendant to pay the $25,000.00. They decide to remove Ford and their well tailored suits from the case. What else did they get as a result of the settlement? The value of taking Ford’s expert out of the case – Priceless. Fords expert will now be used by the plaintiff to refute the claim that the product liability had anything to do with this accident. That is a huge piece of this settlement.
The big three automakers litigate very, very hard. Not only do you get their expensive suits out of the case, you get their experts. If Ford is so sure that their product did not play any causative role in this wrongful death, why did they pay $150,000.00? This is an economic decision. It keeps the jury from hearing about Ford also. The defendant is attempting to make arguments for either contribution or indemnity from Ford in this case.
It is the extremely unusual case in which the court will undue a settlement and allow contribution beyond what the defendant has already paid. Why in essence would you settle a claim if that didn’t insulate you?
This court and the majority of courts say the opposite of note 2 below – the contribution is not permissible, there is no indication of collusion or fraud and the court isn’t going to touch this settlement with a 10 foot pole. What about indemnification? The defendant in this case had some chutzpah to even argue for indemnification. Indemnity occurs in a
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circumstance where a defendant who is otherwise blameless has been asked to pay something and is now seeking to be fully paid back. It’s a little bit of a stretch for a drunk driver who kills an 18 month old kid. The court quite appropriately dismisses that rather summarily. This case is so interesting in terms of the settlement dynamics and the package deals.
Note 2: Not all jurisdictions protect a settling defendant from contribution. Some (the minority) permit the non-settling defendant to seek contribution from the settler. Do you see why that might discourage settlement?
Example: You settle with the plaintiff and then the defendant can come pick your pocket?! Henke: That’s insane.
Note 4 page 392: A retailer’s liability for a manufacturer’s product would give rise to an indemnity claim. That’s a classic indemnification case.
Example: If you buy a product from Sears, you pick it off the shelf, it’s in a sealed container, it arrived at Sears in a sealed container and the stock boy put it on the shelf and you bought it. You bring it home and it harms you. Not only the manufacturer but the retailer is strictly liable because they are all in the chain of distribution. The retailer could go upstream and seek indemnification from the manufacturer.
Note 5: Active negligence versus passive negligence. The retailer who sells a sealed product is clearly passively negligent. They don’t have a duty to use some kind of x-ray vision and see a danger lurking. Because they are a passively negligent party, they may very well be able to get indemnification. Yes they are going to be strictly liable in the first instance but they have a very nice indemnification claim against the upstream entity.
A doctrine of equitable indemnity – that’s the retailer case. It’s equitable to allow the downstream retailer to be indemnified by the truly culpable party who made a dangerous product. Contractual indemnification – common in construction cases. A general contractor may indemnify the subs. Indemnification may operate as a matter of law or two parties perhaps might freely contract for indemnification.
APPORTIONMENT OF DAMAGES
Bruckman v. Peña
CO, 1971
1. Divisibility of harm.
This is an odd fact pattern in that we two torts – two accidents and we have the plaintiff starting a lawsuit against tortfeasor 1 for what they claim is an indivisible injury from the two torts. The much more typical fact pattern is, you have some preexisting condition which is exacerbated by a tort. You start a lawsuit against that tortfeasor and you attempt
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to recover the entirety of your injury. What typically happens in that scenario is the defendant has the burden of proof for proving how much he’s at fault. In most jurisdictions if the defendant is unable to make those proofs to show which part of the injury is attributable, then they’re on the hook for the whole thing.
This case is bizarre. You’re trying to get the initial tortfeasor to pay for both harms. Certainly you cannot make the first tortfeasor pay for the second tortfeasor’s conduct in this case. The court goes thru the jury instructions – part of which is correct and part of which is not.
Page 393: The trial judge blunders in this part of his instruction where the court says, if you find the evidence does not permit such an apportionment, then the defendants are liable for the entire disability. So the first guy would be on the hook for the entirety of both accidents. The court of appeals quite correctly finds that to be a reversible error and leads to a remand for a new trial.
Note 3: Successive tortfeasors (unrelated accidents). What if unlike the principal case it was the second tortfeasor who was the defendant? Look at the holding in the Lovely case – second tortfeasor liable for whole injury where damages could not be apportioned. That’s the much more common scenario.
Note 4: The classic fact pattern. Some tort occurs, the victim is mishandled on the way to the hospital, gets to hospital and is the victim of malpractice, hospital catches on fire, original tortfeasor to remain liable for all the wackiness. Would they be eligible for contribution? Probably.
Michie v. Great Lakes Steel Division, Nat’l Steel Corp.
MI, 1974
1. Toxic tort;
2. Indivisible injury
This is a nuisance case. Nuisance is a tort theory but we happen to teach it in property II curriculum.
Tort of nuisance: Nuisance is a substantial interference with one’s use and enjoyment of property that results in substantial harm.
There are critical differences between trespass and nuisance. With nuisance you must show actual and substantial harm. Nuisance can be negligent or intentional.
Nuisance is a very important theory of recovery in almost every environmental tort case. If you represent plaintiffs in a pollution action, you’re going to have a count for nuisance in your complaint among other things. We have a nuisance claim for these Canadian citizens who have been impacted by this sort of primordial soup of pollutants in the ambient air emanating from these industrial smoke stacks outside of Detroit.
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The exposure leads to both property damage and personal injury. You are exposed to a bunch of stuff and you get sick. The combination of those pollutants and your exposure to them results in an indivisible harm. You can’t really know which smoke stack became a substantial factor and maybe a proximate cause but you know that all of them working together have resulted in this harm.
How do we treat this kind of a case?
Page 397: Justice Cooley: “Where the negligence of two or more persons concur in producing a single indivisible injury, then such persons are jointly and severally liable, although there was no common duty, common design, or concert action.”
The court says: Where the injury itself is indivisible, the judge or jury must determine whether it is practicable to apportion the harm among the tortfeasors.
Example: You are a smoker and you also are an asbestos insulator. And you get lung cancer and both of those things are risk factors for the resulting disease. Do we ask the jury to break up your lung cancer? Typically not. And if not, the entire liability may be imposed upon one or several of the tortfeasors subject to contribution. But 100% of the asbestos settlements let them try to get contribution from the tobacco companies or vice versa if you can’t divide up that lung cancer.
Page 398: Assuming plaintiffs can prove that their exposure to these toxic substances was in fact a substantial factor and a legal cause. Assuming they get past those hurdles, then the effect of the rule shifts the burden of proof as to which one was responsible and to what degree from the plaintiff to the defendants. The burden shifts to the defendants to exculpate themselves. If they can’t, they are jointly and severally liable.
The civil procedure issue: Erie Doctrine – do not miss this issue. This is a federal case, based upon diversity jurisdiction but the underlying law is state tort law. This is a nuisance case. How does a Federal Court rule on the legal issues that flow from an underlying state tort law scenario? What’s their guideline? The only reason a Federal Court is ruling on this case is because of diversity jurisdiction.
The Erie case says this: In a federal case that is premised upon state tort law, the Federal Court is bound to apply the underlying state tort law as that tort law has been interpreted by the state’s highest court.
If the Michigan Supreme Court has spoken to this issue (underlying burden shifting) the federal judge must apply the law as it has been applied by the Michigan Supreme Court or court of appeals, which ever has dealt with the issue. And you see that statement in the last paragraph.
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You have one of two scenarios:
1. Either the Michigan Supreme Court has already spoken to the issue directly; or
2. They have not.
If the state’s highest court has yet to rule on this issue, you have to establish what the Michigan Supreme Court would do with this kind of a case.
VICARIOUS LIABILITY
I don’t know of a more naked deep pocket theory of tort law than vicarious liability. Let’s take a party without blame with a big checkbook and make them liable to the actual wrongdoer based upon the relationship or the status.
Four species of Vicarious Liability:
1. Respondeat Superior;
2. Independent Contractors;
3. Joint Enterprise; and
4. Bailments.
RESPONDEAT SUPERIOR
“Let the superior respond for the sins of its inferior (agent).” Holding an employer liable. A deep pocket theory.
Bussard v. Minimed, Inc.
CA, 2003
1. The going-and-coming rule, which normally bars workers from a workers comp award, was expanded to include foreseeability in this case.
The pest control company is nowhere to be found for some reason. The deep pocket trying to be picked is now the employer.
Scope of Employment – important buzz word and term of art. These cases are all about what does or does not constitute the scope of employment. It is broadest in the workers compensation setting.
Driving to and from work is not typically seen as within the scope of employment because of the “going-and-coming rule.” This court, instead of a very formal, ridged adherence to the to-and-fro rule uses a more elastic foreseeability test.
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If the employer is plying you with booze at the Christmas party, and you get into an accident, that makes some sense. It seems as though the employer exercised all reasonable care with this woman. If she was injured and she brought a workers comp claim against her employer she might get a workers comp award.
There is really no broader use of the phrase “scope of employment” than in workers compensation.
You should accept the fact that it is entirely possible in a given case, that the person who started the accident, the agent of the principal – don’t be at all surprised if that agent is also injured and receives workers comp having been found to be in the scope of employment for that purpose but then the person he hit cannot collect against his employer because the court does not extend the term scope of employment to cover driving to and fro.
O’Shea v. Welch
MO, 2003
This case introduces a couple more important terms of art in our respondeat superior analysis – the rather colorful terms of “frolic and detour.”
We have a manager delivering Chiefs tickets and while en route pulls in to get an estimate on some car work and gets into the accident at that moment. We have a trip within a trip. This case was remanded for further proceedings but in the initial determination there never was a discussion on whether the initial trip to deliver the tickets was within the scope of employment. We have to determine both issues:
1. Whether the trip itself was within the scope of employment; and then
2. Whether this slight deviation remained in the scope of employment.
Page 664: Slight Deviation Rule: You have to determine whether the deviation became significant enough that it constitutes a frolic which takes it out of the umbrella of respondeat superior or was the deviation so slight that it constitutes a mere detour which keeps the case within the umbrella of respondeat superior
As you can imagine these cases are facts sensitive. This was a summary judgment case. The court below granted summary judgment and dismissed this claim. Almost by definition, to grant summary judgment in a case like this, if it’s not a reversible error on its face – it’s really close. To say that there is no genuine issue of material fact as to whether this was an impermissible frolic or a permissible detour – to make that conclusion as a matter of law seems very improvident to me for a court. This court says on 664, it’s a jury question and it mentioned it twice.
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You’re given some typical factors to look at in analyzing whether something is a detour or a frolic:
1. The intent;
2. The nature, time and place;
3. Time consumed;
4. Type of work hired for;
5. Incidental acts reasonably expected; and
6. Freedom allowed to employee.
I find it very odd that summary judgment was granted in this case and that’s what the appeals court is indicating here. He’s using this car for business. Admittedly it does say routine maintenance and it does have a very good shot of being found within the scope of employment – it’s very foreseeable.
If ever writing for a bar/final exam use buzzwords – terms of art leap off the page.
Respondeat superior also applies to negligent and intentional torts and reaches into defamation.
Note 5 page 667: Negligence in hiring or retention of employee. Hiring someone without doing a background check could be held liable for injuries inflicted by employee. Not vicarious liability but rather negligence (negligent hiring).
INDEPENDENT CONTRACTORS
One of the justifications for respondeat superior is certainly to some extent, an employer is exercising some dominion and control over his employees when they are within the scope of their employment. With independent contractors on the other hand, yes someone hires an independent contractor but they are not like the typical employee. As we approach independent contractors we start with a general rule of no vicarious liability for the negligence of an independent contractor. The general rule is honored more in the breach than in reality.
Murrell v. Goertz
OK, 1979
An argument between paper delivery boy and a customer culminates into a fracas and subsequent injuries to appellant. To what extent should the Daily Oklahoman be vicariously liable for Goertz’s intentional tort? In these independent contractor cases, we’re looking to see whether the principal in any way controlled or had dominion over the independent contractor.
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Page 668: The plaintiff points out what they take to be dominion and control that the publisher has over its carriers:
1. Set territorial boundaries of the routs;
2. A policy of getting out the papers by 6:00 AM;
3. Have to use a rubber band; and
4. Publisher takes the complaints.
The court doesn’t buy it. It’s kind of a close call, but no vicarious liability because despite all these policies and regulations there is not sufficient dominion and control over them to justify the imposition of vicarious liability.
Maloney v. Rath
CA, 1968, Justice Traynor
1. Exception to the general rule of vicarious liability;
2. Nondelegable duty.
The court is not willing to take this case out of the negligence regime and go to a strict liability paradigm against a consumer. It’s very significant if you look at this time frame (1968), the ALI drafted the Restatement (second) on products liability 1965. This case comes at the dawn of the strict liability revolution in tort law so it’s important to note that Traynor is not going to take this fact pattern into that paradigm.
You have a nondelegable duty pursuant to the statute to safeguard your car. If you hire a mechanic and they do a faulty job, you are primarily responsible.
Henke’s mechanic: All Auto Service, T: 484.5424. Ask for Betty.
Why is Traynor holding an ignorant consumer responsible for the potential negligence of a mechanic? The rationale behind Traynor’s decision is that it creates certain incentives for me to find a good mechanic. It also creates indemnification. You are encouraged to find a mechanic who is insured and has a deep pocket.
In respondeat superior if a UPS driver hits you, and you sue UPS, Inc., I suppose UPS Inc. could seek indemnity from its driver but that’s not likely to happen. Certainly in this situation however, this case is ripe for indemnification.
Nondelegable duty is extremely important in product liability. To what extent can manufacturers delegate duties either to retailers, to suppliers, to employers or to physicians? If Merck warns your physician about the dangers of Vioxx, have they discharged their duty to warn?
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Note 2 page 671: Negligence in the selection of the contractor. Now if your brakes fail, you again may be negligent in the first instance for hiring a crummy mechanic. And now we may really have true joint tortfeasors and maybe a contribution situation. The more dangerous the activity, the more nondelegable it becomes.
Note 4(B): Apparent Authority Doctrine/Agency by Estoppel. This theory has been applied in cases holding hospitals vicariously liable for the medical malpractice of independent physicians practicing medicine on their premises.
Example: When you go to a hospital and you are treated by a physician at that hospital, if they commit malpractice there’s a very good argument that the hospital should be vicariously liable because they have given an apparent authority to that doctor. They’ve given him their stamp of approval in essence. And they should be estopped from denying that. Another term for this is Agency by Estoppel. An agency relationship is created between the hospital and its doctors and they cannot deny that relationship. If you at that hospital and that doctor commits malpractice on you, you have a very nice claim for vicarious liability against the hospital.
Note 4(C): Inherently dangerous activities. If you hire a blasting company to implode your building and they do that negligently and the building next door is impacted. Vicariously liability is on you when you have hired an independent contractor to do some kind of abnormally dangerous activity.
Note 4(D): Illegal activities. One who contracts for performance in an illegal act is vicariously liable for any damage.
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REVIEW OF VICARIOUS LIABILITY
First two types:
1. Respondeat Superior – let the superior respond for the negligence of its agent. Buzzwords: scope of employment. When is someone within his scope of employment for purposes of holding their employer vicariously liable? As a general rule, going to and from work tends not to be within the scope of employment.
In the Bussard case we saw a more forgiving test. In stead of simply saying, she was driving home from work the court adopted a general foreseeability test and said that if something has happened within the scope of her employment, in this case being exposed to pesticides, which makes it generally foreseeable that she may do something negligent as she leaves the office, the court said perhaps we would find that to be within the scope of employment. At least it should be a jury question. It should not be decided as a matter of summary judgment. I would not be misled by that case. I think there are plenty of courts that would look at that fact pattern and just very formalistically say, she was going to and fro – no vicarious liability.
O’Shea case: Frolic and Detour. It goes back to scope of employment – you have to distinguish between a slight deviation which is known as a permissible detour. You’re still within the scope of employment, versus a frolic – some kind of substantial deviation that takes you out of the scope of employment and destroys vicarious liability. These are very fact sensitive situations. Summary judgment seems to be a rather unwise disposition with these cases.
I think that for trial judges to dismiss these cases saying there is no genuine material fact strikes me as a pretty radical thing to do although we saw it in those cases last week. The notion that underlies respondeat superior is that if someone is within their scope of employment the employer is generally exercising dominion and control over you. That really is the foundation of respondeat superior. That phrase – “scope of employment” should be given a broader interpretation in the context of workers compensation than for respondeat superior.
We talked about the Lundberg v. State case from the 10th edition. Concise Rule of Law:
The doctrine of respondeat superior extends liability to employers for the negligent actions of an employee committed while the employee was acting within the scope of his employment but not always for others.
Lundberg was killed in an auto accident caused by a State employee driving from his home to his place of employment 80 miles away. The employee is also injured. He gets a workers compensation award. He is found to be within the scope of employment for workers comp but the beneficiaries of Lundberg do not get any respondeat superior
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liability. He is not within the scope of employment for purposes of respondeat superior but he was within it for purposes of workers comp (a broader interpretation).
2. Independent Contractors. The general rule is no vicarious liability for independent contractors. But we riddled it with exceptions beginning with Maloney v. Rath – Justice Traynor’s decision. The first exception is the so-called Nondelegable Duty Exception.
If you hire an independent contractor to perform some task and for example in that case you have a statute that says you the owner of an automobile must keep it in good working order. If you hire someone to perform that task and they are negligent, Traynor said that task is too important to delegate to someone else and you yourself are vicariously liable for that negligence of your mechanic. There are certain duties that involve a high risk of catastrophic harm. You say to yourself, how will I know there is a delegable duty? You have to use your common sense.
Certain things are of such importance and great risk that they cannot be delegated to someone else. Keep in mind what Traynor said, even if you’re primarily responsible, you can turnaround and sue your mechanic for indemnification. You may be vicariously liable momentarily but then you are going to sue for indemnification.
Doctrine of Apparent Authority: You go to the hospital, you’re operated on, and the hospital commits malpractice. Chances are you can hold the hospital vicariously liable for the negligence of the physician because that hospital invested in that physician an apparent authority and they can’t walk away from it after that person commits malpractice.
The notes discuss vicarious liability by hiring someone to do an abnormally dangerous activity and hiring someone to do an illegal activity. Once again vicarious liability comes back to you.
Keep in mind the note on page 667 and the note on page 671: Distinguish between vicarious liability and things like negligent hiring or negligent selection of an independent contractor.
Example: You go to a fly-by-night mechanic that’s not certified, they fix your brakes and they do a bad job. Now if you get into an accident, the person that you hit – forget about vicarious liability, you yourself were negligent in the first instance for your selection of a bad independent contractor.
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3. Joint Enterprise
Popejoy v. Steinle
WY, 1991
What I find interesting is how this happened procedurally and chronologically. It’s a very tragic and sad case. The woman Connie Steinle is driving to purchase a calf for her daughter and she gets into an accident. She is killed and Popejoy is minimally injured at first. Sometime after the initial accident, 15 months or so, he starts to get much more serious ramifications from the original accident. He decides to start a lawsuit. More tragedy has occurred. In the meantime the young girl’s father has also died. This jurisdiction has a pretty good docket and the probate court has already settled the affairs of mom’s estate. Popejoy is now barred because the probate case is over. I suppose at the time the lawyer for Popejoy could have said, sorry fella, you have no case or he could of done what he tried to do here. He now tries to create this argument that the Steinles were engaged in a joint enterprise having to do with this animal husbandry business. So now he is trying to get to the husband’s estate for purposes of vicarious liability. It’s a clever argument. But it is ultimately an unsuccessful argument
The Four Elements of Joint Enterprise, Restatement (Second) of Torts § 491:
1. An agreement, express or implied, among the members of the group;
2. A common purpose to be carried out by the group;
3. A community of pecuniary interest in that purpose among the members; and
4 an equal right to a voice in the direction of the enterprise, which gives an equal right of control.
Element 3 is the most important. Can the plaintiff show a community of pecuniary interest in the purpose among the members? Is everybody profiting from this enterprise? The court found that there was no pecuniary interest in the purchase of the calf. There was no indication that he had a financial stake in it. The court found therefore that there was no joint enterprise between the parties and thus no vicarious liability.
4. Bailments
Shuck v. Means
MN, 1974
1. The rental of a car creates a bailment;
2. Limited property rights.
Coddling leased a car from Hertz and permitted Means, an uninsured driver, to drive that rental car. Defendant negligently caused an accident and Shuck was injured in that accident and filed a personal injury action against Hertz. Vicarious liability for Hertz? Yes. Minnesota has this owner consent statute:
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“If a motor vehicle shall be operated upon any public street or highway of this state, by any person other than the owner, with the consent of the owner, express or implied, the operator thereof shall in case of accident, be deemed the agent of the owner of such motor vehicle in the operation thereof." Judgment was given to plaintiff and Hertz appealed.
Somehow the court concludes that despite Hertz’s utter ignorance of the identity of Mr. Means (they knew nothing about him) but the court finds that Hertz gave Mr. Means implied consent to operate this motor vehicle and therefore under the statute Hertz is vicarious liability for Mr. Means’s negligence. Henke: This is a naked grab at a deep pocket.
The supreme court of Minnesota is pretty upfront about it. This is an attempt to create a remedy for an injured person.
Page 679 Note 2(B): The family purpose doctrine – a court-created legal fiction by which the owner of an automobile is held vicariously liable when the car is negligently driven by a member of the immediate household. The car must be driven with the permission (easy to prove) of the owner.
(C): Automobile Consent Statutes – many states have statutes that make the owner of an automobile vicariously liable for injury caused by the negligent operation of the vehicle as long as it is being used with the owner’s consent.
Note 3: “Omnibus Clause” – a lot of insurance contracts now have this clause which basically makes the owner vicariously liable for almost anyone who’s driving the car.
One way or another in most jurisdictions today – if you own a car and somebody else is driving it and they drive negligently and they get into an accident, it’s probably coming back on you.
Note 6: Distinguish Negligent Entrustment. If you give your car to your drunken friend and they go out and get into an accident, you don’t need to be held vicariously liable, because you were negligent yourself in the first instance in making that entrustment.
A reoccurring theme: Negligent hiring. If you yourself have been negligent by hiring somebody, selecting a contractor, or by giving your car to a drunk driver – you don’t need to go to vicarious liability, you could be tagged for your own negligence in the first instance. There may be two ways to get a remedy in these fact patterns.
STRICT LIABILITY
There is new research on the importance of § 520 as a theory of recovery in environmental tort cases having to do with leaking underground storage tanks. 520 is an important theory.
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You get to this section in the course and all of a sudden after weeks of negligence and fault, you suddenly come to strict liability. The fact of the matter is as you go thru these cases ask yourself, just how strict is strict liability? And doesn’t fault seep back into the discussion.
Technically speaking strict liability in tort is supposed to be liability without fault. Keep a raised eyebrow to that statement because fault does play a role even in the context of strict liability. Be sensitive to the fact that it may be more bells and whistles than actual reality.
You should carefully distinguish between strict liability and absolute liability. We see courts sloppily interchanging those phrases.
When we get to Products Liability, we’re going to talk about some products whose risks are so severe and whose utility so minimal that if these products hurt you, a company will be absolutely liable, period. No defenses, no comparative fault, no state-of-the-art defense – nothing. That is absolute liability. It means that a company makes a decision to either engage in an activity that is so dangerous and of such little use to society where they decide to manufacture a product that if you are harmed, they pay you. Absolute liability – no defenses. That’s very different from strict liability.
There are a number of defenses to strict liability claims. There are no defenses to an absolute liability claim.
1. Animals
Ferae naturae: Owners of wild animals subject to strict liability if the animal injured anyone.
Domestic animals, page 691: In many states the common law has been changed by statute. And what these statutes typically do is do away with the necessity of proving scienter. You need not show that the owner of the German Shepherd had knowledge of its dangerous propensity – it is assumed you knew that. And if your German Shepherd bites someone, in many jurisdictions that is a strict liability case. Notice on page 690: One bite rule. There are a number of jurisdictions that to a degree do allow for one free bite. Essentially indicating unless you have knowledge of the dangerous propensity of your dog, there is no strict liability and the plaintiff must show negligence. A good plaintiff’s lawyer might show that you knew or should have known of your dog’s dangerous propensity anyway. If you can’t show that, you are left with proving negligence.
There are defenses: plaintiff’s committing a trespass, presence of a warning sign, in Florida a dog owner who displays an easily readable sign that says “Bad Dog” not strictly liable to anyone who is at least 6 years old.
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Rylands v. Fletcher
UK, 1868
An old and venerable case that lays down the foundation for many of the principals that appear in Section 519 and 520 of the Restatement. A mill owner builds a reservoir and unfortunately his contractors flood abandoned mine shafts. The miners bring suit, typical theories don’t seem to work. There was no trespass because the damage was not immediate. No nuisance because they are doing a lawful and reasonable act. And there must be negligence. The only possibility here was that the contractor whom they selected to do the work was selected negligently. Vicarious liability is not yet a viable concept. If this case were decided today, we may never have to get to this idea of strict liability because creating a reservoir that winds up flooding a mine shaft would be vicarious liability. You could say it was a Nondelegable duty and an abnormally dangerous activity. Fast forward this case, and you might be able to tag defendant for vicarious liability. The typical theories don’t fit and yet the court is striving to come up with a remedy.
In the absence of being able to hang your hat on these familiar theories, the court begins to articulate this new principal of liability without fault. The ultimate statement of the case is really Lord Cairns’ decision: On the other hand, if defendants, not stopping at the natural use of their close (their property), had desired to use it for any purpose which I may term a non-natural use. If you begin to use your property in that way, and you harm your neighbor, you essentially are strictly liable – even if you are exorcizing all reasonable care in the performance of that non-natural use.
Note 5: Natural and non-natural uses of land. Water collected in large tanks in dangerous proximity to plaintiff’s land – strict liability case. But if there’s water in a cistern or household pipes – that’s not a strict liability case.
Example: If you go home for Christmas break, we get a cold snap, your pipes freeze and your neighbor’s yard is flooded. That’s not a strict liability case, it’s a negligence case. That’s a natural use and natural storing of water. Creating a reservoir is a non-natural use. For a natural use you may still be liable in negligence but the plaintiff will have to show that you somehow failed to show reasonable care whereas if your use is non-natural, forget about reasonable care – if your neighbor is injured, liability ensues.
Note 2: Precursor to §520 – the appropriateness of the activity to the location. Is it a matter of common usage? What is its value to the community? A lot of Rylands can be explained in that note.
Millwork was far less important of an economic activity for that area than coal mining. If you want to build a mill and your mill has a reservoir that floods out a coal mining interest, you’ve got to pay up. They are not going to prohibit you from building a mill but the more socially accepted activity is coal mining and we are going to protect it thru the imposition of strict liability in tort on the guy who builds the mill.
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Indiana Harbor Belt R.R. Co v. American Cynamid Co.
Seventh Circuit, 1990, J. Posner
1. A judge deciding as a matter of law.
This acrylonitrile was making a labyrinthine route on its way to New Jersey. It starts out with North American Car Corp, then Missouri Pacific, switches lines in Indiana Harbor and makes its way up to New Jersey. Somewhere in that exchange we’ve got a leaking valve and this stuff spills out. Property damage is $981,022.75 and now the property seeks compensation.
The case sites the Guille (Crashing balloon) case. The technology at the time did not allow for Guille to make a precise landing. Indiana Harbor Belt on the other hand can exercise reasonable care to make sure there is no leak.
Judge Posner spends a lot of time talking about factor (c) of § 520 of the Restatement: The inability to eliminate the risk by the exercise of reasonable care.
No matter how much reasonable care is exercised by the balloonist in Guille, he cannot insure a safe landing. On the other hand if somebody checks this railcar and tightens the valve, there will be no leak. It’s one of the critical distinctions between the two cases. Certainly I will tell you that factor (c) is a very common consideration in these cases. To what degree can the exercise of reasonable care insure a safe operation? Posner talks about that a lot.
Posner also analyzes the factors in (d),(e) and (f). Judge Posner talking about factor (e) says, “Brutal though it may seem to say it, the inappropriate use to which land is being put in the Blue Island yard and neighborhood may be, not the transportation of hazardous chemicals, but residential living. The analogy is to building your home between the runways at O’Hare.” That may be the inappropriate activity for the location as opposed to the hauling of substances.
What would happen if there was rerouting in less populated places? The rail is not as good and there may be more accidents but maybe less costly.
The plaintiff in this case is so desirous of a strict liability claim versus a negligence claim. It’s not about the merits; it’s about the appropriate theory of recovery. The actuality of proving negligence in this case is going to be very, very difficult.
Page 707: The plaintiff overlooks the fact that ultra-hazardousness or abnormal dangerousness is, in the contemplation of the law at least, a property not of substances, but of actives.
Posner in a sense is chastising the plaintiff’s lawyer for trying to pull one over on the court. For in essence trying to say, I’m making a 520 argument but I’m really trying to get thru the back door of a 402A argument (Products Liability). Do not confuse the two.
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Whatever the situation under products liability law, the manufacturer of a product is not considered to be engaged in an abnormally dangerous activity merely because the product becomes dangerous when it is handled or used in some way after it leaves his premises, even if the danger is foreseeable.
Henke: When analyzing strict liability on an EXAM, students sometimes flip-flop between strict liability for products and the strict liability for activities. YOU HAVE TO KEEP THEM SEPARATE.
This is a 520 case and not a 402A products liability trial on the dangerousness of this particular chemical.
Miller v. Civil Constructors, Inc.
IL, 1995
This case gives the text of § 520. You should really commit to memory the six factors. If you are doing a § 520 analysis, you will have to discuss all of these factors. The first set of three factors smack of negligence. The second set of three factors really hearken back to Rylands v. Fletcher. They are pragmatic, public policy laden factors.
There’s interplay between three things: The law of nuisance, the law of zoning and the law of § 520. Zoning is an attempt to “keep the pig out of the parlor.” It’s all about putting compatible uses together. One activity towns that employ everyone (and kill most of them) are enjoined as a nuisance and allowed to continue as long as they pay their way. § 520 is all about the same thing – determining whether liability should exist for activities based upon their risk (a-c) and if the activities are appropriate to a given area (d-f).
Risk Factors:
(a) Existence of a high degree of risk of some harm to the person, land or chattels of others;
(b) Likelihood that the harm that results from it will be great;
(c) Inability to eliminate the risk by the exercise of reasonable care;
Pragmatic Factors:
(d) Extent to which the activity is not a matter of common usage;
(e) Inappropriateness of the activity to the place where it is carried on; and
(f) Extent to which its value to the community is outweighed by it’s dangerous attributes.
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Whether or not strict liability under § 520 is appropriate is a question of law. It is for the court to determine whether or not the jury should even consider the strict liability regime. It is not a question of fact in the first instance.
Abnormally dangerous (R II) is the more in vogue word to use instead of ultra-hazardous (R I).
LIMITATIONS (DEFENSES) ON STRICT LIABILITY
Foster v. Preston Mill Co.
WA, 1954
Henke: an interesting and important case. A couple of weeks ago I talked about general versus specific foreseeability. The Third Restatement is getting a little bit stricter about the specific type of foreseeability of harm that a plaintiff might have to show. We looked at the Larue v. National Union Electric Corp. (vacuum cleaner case). We said that if a vacuum cleaner is defectively designed and maybe it’s foreseeable that an accident might occur generally speaking, would we extend liability to such a bizarre harm as the one in that case? The answer is maybe we shouldn’t. Take that discussion and transpose it into what happens here.
This case involves a blasting operation 2.25 miles from a mink farm. Due to the exceedingly nervous disposition of mink, the blast caused the mother mink to kill their kittens. The mink farmer sues the blaster under § 520 for an abnormally dangerous activity.
There’s a very important limitation in § 519 of the Restatement on page 710 and we should certainly commit this to memory as well.
§ 519(2): The rule of strict liability has been held not to apply when the harm occurring is not the kind that makes the activity abnormally dangerous.
This is the wrong harm. For strict liability to apply here you need the barn to collapse, you need the blasting operation to lead to the barn reverberating to such a degree that it collapses and kills the mink. That harm matches the foul if you will. That would be the type of harm the possibility of which makes blasting abnormally dangerous. Mother mink’s nervous reaction to a blasting operation 2.25 miles away is not the right kind of harm.
This is a very important limitation on § 520. You’ve got to have the right type of harm. You can also talk about this in terms of proximate cause. Page 711: This limitation has been expressed by saying that the defendant’s duty to insure safety extends only to certain consequences. More commonly, it is said that the defendant’s conduct is not the “proximate cause” of the damage.
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If you are doing a § 520 analysis on an EXAM and you determine that the ensuing harm is not the type of harm that would flow naturally from the activity, you should mention two things:
1. Indicate that the defendant will attack the plaintiff’s claim under paragraph 2 of 519; and
2. The defendant will attack the plaintiff’s claim on proximate cause grounds.
Even if you didn’t have that limitation, you could attack this on proximate cause. You could simply say to yourself what the Restatement says about proximate cause:
Looking back from the harm to the commission of the tort, how extraordinary does it seem that one would bring about the other?
Example: Rubber band analogy – if you stretch it too far it snaps. The snapping point is when something is not a legal cause anymore. That’s proximate cause – who needed Palsgraph? If you look back from the commission of the tort to the ensuing harm – a blasting operation 2.25 miles away, mother mink kill their young – it’s a band snapper. Larue, riding a vacuum cleaner in a household environment, penis caught in the fan blades – the rubber band snaps somewhere in there.
Either way you could attack this thing but that is one important defense to a 520 claim: The harm does not match up with the activity.
Golden v. Amory
MA, 1952
1. Act of God;
2. Proximate cause.
The defendant is using his land in a non-natural way. He has a hydro-electric plant. The reason that there is a flood is because of a hurricane. The affirmative defense that you plead in the answer to your complaint here is Act of God. But you could also make the proximate cause argument again. You could say that the intervening act of God (hurricane) is an intervening and superseding cause of the harm. I think you could also attack the plaintiff here on proximate cause.
A lot of you raise proximate cause as a defense. But that of course is inaccurate. You know that part of the plaintiff’s prima facie case is to prove causation. A defendant may attack the plaintiff’s case for lack of causation but it’s not an affirmative defense. When you’re talking about proximate cause, you might say the defendant will attack the plaintiff on proximate cause and attempt to show that there is a weak nexus between the negligence and the harm. The plaintiff’s case may collapse for lack of proving proximate
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cause. That’s how you should really talk about proximate cause. The plaintiff bears the burden of proving causation.
Sandy v. Bushey
MA, 1925
1. Comparative fault.
Plaintiff’s conduct can be a very troublesome issue. This is an old case. Plaintiff is tending to his horse, there’s another horse in the field of a rather menacing nature. He attempts to ward that horse off and he thinks he has done so successfully but when he turns his back on the horse he is then attacked. He attempts to sue in strict liability for this dangerous animal. The defendant claims that the plaintiff was contributorily negligent. This is 1925, long before the advent if comparative fault. So of course if the plaintiff is found to be at all contributorily negligent, it will mean the end of his claim.
What’s difficult in these cases – how do we compare plaintiff’s negligence to defendant’s strict liability? If strict liability is this exalted standard, what are we going to do with this routine negligence? Is this like comparing apples and oranges? Instead of having a negligent defendant and a negligent plaintiff, we now have this strict liability regime. What the court said 80 years ago was pretty true then – not so true anymore. Take this holding as a minority position.
What this court says is the only type of plaintiff’s conduct that will be meaningful in a strict liability case is conduct that essentially rises to the level of assumption of the risk. Only abject stupidity will impact the plaintiff’s case when the liability regime is strict. Mere carelessness or mere negligence will not be considered against the plaintiff when we’re talking about strict liability. I think there is some logical appeal to that. Why should a plaintiff’s mere carelessness destroy his claim when the standard we are comparing it to is strict liability? They’re on a different philosophical plain.
But you can already probably imagine that with the advent of comparative fault and with the abolition of contributory negligence, that’s no longer the position of most jurisdictions. Most jurisdictions now treat the plaintiff’s conduct in a strict liability case the same way that they would in a routine negligence case. If you’re practicing in a state that has comparative fault principals and you have a strict liability claim – a dog bite claim or an abnormally dangerous claim, your plaintiff’s negligence is likely to come in. It is likely that the jury will be asked to apportion fault among both the tortfeasors and the plaintiff if applicable. This is a minority position case now with the advent of comparative fault.
Note 2: Restatement (Third) of Torts: Apply comparative negligence principals to compare the negligence of the plaintiff to the strict liability of the defendant in cases involving abnormally dangerous activities or animals.
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Do note that a good handful of jurisdictions do still apply this Sandy approach – only using plaintiff’s conduct against him if it is really stupid stuff – assumption of the risk type stuff. Most jurisdictions will use comparative fault principals. We are going to be dealing with this same issue in products liability. How do we compare strict liability for a defective product against plaintiff’s negligence in using that product?
*PRODUCTS LIABILITY*
OVERVIEW
In 1965 the ALI drafted the Second Restatement of products liability, § 402A. The Third Restatement is over 360 pages. The Third Restatement of products liability is one of the most amazing documents that I have ever seen. If you are ever doing a scholarly paper and you need research – it is an amazing research tool. We need to juxtapose the Second and Third Restatements and I suggest to you which sections of the Third Restatement I think are most significant and I have included those in the supplement.
The two critical things that you need to do in a products liability analysis are:
1. Identify the type or types of defects; and
2. Identify the appropriate theory or theories of recovery.
Whenever you read one of these cases one of the first things you should do is identify what type or types of defects are at issue because the type of defect will often determine what your most appropriate theory of recovery might be. There are 3 essential types of defects in products liability cases.
The easiest and most straightforward:
1. Manufacturing defect: A manufacturing defect occurs when one or a small number of units of an otherwise adequately designed product line malfunctions due either to a flaw in the component parts of the product or due to some flaw in the manufacturing process.
2. Design Defect: A design defect occurs when the plaintiff alleges that the entire product line is defective due typically to the defendant’s failure to comply with state-of-the-art technology or information at the time of manufacture. The classic example is the Ford Pinto. The entire product line is dangerous. The two analytical tools that will guide you in design defect are:
1. The Risk Utility Test – O’Brien case; and
2. The Consumer Expectation Test.
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3. Warning Defect: There are two possibilities under the warning defect scenario:
1. Failure to warn; or
2. An inadequate warning.
Based upon state-of-the-art information at the time of manufacture, did the defendant have a duty to warn and fail to? Or did they have a duty to warn, they provided a warning but the warning failed to convey the magnitude of the known risk and was thus inadequate?
So you’re either going to have a failure to warn altogether or you’re going to have a warning and you’re going to attack it’s effectiveness. The warning defect claims are really, really interesting. Oftentimes a design and warning defect will coexist (O’Brian case).
THEORIES OF RECOVERY
There are essentially three theories of recovery:
1. Negligence. Negligence remains extremely important in product liability claims despite the advent of strict liability in tort. Negligence remains a plaintiff’s dream. Your dream is to find the Sumner-Simpson Papers. You want to show that a company knew something and failed to act in the face of that knowledge.
2. Strict liability in tort. Greenman v. Yuba Power.
3. Contract theories:
i. UCC 2-313 (Express Warranty) Baxter v. Ford Motor Co.
ii. UCC 2-314 (Implied Warranty of Merchantability) Henningsen case.
iii. UCC 2-315 (Fitness for a Particular Purpose)
The UCC theories are most critical in cases of economic loss only whereas in cases of personal injury typically you are going to be in a negligence or strict liability regime.
Example: If you go out and purchase a new boat and on its maiden voyage the boat takes on water but nobody is hurt and no property damage. It’s a case of direct economic loss. You paid $25,000.00 for a boat but in its defective state it’s only worth $10,000.00. That’s a products liability claim – the boat is defective. In a case like that, your theory will probably be under the UCC. That is where you will really need 2-313 and 2-314 (See the Spring Motors case).
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MacPherson v. Buick Motor Co.
NY, 1916, J. Cardozo
1. Do away with privity of contract;
2. A reasonable inspection would have unearthed the problem;
3. Negligence is “hot” and strict liability is “cold;” and
4. Negligence is my friend.
This is the most important product liability case in the history of American Jurisprudence. MacPherson was a guinea pig for testing out a proposition of law much larger in significance than the amount of any verdict he would receive at the hands of a county jury. This is a classic manufacturing defect case. There’s no suggestion that all of these cars are bad. It’s just this particular car that Mr. MacPherson got had a bad wooden wheel. He got the bad egg.
You’ve got a car, it’s got a defective wheel – it’s a pretty nice strict liability claim. Strict liability is strictest and most meaningful in manufacturing defect claims.
MacPherson has no direct contact with Buick the upstream entity. Up until this point we know that from cases like Winterbottom (Stagecoach case) we typically require privity of contract as a foundation for this sort of upstream liability. So why now does Cardozo determine that you can essentially go thru the immediate upstream entity and go all the way to the manufacturer? Upon what does he hang that lovely hat for that principal? Up until this point ironically and perhaps oddly, the only duty that we have here with the one party who’s least likely to ever use the product. Cardozo goes the extra step and he makes a statement on page 410 that is really a remarkable statement:
“If he is negligent, where danger is to be foreseen, a liability will follow. We have put aside the notion that the duty to safeguard life and limb, when the consequences of negligence may be foreseen, grows out of contract and nothing else. We have put the source of the obligation where it ought to be. We have put its source in the law.”
Cardozo does away with privity of contract and what does he cite? The law. Gone are the days of the stagecoach. Irrespective of contract, a duty arises in law, in equity, in fairness that a duty extends not only to the immediate party, with whom you are in privity but to foreseeable downstream entities as well, i.e. the consuming public.
In one fell swoop hundreds of years or precedent fall by the wayside and now you can sue not only the immediate party with whom you are in privity, but you can go upstream and sue other entities.
Why didn’t Imperial Wheel get a ticket to the game? This is a nondelegable duty issue and Cardozo talks about it on page 411:
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“We think that the defendant was not absolved from a duty of inspection because it bought the wheels from a reputable manufacturer. It was responsible for the finished product.” This will be a recurring issue in products liability. We are time and time again going to ask, to what extent can the finished product manufacturer delegate duties? Whether it’s a duty to warn, a duty to install a part or a duty to inspect the part, Cardozo’s instincts almost 100 years ago resonate very loudly in the modern context. Very seldom in products liability cases can the finished product manufacturer delegate issues of safety or warnings to other parties. Could they bring Imperial Wheel in as a joint tortfeasor? Absolutely.
Page 411: “The obligation to inspect must vary with the nature of the thing to be inspected. The more probable the danger the greater the need of caution.”
What’s unusual about this case is that most manufacturing defect cases do not allow for a reasonable inspection that would find the lurking defect. This is the rather odd manufacturing defect case where a reasonable inspection would have unearthed the problem.
Note 4, page 721. Henke: One of my favorite notes:
Even with the advent of alternative means of recovery such as a breach of warranty and strict liability, negligence continues to be an important cause of action for plaintiff’s injured by products. Almost every cause of action for product liability contains a negligence count. Most plaintiffs’ lawyers still try to prove negligence. Why? “More plaintiffs would prefer to present their respective cases to a jury on a negligence, theory rather than on a strict liability basis. Negligence is “hot” and strict liability is “cold”. It is easier to prevail by showing that the defendant did something wrong than that there is something technically defective about the product.”
Negligence is your friend as a plaintiff. If you can find evidence that a company had actual knowledge of dangers and didn’t do anything about it – that’s when you hit the home run. Show the Vioxx juries emails about what they knew about heart issues.
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REVIEW PRODUCTS LIABILITY
THREE TYPES OF DEFECTS
1. Manufacturing defects. One unit of an otherwise adequate product line malfunctions perhaps due to bad component parts like in MacPherson or because of some quality control – somebody on an assembly line leaves out a part.
2. Design defects. Situations in which an entire product line is defective typically because of some failure to comply with state-of-the-art technology.
3. Warning defects. Either a failure to warn based upon state-of-the-art information or the manufacturer incorporates a warning but for some reason the warning is found to be inadequate to convey the magnitude of the known risk.
THEORIES OF RECOVERY
1. Negligence. Note 4, page 721: Negligence is still an extremely important theory of recovery in product liability cases. Most product liability cases still boil down to fault – especially as we will see in design defect and warning defect cases. When a company makes a conscious decision to design a product, in essence we are going to ask ourselves that familiar question – did they exercise reasonable care in designing the product as they did? When we look at a warning on a product, we’re going to say, did the company act reasonably in using that kind of language on that product or did they act reasonably when the failed to give a warning?
Seldom do we escape from the notion of reasonable care. It continues to be very, very important in products liability.
MacPherson v. Buick Motor Company: In Torts I this was a duty case and whether or not privity of contract was necessary for a duty to extend. Now we’ve taken it into the products liability setting.
The first point to make about the case is this is an unusual case in manufacturing defect. We have one rotten wheel and there’s no allegation that the entire product line is defective. What makes this case somewhat unusual is the facts indicate that a reasonable inspection would have unearthed the defect. Whether it’s Imperial Wheel or Buick, somebody could have done a reasonable inspection here and found the defect.
In the modern context, that will typically not be the case. Strict liability will be most meaningful typically speaking in manufacturing defect cases. Manufacturing defect cases are where you most typically really see strict liability in its strictest sense. This is the odd manufacturing defect case where negligence works.
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In one fell swoop Cardozo decides that privity of contract is not a bar to suing an upstream entity. The only privity of contract in MacPherson is between MacPherson and Close Bros., the dealer. Cardozo in that now familiar language says that the obligation from Buick to MacPherson is not just based upon an agreement. “I’m going to put that source of obligation where it belongs; I am putting it in the law.” This is a public policy laden decision. Buick has a direct duty right thru Close Bros., down to Mr. MacPherson. We take it for granted almost a hundred years later that you can freely sue any party in a chain of distribution in a products liability case, well before MacPherson that was not so.
A couple of other important points to keep in mind from MacPherson:
I. Nondelegable duties. We first raised that phrase in Maloney v. Rath when we talked about vicarious liability for an independent contractor. We found out that you cannot delegate your duty to keep your car in good working order to your mechanic. If your mechanic is negligent, you are vicariously liable for that negligence because that is a non-delegable duty. A manufacturer of a finished product cannot delegate the duty to safeguard that product to a component part manufacturer. Buick cannot simply rely upon Imperial Wheel to safeguard a component part. If a component part is faulty, Buick had a nondelegable duty to make sure it was safe. In a modern case you could bring Imperial Wheel in as a joint tortfeasor. Buick could start a contribution action against Imperial Wheel. But the point is in the first instance is Buick cannot delegate that duty to Imperial Wheel.
Perhaps most controversially, we are going to deal with this in pharmaceutical cases when we ask the question whether a pharmaceutical company can delegate its duty to warn to a physician who then prescribes something to you and shares with you the dangers.
II. BPL framework. Don’t lose sight of your basic BPL framework as you go thru products liability. Cardozo: “The obligation to inspect must vary with the nature of the thing to be inspected. The more probable the danger the greater the need of caution.” In O’Brein v. Muskin Corp., part of the risk-utility test is BPL oriented.
SECOND THEORY OF RECOVERY
2. Warranty based. Page 721: Warranty is a freak hybrid, “born of the illicit intercourse of tort and contract,” and partaking the characteristics of both. The fact of the matter is this: product liability law fundamentally is premised upon notions of both tort and contract. We have several warranty theories that you might utilize as a plaintiff’s lawyer in a product liability case. The first is the so called express warranty. We have this Baxter case:
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Baxter v. Ford Motor Co.
WA, 1932
1. “Trick or Treat” case;
2. Express Warranty
If you are a plaintiff’s lawyer in this case, you are bringing a claim based upon the breach of an express warranty/misrepresentation. Your client bought a car from Ford and among the representations in their sales catalog was that there was shatter proof glass. The plaintiff is driving along, a pebble flies up, hits the windshield and he is rendered blind in left eye and impaired in the right. You file a lawsuit premised upon a breach of warranty and misrepresentation. In most trials like this, the trial judge will set aside a morning in which the judge hears what’s called in limine motions. These motions are an attempt by the court to define the parameters of the trial. You make an in limine motion to exclude part of a deposition transcript or to keep certain documents out of evidence. In this case the defendant makes what I would imagine is an in limine application to exclude the catalog materials that have the misrepresentation.
When that motion arrives in your office, you shake your head and say, the big three are tough litigators. I’ve got to waste three hours of my day and file a response to this motion. This motion is so frivolous that I’m going to seek costs. I’m going to see if I can get the judge to have Ford pay for the costs associated in my defending this motion because that’s how bizarre you would think this motion was. You’ve got a misrepresentation case and they want to exclude the misrepresentations. So, you show up to argue the motion – motion granted. Trick or treat. Things don’t turn out well in the first trial. Page 724: verdict for the plaintiff.
I have put two theories together here. They are certainly closely related but I think there are some nuanced differences.
1. UCC 2-313 is the section on express warranty.
2. 402(b) of the Second Restatement is the section on tortuous misrepresentation.
A sneak preview into misrepresentation so we can bring it into this context:
SIX ELEMENTS OF MISREPRESENTATION:
1. A misrepresentation of
2. a material fact,
3. made with an intent to induce reliance (reel you in),
4. actual reliance,
5. reasonable reliance,
6. and damages.
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When you look at the courts discussion in Baxter they are really indirectly, at first, and directly, later, really talking about reliance. For example, page 723: An ordinary person would be unable to discover by the usual and customary examination of the automobile whether glass which would not fly or shatter was used in the windshield. Henke: In other words – reliance. It would be reasonable for a consumer to believe this representation.
Page 723: The appellant under the circumstances shown in this case, had the right to rely upon the representations made by respondent Ford Motor Company relative to qualities possessed by its products, even though there was no privity of contract between appellant and respondent.
In Baxter the court is basically acknowledging the presence of the prima facie elements of a misrepresentation claim. This shatter proof glass representation was capable of being reasonably relied upon.
UCC 2-313 (express warranty): The argument I want to make to you is I think although the elements of express warranty and misrepresentation are similar, I think they are slightly different and here’s how – Actual reliance is not necessarily needed under 2-313.
2-318 is the section of the code that says that 2-313 and 2-314 extend to members of the household. So, if Mrs. Henningsen is driving that car and she goes into a wall and one of her kids is injured, the same warranties that apply to Mr. and Mrs. Henningsen apply to members of their household. Certainly members of the Henningsen household did not actually rely upon those warranties. They weren’t even there when the contract was signed. It has always been my belief that the reliance element can be more easily inferred under 2-313 than under 402B.
Section 2-318 extends the warranty to parties that had no part of the contract, seems to me to alleviate the necessity of proving actual reliance whereas under the misrepresentation claim you clearly have to show it.
There’s no question in the world that if you pursue a 402(b) argument, you have to show reliance. It is part and parcel of a misrepresentation claim. When we talk about 2-313, we talk about the express warranty becoming a basis of the bargain – kind of that generic contract discussion but we don’t necessarily talk about actual reliance.
These two theories are very similar. The evidence that you would introduce to prove one you are probably going to introduce to prove the other but I do think you can make that nuanced argument.
What does the defendant say in response to an express warranty argument? About the only thing that they try to say is discussed in Note 3 – the old puffery argument. Klages case: manufacturer’s argument that representations were mere puffery and that the
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plaintiff did not justifiably rely upon them rejected. The puffery defense is a very tricky one for a defendant to make. Think about the Baxter case. You’ve got the lay jury sitting there listening in the second trial and looking at representations made to the Baxters. If the Baxters relied upon those, maybe those lay jurors would be inclined to do the same thing. So for some corporate lawyer to stand up in front of a jury and say, ladies and gentlemen, c’mon, shatter proof glass?
An express warranty claim is a beautiful thing for a plaintiff’s lawyer in a product liability case. If you get an express warranty that is breached and causes an injury, let me say this, I believe in many ways, it is stricter than strict liability. There is very little by way of defense that a company can say to try to walk away from its express warranties.
IMPLIED WARRANTY OF MERCHANTABILITY
Henningsen v. Bloomfield Motors, Inc.
NJ, 1960, J. Francis
We’re not told why but the negligence counts were dismissed This car presumbably was made in Detroit and shipped out to Bloomfield, New Jersey. If you are the Henningsens, what problems do you face in trying to prove negligence? Who knows how this happened. If you were to ask the court for an inference of negligence based upon res ipsa loquitur, what might be the weakness in that argument? Exclusive control. This was manufactured 700 miles away, no telling how many entities have touched it and when you get to that annoying element of res ipsa which requires exclusive control over the dangerous instrumentality maybe that breaks down. That’s a thematic weakness in some of these products liability claims – where something is manufactured in one part of the country and travels half way around to the next part. The negligence claim falls apart here. We have to know chronologically we’re still three years away from Justice Traynor’s famous statement of strict liability in Greenman. Negligence doesn’t work, the sun is not yet up on strict liability so in their absence we get into this implied warranty of merchantability.
In addition to the four corners of the contract, there’s this implied warranty that surrounds it like a penumbra. There’s no implied of merchantability in the contract itself but when you are given a contract of sale, some where in the shadows surrounding that contract is an implied warranty that it will function for the use for which you have purchased it.
In the modern context the implied warranty of merchantability is codified at section 2-314 of the UCC. The reason you do not see 2-314 in Henningsen is because New Jersey did not adopt the UCC until a little bit more than a year after this case.
Henningsen did not read the fine print in the contract. Justice Francis gets around that. This is a classic contract of adhesion. We have a standardized form contract, we have two parties totally on unequal bargaining plains. They are not savvy enough to know the gravity of the contract.
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What Chrysler is basically saying is, if you have a defective steering wheel column and you hit a wall and you’re catastrophically injured, you get a new steering wheel column. That’s the net impact of these disclaimers.
Page 727: Echoes of Cardozo. Page 728: Thus, where the commodities sold are such that if defectively manufactured they will be dangerous to life or limb, then society’s rests can only be protected by eliminating the requirement of privity between the maker and his dealers and the reasonably expected ultimate consumer.
Page 730: The task of the judiciary is to administer the spirit as well as the letter of the law.
Henke: Never lose sight of the fact that judges are both arbiters of law and chancellors in equity.
Judges have an obligation to enforce and interpret statutes and add whatever development they see fit to the common law and yet beyond the strictures of statutes and common law, judges have an inherent power to do what is fair and equitable. There is no question that this opinion is steeped in equity and fairness. So many of these early product liability decisions are equitable decisions.
We’ve already talked about equity with the discovery rule created by judges tolling statutes of limitations to allow otherwise time barred cases.
UCC provisions that you have to be careful of:
1. 2-316 Disclaimers. The general rule under 2-316 is basically this: If a disclaimer is both conspicuous and understandable it will be generally enforced. Even if Henningsen had read the contract, who knows whether he would have ever discerned their existence. Disclaimers are freely enforced. Total Disclaimer.
2. 2-607 requires that an aggrieved buyer give the seller reasonable notice of breach. Cross reference this with § 1769 of the California Code in Greenman – defendant argued he didn’t give timely notice. California had not adopted the UCC but the California Code was very similar. So with reasonable notice of breach you can just sit back and not take action. This may be a booby-trap for a consumer.
3. 2-725 SOL. The SOL to bring a claim under UCC is 4 years from date of delivery and significantly the equitable discovery rule does not apply to the four year statute under the UCC.
4. 2-719 is the section that governs limitations on consequential damages. For example, in the Spring Motors case there were all kinds of limitations of damages in that
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case. Ford said that if Spring Motors had any lost profits, those would not be compensable. If Spring Motors had repair costs – none of that is fair game. Limitations on Damages. 2-719(3): Of some help to consumers: limitations on consequential damages in the case of consumer goods is prima facie unconscionable. If Chrysler tries to limit consequential damages in a case like Henningsen, chances are that will be found prima facie unconscionable but you still have 2-719.
If the fact pattern that you are analyzing is a Personal Injury case, you do not need to discuss the implied warranty of merchantability. It is my contention that in 2006, a plaintiff’s lawyer in a products injury or products case should confine their theories of recovery to negligence, strict liability and if applicable the express warranty.
Do not unnecessarily put yourself into this UCC world.
If you’ve got strict liability in tort where none of these booby traps apply, why put yourself there? For the opposite view Note 3 736 after Greenman: I don’t see putting your client into this world in a personal injury case. Altogether different if it’s an economic loss case:
If you’re representing a plaintiff for direct economic loss meaning, they bought a product and it is defective – it didn’t hurt them or destroy their property, it’s just a bad product. They paid full value for it and it’s crummy. That case is a UCC case.
STRICT LIABILITY IN TORT
Escola v. Coca-Cola Bottling Co. of Fresno (Not in book)
CA, 1944, J. Roger Traynor concurring
Escola, was a waitress in a restaurant. Coca Cola’s driver delivered several cases of Coca Cola to the restaurant, placing them on the floor. Immediately before the accident, plaintiff picked up the top case and set it upon a near by ice cream cabinet in front of the refrigerator. She started taking out the bottles one by one and put them inside the refrigerator. After she had placed three inside and had moved the fourth bottle about 18 inches it exploded in her hand. It broke into two jagged pieces which severed blood vessels, cut nerves and muscles of her hand. It made a loud popping sound and dispersed glass and soda outward. The top portion of the bottle, with the cap remained in her hand, and the lower portion fell to the floor. Defendant’s driver testified seeing other bottles of Coca Cola explode in the past, and had found broken bottles in the warehouse of unknown cause.
Where the defendant had exclusive control over the item causing injury and the accident is of such a nature that it ordinarily would not occur in the absence of defendant’s negligence. Res ipsa loquitur applies as an inference of defendant’s negligence for the defective bottle at the time it was delivered, affirmed.
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Plaintiff must prove the condition of the bottle did not change after it left defendant’s possession. Evidence supports inference that the bottle was not damaged after delivery to the restaurant by defendant. The bottle was charged with gas under pressure by the defendant. There is an industry wide standard for testing the bottles. There is a duty on the bottler to discover defects through appropriate tests. When a defendant produces evidence to rebut the inference of negligence under res ipsa it is ordinarily a question of fact for the jury to determine whether the inference has been dispelled.
Traynor: A manufacturer incurs absolute liability when an article that he has placed on the market, knowing that it is to be used w/o inspection, proves to have a defect that causes injury. It is in the public interest to discourage the marketing of products having defects which are menacing. If such products find their way into the market, it is the responsibility of the manufacturer, even if there is not a showing of negligence. Consumers no longer approach products warily but accept them on faith, relying on the reputation of the manufacturer, who has sought to justify that faith by increasingly high standards of inspection, and a readiness to make good on defective products by way of replacements and refunds.
Henke on Traynor: Traynor said, don’t manipulate res ipsa like that, let’s call this what it is – the strict liability rationale. It took him almost 20 years but now the majority is willing to go along with his strict liability analysis.
Greenman v. Yuba Power Products, Inc.
CA, 1963, Justice Roger Traynor
Because of some defective set screws, the reverberations allow for a piece of wood to fly off and hit plaintiff straight in the head and he sufferers a bad injury. He waits 10 ½ months to notify the manufacturer. The manufacturer immediately points to § 1768 which requires that the manufacturer receive reasonable notice of breach. If this were an implied warranty of merchantability case, they’d have a pretty good argument. But that’s when Traynor makes the phrase:
The notice requirement…is not an appropriate one for the court to adopt in actions by injured consumers against manufacturers with whom they have not dealt…it becomes a booby-trap for the unwary.
A manufacturer is strictly liable in tort when an article he places on the market, knowing that it is to be used without inspection for defects, proves to have a defect that causes injury to a human being.
Page 733: Reasonable Alternative Design. That is essential in design defect claims and you get a vague reference to that here. If you fail to prove a reasonable alternative design, you don’t get to a jury.
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Page 735: Again, echoes of Cardozo from MacPherson:
Although in these cases strict liability has usually been based on the theory of a warranty, the recognition that the liability is not assumed by agreement but imposed by law.
What’s very interesting about Greenman is Traynor makes that sweeping statement about strict liability but he carefully closes out his opinion:
To establish the manufacturer’s liability it was sufficient that plaintiff proved that he was injured while using the Shopsmith in a way intended to be used (Suggesting that misuse may negate the strict liability claim) as a result of a defect in design and manufacturer of which plaintiff was not aware (Suggesting that notions of contributory or comparative negligence may temper the strict liability claim) that made the Shopsmith unsafe for its intended use.
That statement is a lot more measured than the earlier one.
Two short years after Greenman, the ALI drafts this remarkably influential restatement of strict liability § 402A. Basically it’s a restatement of Greenman.
Two important terms of art in 402A:
1. One who sells; What constitutes a seller of a product for purposes of strict liability?
Example: If you go to a breast implanting surgeon and he does numerous implants every week and has a bulk-sale discount with Dow Corning to only do Dow implants. And that implanting surgeon gives you a defective implant that ruptures, should that surgeon be held strictly liable? Are they a seller of a product? Who knows? The word seller is not always obvious.
2. any product, Is an animal purchased at Meijer’s considered a product? The third Restatement says yes.
Example: If you buy a hamster at Meijer and it give you a communicable disease, is Meijer liable? Yes, pets are products for strict liability treatment.
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…in a defective condition unreasonably dangerous. That statement has not withstood the test of time. You’ve got to show it’s defective and it’s really bad. Most jurisdictions today, when a judge is giving a jury instruction, they’ll say something like – you must find that the product was not reasonably fit, suitable or safe. That’s much more modern language.
…to the user or consumer (or to the foreseeable bystander. A bystander would have the same claim that you would have) or to his property.
The principals here apply equally to personal injury and property damage. strict liability is fair game for both.
(b) a frequent issue is, what happened to that product from the time it left the warehouse to the time you were hurt (Substantial Alteration Defense). Judge Traynor was talking about misuse toward the end of Greenman, 402A is talking more about alteration.
(2) an attempt to explicitly distinguish this theory from either negligence or warranty.
Note 5, page 736: combine with Note 8 on page 756.
Note 5: In a foodstuff case, strict liability can apply equally to either the foodstuff itself being defective or the container that holds the foodstuff. Either of those defects will be treated the same for strict liability purposes.
Note 8: Makes a distinction – “foreign-natural” test. In some jurisdictions strict liability in food cases is limited to situations where the defect is something foreign (piece of glass, mouse, worm, etc. in a can). Those are strict liability cases. There are some jurisdictions that limit strict liability to situations where a foreign substance gets into your food as opposed to a natural by-product (fish bone in chowder, pits from cherries, shells in nuts, etc.). Those are negligence cases. You must prove negligence in the preparation of food in order to recover.
The majority of jurisdictions generally apply strict liability in both contexts.
Strict liability will often be your friend if you cannot pinpoint where something went wrong, and if res ipsa loquitur doesn’t work because of lack of exclusive control
Note 8D: The manufacturer is in a better position to protect against harm, by insuring against liability for it, and, by adding the cost of the insurance to the price of his product, to pass the loss on to the general public.
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It’s the cost of doing business. Companies are better situated to plan for and anticipate accidents.
Note 9: Are companies withholding potentially beneficial products because of the specter of lawsuits?
Spring Motors v. Ford (Handout)
NJ, 1985, J. Stewart Pollock: Return dignity to the profession via pro bono work
Defendants, a motor vehicle manufacturer, its dealer, and a supplier of transmissions, challenged a judgment of the Superior Court, Appellate Division (New Jersey), which affirmed the dismissal of plaintiff buyer's breach of warranty claim and reversed the dismissal of tort claims, concluding that the action was not time-barred and that plaintiff could maintain its strict liability claim against all defendants.
Defects in transmissions installed in commercial trucks, caused plaintiff to sustain a loss in the benefit of its bargain and consequential damages. Plaintiff sought recovery for repair, towing, and replacement parts, as well as lost profits and a decrease in the trucks' value. The trial court perceived the matter as sounding in contract, and finding that plaintiff's action was barred by the four-year statute of limitations, granted summary judgment for defendants. The Appellate Division reversed finding that the action was one of strict liability in tort, not contract, and that the six-year period of limitations applicable for tort actions had not expired. The fundamental issue was whether plaintiff should have been restricted to its cause of action under the Uniform Commercial Code (UCC) or allowed to pursue a negligence and strict liability cause of action. A commercial buyer seeking damages for economic loss resulting from purchasing defective goods could recover from an immediate seller and a remote supplier in a distributive chain for breach of warranty under the UCC, but not in strict liability or negligence. Hence, the four-year period of limitations was applicable.
The judgment below was reversed because the court concluded that the plaintiff was restricted to its cause of action under the Uniform Commercial Code, that a four-year period of limitations existed, and that plaintiff's cause was time-barred.
Spring Motors is contracting with Ford to make these customized trucks. Among the specifications are these Clark Transmissions. Dates are very important in this case. The trucks are delivered to Spring Motors in November, 1976. By as early as February, 1977 the problems begin to manifest themselves with the transmissions. Throughout the course of 1977 and 1978 there is a constant back and forth between Spring Motors, Ford and Clark about these transmissions. It gets to the point where Spring Motors, who had earlier leased the trucks to Economic, basically says to hell with it and they sell the trucks to the lessee for a highly discounted price.
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They decide to approach their attorneys about this matter in December of 1980. A few weeks ago we talked about how important it is to know how to characterize a lawsuit for purposes of statutes of limitations. This lawyer does a little research about this freak hybrid, born of this illicit intercourse between tort and contract. There’s an ambiguity in the law as to whether this case should sound in contract or tort.
We are going to get the court to articulate when a case is particularly held under the UCC or in tort.
Know these points:
1. Know your jurisdictions applicable SOL so that when a client approaches you, you are equally conversant with potentially multiple theories on which to rest your case.
2. This is a case that we would characterize as a products liability lawsuit involving direct economic loss. This is our first non personal injury products case that we have read. It’s a case of economic loss meaning simply that you paid full value for a product that in its defective condition is not worth as much. In a case of direct economic loss that is litigated between two commercial entities, Justice Pollock concludes that the appropriate remedy is under the UCC. In every jurisdiction today, point number 2 is valid. If you are doing a products liability case in which two commercial entities of relatively equal bargaining power are litigating over economic loss, you’re going to bring that case as either a 2-314 or a 2-313.
3. What about a situation in which you have a consumer and a commercial entity for direct economic loss? The majority of jurisdictions also treat that case under the UCC. This is where Pollock talks about the cross-pollination which he echoed. In most jurisdictions the Seely v. White Motor Co. case is controlling law. In the absence of personal injuries or property damage strict liability was inapplicable.
4. The court in this case ultimately concludes that there is no claim. But Justice Pollock in dicta goes on to discuss what if they had not been time-barred. Could Spring Motors sue Ford and/or Clark directly? Had they not been time-barred, would privity of contract been a bar? He said no. Justice Pollock acknowledges the fact that most of the cases that abolished privity were personal injury cases. The question now was, should we also abolish privity in a case of economic loss? He said yes. A good number of jurisdictions do not agree. They still require privity for economic loss.
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5. Make a general distinction between the dynamics of this case and the dynamics of Henningsen. This case talks a lot about these sections of the UCC that we talked about in the beginning of class – disclaimers, notice of breach, limitations on consequential damages. Pollock tells us that even if Spring Motors had not been time-barred here, the court would have enforced all of these disclaimers and limitations. These disclaimers and limitations that were so suspect in Henningsen, where we had a contract of adhesion, those would have been perfectly fine in this case. In fact Pollock chastises Spring Motors for trying to make a better deal now than the one they originally entered into. With this fifth point let me utter a phrase that hopefully has been uttered to you in contracts – liquidated damages. J. Pollack says what distinguishes this case from a case like Henningsen is, these parties can sit down and bang out terms. If Spring Motors wants to recover from lost profits down the road, fine. They can ask for that in a liquidated damage clause at the inception of the contract. Mr.’s MacPherson, Greenman and Henningsen do not have the same ability to bargain for terms as Spring Motors.
6. Page 15 of decision:
The demarcation of duties arising in tort and those arising in contract is often indistinct, but one difference appears in the interest protected under each set of principles. The purpose of a tort duty of care is to protect society's interest in freedom from harm, i.e., the duty arises from policy considerations formed without reference to any agreement between the parties. A contractual duty, by comparison, arises from society's interest in the performance of promises. Generally speaking, tort principles, such as negligence, are better suited for resolving claims involving unanticipated physical injury, particularly those arising out of an accident. Contract principles, on the other hand, are generally more appropriate for determining claims for consequential damage that the parties have, or could have, addressed in their agreement.
Spring Motors and Ford should not leave their damages to chance. They should sit down and hammer out a liquidated damage clause. If I fail to do that, how dare I ask the court to rewrite my contract for me and give me a better deal?
Torts are unanticipated and cannot be planned for.
Q & A
520 Analysis: Fundamentally to determine whether negligence is an adequate theoretical foundation for your case or whether the facts of this case warrant the imposition of strict liability.
I would identify all six factors of Section 520
Also, identify the seven risk utility factors. These tests go into jury instructions.
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Talk about those factors and list the inspiration for those factors and then go into the facts. Factor C is very important.
I usually ask you to write a memorandum of law which is an exploratory piece of writing, it’s not arguing strenuously. Here’s why negligence may be appropriate, here’s why strict liability may be appropriate. You will conclude with something like, if someone tightened a valve like in Indiana Harbor Belt…there’s not strict liability there. Negligence is a perfectly acceptable regime.
After going thru the prima facie case, go thru defenses. 519(2) – wrong harm, wrong foul like in the minks case. Was there an intervening act of God, was the plaintiff comparatively at fault?
Plaintiff bears the burden to prove proximate cause and you could attack plaintiff’s proximate cause as a defense.
Booby traps are the difference between strict liability and implied warranty of merchantability.
In a design defect, strict liability and negligence are functionally equivalent. We’ve all acknowledged in the modern context that fault and reasonable care still seeps in.
If a company designs a product that is less safe than it could have been because there was a reasonable technological alternative design – if they make that decision, they’re negligent. We could also say if they make that decision and you’re injured, they’re strictly liable.
But practically speaking, the way you litigate that case is going to be very similar under both situations but in manufacturing defect it’s really different. When that sealed container is put on the shelf at Kroger’s, and you buy it, bring it home and you get cut, you do not have a negligence claim against Kroger. They did not breach any duty to you by failing to ascertain a latent defect.
If you didn’t have a strict liability claim there, you really would not have a claim.
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REVIEW FROM LAST WEEK
So far we have focused on theories of recovery that you might pursue in a products liability case. We began with what I think probably remains the most important theory in product liability cases and that’s good old fashioned negligence. Keeping in mind that negligence is “hot” and strict liability is “cold”. If you can show actual knowledge on the part of a company – knowledge of danger and a failure to act to act in the face of that knowledge, it’s a very, very good case from a plaintiff’s standpoint.
But strict liability to some degree exists because you can’t always show negligence. In the Henningsen case, the plaintiff’s negligence count was dismissed. Why? Because they couldn’t show where the culpability was. Res Ipsa Loquitur is often an uneasy fit in a products liability case because the product was manufactured some where and shipped halfway across the country so when you get into that element of exclusive control and possession, the res ipsa loquitur inference often breaks down. If you can’t show any real fault, especially in manufacturing defect cases, well then maybe you fall back on a strict liability theory. But negligence is a great theory.
Your discussion of negligence in this course is different from in Torts I. I want you to talk about it in a strategic way. If you have a fact pattern that indicates that documents have been unearthed that this company knew of a hazard and failed to warn. They had actual knowledge and they didn’t warn – I want you to be able to tell me that, that is a beautiful negligence case and that’s the theory to be relied upon.
WARRANTY THEORIES
We mentioned two primarily:
1. UCC 2-313 (express warranty); and
2. UCC 2-314 (implied warranty of merchantability).
If you have an express warranty – shatter proof glass for example (Baxter case) and in fact that warranty is breached, this is an excellent case for a plaintiff in products liability. You don’t see many express warranty cases but if you have one, go with it. In many ways an express warranty is stricter than strict liability. What is it that a manufacturer says – that was not a real representation, that was mere puffery, just trade talk. That is a very uncomfortable argument for a defendant to make. To talk to a lay jury and say this plaintiff should have never taken stock in the warranty that we gave him, that’s an awkward position for a defendant to be in. Express warranty is a wonderful theory if you have it.
2-314 is probably your most important theory in case of direct economic loss like Spring Motors. If you have a defective product which has not injured you, nor damaged your
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property – it’s just a bad product, then you should talk about the UCC 2-314. As I suggested however, I would stay away from 2-314 in a personal injury case. Why go there when you have negligence or strict liability? And it all goes back to what Justice Traynor talked about in Greenman – booby traps and pitfalls for the unwary. If you decide to pursue a UCC theory like 2-314, then you have to be mindful of 2-607 (reasonable notice of breach), 2-316 (disclaimers) 2-719 (limitations on consequential damages) and 2-725 (the four year SOL).
If your fact pattern in a products liability scenario for me is a personal injury case, you can confine your discussion of theories to negligence, strict liability and if applicable, the express warranty. But if it’s a direct economic loss, that’s when you should be all over 2-314.
STRICT LIABILITY IN TORT
The Greenman case and section 402A of the Second Restatement along with various sections of the Third Restatement that we will continue to discuss today. Strict liability in tort is most significant is manufacturing defect cases. When those particular products are defective, when one product in an otherwise good batch goes awry because if a manufacturing flaw or because there are some bad raw materials involved – that’s when you are going to need strict liability because you are often suing retailers, suppliers and other entities in the chain of distribution who have not been culpable in any way. They’re just retailers. They sell you a product, it comes in a sealed container and it turns out to have a latent defect. Your negligence claim against them would fail. They have not breached any duty to you by failing to ascertain a latent defect. On the other hand they are strictly liable in tort as a party in the chain of distribution.
I think it is absolutely reasonable to state that strict liability and negligence are functionally equivalent in design defect and warning defect cases.
The proofs that you would introduce in a design case or in a warning case are the same for negligence and strict liability. I just don’t see any difference between the two
MANUFACTURING DEFECTS
The definition most valuable to you is Restatement (Third) § 2(b): Design defect.
Of the three defects, the one that presents the fewest challenges and quite frankly the fewest analytical avenues are manufacturing defect cases.
Rix v. General Motors Corp.
MT, 1986
1. Plead out manufacturing defect
2. Plead out a design defect.
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A rear-end hit case. The plaintiff pleads out two types of defects:
1. A manufacturing defect in the brake tube; and
2. A design defect claiming that this vehicle should have had a dual braking system.
One of the hardest things to do in a manufacturing defect case is to show that the defect existed at the time it left the manufacturer’s control. There is a lot of dispute in this case on whether this defect existed originally or whether it came to exist after it entered the world.
This happens all the time in bad food cases. You get the bad food and you claim that glass was in it. How do you prove there was glass in there when it left Kroger’s? Or you drive that automobile and it hits a wall. How do we know that there was something wrong with the steering column when it left the manufacturer’s hands? Or that you didn’t misuse the product after in came into the world? I would suggest to you that the strategic reason for the inclusion of a design defect claim is the plaintiff’s lawyer’s anticipation of that argument.
Point 1: The strategy of the plaintiff’s lawyer
The plaintiff’s lawyer in this case probably said to himself, I’m going to have trouble in terms of proof on my manufacturing claim so let me dig a little bit deeper and let me see if I could also include a pleading on design defect suggesting that this entire product line is defective for not having a dual braking system. It’s an anticipation of a proof problem on the manufacturing claim.
Point 2: Crashworthiness looming in terms of severity
Page 740: There is an oblique reference to the crash-worthiness doctrine:
“The plaintiff maintains the accident would have been less severe or would not have happened had the truck been equipped with a dual system.”
One species of design defect is to say that a defect in design did not necessarily cause the accident but it enhanced the injury. Because your car was not crashworthy perhaps you are now more severely injured than you should have been.
Example: You are paralyzed now when you only should have had a soft tissue injury.
Point 3: Jury charge conference
This judge copied 402A and just recited it to the jury. It seems to be on the lazy side. If you’re trying a products case, if the judge doesn’t do it himself, you should ask for a jury charge conference. Good judges will seek out the lawyer’s ideas on what they might
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want the charge to look like. If you’re ever at a charge conference, don’t just give him something like this.
Page 742: Definition of a manufacturing defect: “An imperfection that inevitably occur in a typically small percentage of products of a given design as a result of the fallibility of the manufacturing process.”
Page 743, Note 3: The plaintiff was fearful that the manufacturing defect claim might be a hard one to prove because of how this product had been reconstituted after if left the manufacturer’s control.
1. You have to prove the defect existed when it left the manufacturer’s control; and
2. As a plaintiff you have to negate other possible explanations of why the accident happened, i.e. weather conditions, are there any skid marks suggesting she was speeding, did she bring the car in for regular preventative maintenance before the accident happened, any indication of any undue wear and tear or misuse on her part?
As you answer all of those questions, no, by negating other possible explanations for why this occurred, you are of course simultaneously making it more probable that your explanation is correct. You are probably using expert testimony to negate those other possible explanations – accident reconstruction, engineers, etc.
DESIGN DEFECT
O’Brien v. Muskin Corp.
NJ, 1983, J. Pollock
Point 1:
Don’t get waylaid thinking about what this jackass did - that’s not the point. The point is, can the issue of design defect go to the jury?
This was both a warning defect and a design defect claim. The trial judge felt that as a matter of summary disposition there was not enough evidence to go to the jury on the design claim and he limited the jury’s considerations to the warning issue.
We are before the New Jersey Supreme Court now on the propriety of the trial judge’s dismissal of the design claim. In the threshold determination of whether or not a defect exists, don’t get caught up in his conduct.
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And we know there is a battle of experts about the bottom of this pool. It’s a vinyl bottom presumably designed so that the user can slide if they land on the bottom as opposed to just landing abruptly and perhaps suffering a worse accident. Vinyl vs. this
type of latex – that’s the underlying dispute. Because it is a design defect claim, there is much more at stake. To some extent, if a manufacturer looses a manufacturing defect claim, so what? This one product was no good and you take a hit. On the other hand if a company looses a design claim, the integrity of an entire product line is now being maligned. And so the ramifications of losing a design defect claim are far more severe than losing a random manufacturing defect claim. If you lose one design claim, you might lose a lot. If a jury in New Jersey can sit down and basically say, this above-ground swimming pool has the best liner that we know of but you are still strictly liable – that’s a bad day for Muskin Pools.
Page 752:
“To the extent that risk-utility analysis, as it is known, implicates the reasonableness of the manufacturer’s conduct, strict liability law continues to manifest that part of its heritage attributable to the law of negligence.”
That is an insightful statement reminding us that strict liability and negligence are basically the same thing in these design defect claims.
Consumer Expectation Test:
There are about eight jurisdictions that use a separate consumer expectation test as the benchmark for design defect. What most jurisdictions do and what the Third Restatement has suggested and what I would expect all of you to do is to consider the consumer’s expectations as a part of your overall risk-utility analysis. A consumer’s expectations are basically set forth in Factor 6. Very few jurisdictions use this as a separate test and I utterly agree with that principal. I believe the Consumer Expectation Test is unrealistic. To make a consumer’s expectation the benchmark for whether something is designed properly, seems to me to impart in us much more wisdom than we have. When is the Consumer Expectation Test good? The more sophisticated the product, the more the Consumer Expectation Theory is rendered moot.
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Restatement (Second) of Torts lists these elements:
§ 520. Abnormally Dangerous Activities
In determining whether an activity is abnormally dangerous, the following factors are to be considered:
(a) existence of a high degree of risk of some harm to the person, land or chattels of others; (b) likelihood that the harm that results from it will be great; (c) inability to eliminate the risk by the exercise of reasonable care; (d) extent to which the activity is not a matter of common usage; (e) inappropriateness of the activity to the place where it is carried on; and (f) extent to which its value to the community is outweighed by its dangerous attributes.
RISK UTILITY FACTORS
(1) The usefulness and desirability of the product--its utility to the user and to the public as a whole. Would society be just as well of if it didn’t exist?
(2) The safety aspects of the product--the likelihood that it will cause injury, and the probable seriousness of the injury. Back to BPL.
(3) The availability of a substitute product which would meet the same need and not be as unsafe. 3 and 4 are the heart and soul of design defect. It is not enough in a design defect case to simply criticize. You have to criticize and suggest how it could have been better. If you can’t suggest how it could have been better, I think § 2(b) of the Third Restatement couldn’t be clearer in terms of the weakness in your case if you can’t do that.
(4) The manufacturer's ability to eliminate the unsafe character of the product without impairing its usefulness or making it too expensive to maintain its utility. Is it technologically feasible to make this product differently? What about the cost? Defendant counters with, it solves the problem but it creates another one. Does the alternative design just correct the old problem or does it unfortunately create other problems? Will the alternative design frustrate the very purpose for which you got the product? Motorcycle and VW bus examples – no liability. You’ve got to be all over alternative design on an exam.
(5) The user's ability to avoid danger by the exercise of care in the use of the product. The user in this factor is not the plaintiff. It’s the reasonable hypothetical user –not the expert or Olympic diver. Discuss subjective knowledge and abilities in defenses.
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(6) The user's anticipated awareness of the dangers inherent in the product and their avoidability, because of general public knowledge of the obvious condition of the product, or of the existence of suitable warnings or instructions. If applicable, talk about consumer’s expectations. Is this a simple product? Are the dangers open and obvious? So the consumer’s expectations are meaningful? The user here is not your client.
(7) The feasibility, on the part of the manufacturer, of spreading the loss by setting the price of the product or carrying liability insurance. Unlikely to require much discussion unless you have financial data about the company.
Custom in the industry vs. State-of-the-art:
By implication, risk-utility analysis includes other factors such as the "state-of-the-art" at the time of the manufacture of the product. The "state-of-the-art" refers to the existing level of technological expertise and scientific knowledge relevant to a particular industry at the time a product is designed. Although customs of an industry may be relevant, because those customs may lag behind technological development, they are not identical with the state-of-the-art. A manufacturer may have a duty to make products pursuant to a safer design even if the custom of the industry is not to use that alternative.
Note 5: State-of-the-art. If you have information about state-of-the-art in your fact pattern, use it in your risk-utility test. In some jurisdictions, custom in the industry is a defense.
Note 6: Open and obvious danger. Most jurisdictions have rejected it as a bar and consider it in risk-utility.
Note 7: What do we do with pharmaceuticals? Comment k of 402A, the unavoidably unsafe product analysis. Manufacturer of a pharmaceutical designs a vaccine and we know that that vaccine is going to help 95% of the public but maybe 5% have an allergic reaction or get the disease. Should pharmaceutical companies that make unavoidable unsafe yet effective in many ways, should they be subject to the same kind of strict liability analysis that a lawnmower manufacturer is? Comment k said no. As long as that product was accompanied by a good warning, that there should not be strict liability if in fact some people are injured because the product was unavoidably unsafe. It’s primarily good but some unfortunate people will be harmed. You should really think of the pharmaceutical cases as a warning defect. Do note at the bottom of note 7. Strict liability is certainly available if there’s a manufacturing defect case. You’ve got a bad batch/tainted batch of drugs – straight up strict liability. But if it’s a design issue then probably not a strict liability claim.
Note 8: Some jurisdictions apply strict liability to bad food only if it has a foreign substance in it. Whereas if the substance is a byproduct (bones), a number of jurisdictions treat that as a negligence case. Some have abandoned it and hold food companies strictly liable.
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Note 10: Crash-worthiness doctrine. The essential argument is not that the defect caused the accident but that the defect enhanced the injury.
Point 1: The Crashworthiness doctrine stems from the recognition that an automobile accident is a foreseeable misuse of a car. Accidents happen all the time. An accident is not an intended use of your car but it is a foreseeable misuse. The duty to design a crash worthy car stems from the fact that accidents are foreseeable misuses. That’s where the basic duty comes from.
Point 2: Burden of Proof. If you’re arguing in a crashworthiness case that you are paralyzed and you only should have had whiplash, is it the plaintiff’s burden to prove that but for the defect I’m only minimally injured and instead I’m paralyzed or does the defendant bare the burden that the alternative design you suggest, it wouldn’t have helped
and you’d still be in the same condition given the dynamics of this accident. Who has that burden of either proving or disproving the enhancement? Third Restatement Section 16 puts the burden on the defendant. If the defendant is unable to prove that enhancement – if they are unable to divide up the harm, they are on the hook for the severe injury. A majority of jurisdictions follow the Third Restatement on this.
Point 3: Should the plaintiff’s conduct in causing the accident count against him in crash worthiness case? If you were drunk and you drive into a tree. Your door is not sufficiently reinforced. Should the fact that you were drunk be something the defendant could use against you? I would argue no, because accidents are foreseeable drunk or not. Accidents happen, let’s see how the car reacts. Under the Third Restatement and the majority of jurisdictions, plaintiff’s conduct is fair game for the defendant to raise in crash-worthiness.
Point 4: These cases often involve that issue where reasonable alternative design made defeat the very nature of the vehicle. It comes up a lot in crashworthiness cases.
These are the most expensive cases to litigate. You divide up the injury in cases where the plaintiff did not wear his seatbelt.
WARNING DEFECT
Campos v. Firestone Tire & Rubber Co.
NJ, 1984, J. Pollock
Portuguese immigrant working a tire changing machine gets injured. Plaintiff brings an inadequate warning claim. The plaintiff’s expert testifies that due to the nature of the industry, there should have been pictorial warnings instead of written ones.
Set up question from deposition: Is it better than the pain caused by a prior injury in terms of suppressing his instincts for putting his hands in the cage? Answer: No.
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This court says the obvious danger is merely one element. Most jurisdictions have found no duty to warn of obvious dangers or of risks that are generally known. You should indicate both positions here. I think there are enough jurisdictions that treat open and obvious like this court does. There is a significant number of jurisdictions that treat open and obvious as just a part of the analysis on whether there is a duty to warn.
You should not apply the risk-utility test to a warning defect. The risk-utility test should be limited to design defect claims.
Firestone admitted that they had the non-delegable duty to warn.
“That preexisting knowledge might negate a claim that the absence of a warning was a cause in fact of plaintiff’s injury.” I cannot tell you how many warning cases fall apart on causation (Graves case). Was the inadequate warning a cause in fact? Probably not – it’s not enough to prove defect.
If you are analyzing a warning defect claim you can say negligence and strict liability are functionally equivalent in warning and design cases or you could use Justice Mosk’s theory that the two have converged. Bottom line: these cases are all about fault. What did a company know, when did they know it and is this warning adequate to convey the risks they knew.
Note 3: Virtually all courts still apply a fault-based standard.
Note 4: If a company has the option of using a reasonable alternative design, can they instead insulate themselves by putting a warning on their product? Under the Third Restatement, a warning is not a substitute for a reasonable alternative design.
Note 7: If a product is dangerous only to hypersensitive persons, do manufacturers have duty to provide warnings? Most jurisdictions impose a duty to warn if the ingredient is one to which a substantial number of persons are allergic.
Note 8: Warning pollution. Might the proliferation of warnings in the obvious danger situations dilute the impact of necessary warnings? Absolutely. At what point do good/necessary warnings become diluted by, and hence, inadequate because there’s too much?
Note 9: Inadequate warning is a jury question.
Note 10: The sophisticated user. The idea is relevant to both design and warning claims. In many jurisdictions sophisticated user is an affirmative defense to be pleaded in the defendant’s answer. Is that an issue in the duty to warn? Absolutely. If you are analyzing a fact pattern and something suggests that a particular user is sophisticated, that may be an important issue.
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*Note 11: Learned Intermediary Rule. This is an exception to the non-delegable duty of a manufacturer rule. Generally speaking a pharmaceutical company discharges its duty to warn by warning the prescribing physician who acts as a learned intermediary between the company and the patient. This is an example of an acceptable delegation of duty.
Exceptions:
1. Mass immunization exception. Pharmaceutical company cannot rely on intermediary. They have to warn people directly.
2. Oral contraceptives exception. Must warn directly because physicians are more actively involved in the decision to use pill. Physician has a passive role.
3. Direct marketing. The days of Norman Rockwell medicine are dead. If there is that kind of direct to consumer advertising, the company cannot hide behind the learned intermediary exception. There is a duty to warn directly. Perez v. Wyeth.
Note 13: Should this doctrine be extended to the workplace? If a manufacturer of a punch press has the choice of either sending folks into the field to instruct the users on safe use or they say, here are some pamphlets, hand them out. I would be very cautious to extend the Learned Intermediary Doctrine beyond physician/pharmaceutical scenario.
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Notes on Page 764: Issues in Warning Defects
Note 14: Presumption the Warning will be read and Heeded. 402A comment j said if a manufacturer gives a warning on a product they are entitled to a presumption that it will be heeded. The flipside to comment j: Plaintiff’s argue that if a defendant is entitled to a presumption that a warning will be read and heeded when it’s on a product, if there’s no warning or a bad/inadequate warning, why shouldn’t I get a presumption that had there been a warning on the product, I would have read and heeded it. The burden shifts to the defendant that you would have read this warning. The question becomes, how do you rebut the heeding presumption? As in Graves, do you smoke? Speeding Tickets? Drink excessively? All of that evidence is fair game to rebut that presumption. But by getting the heeding presumption you may be opening Pandora’s Box. Many jurisdictions have adopted this reverse heeding presumption.
If the defendant does not rebut the presumption, in essence, you win the case on proximate cause.
Note 15: Post-Sale Duty to Warn. § 10 of the Third Restatement (in supplement) contemplates a post-sale duty to warn:
(a) One engaged in the business of selling or otherwise distributing products is subject to liability for harm to persons or property caused by the seller’s failure to provide a warning after the time of sale or distribution of a product if a reasonable person in the seller’s position would provide such a warning.
(1) the seller knows or reasonably should know that the product poses a substantial risk of harm to persons or property.
Let’s say it’s a pharmaceutical product and all of a sudden the manufacturer learns of a catastrophic side-effect. Section 10 contemplates that there may be an on-going post-sale duty to get the word out. The duty to warn may not end the moment that product is released into the world. How do you discharge that duty? How do you find all the people that may be impacted?
Note 16: Post-Sale Duty to Recall. Traditionally, product recall has been a function of federal administrative agencies rather than the tort system. Vioxx voluntarily recalled their drug.
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DEFENSES
PLAINTIFF’S CONDUCT
Daly v. General Motors Corp.
CA, 1978
This case remains a remarkably influential case in this area. § 17 of the Third Restatement (in supplement) in many ways mirrors the Daly case:
(a) A plaintiff’s recovery of damages for harm caused by a product defect may be reduced if the conduct of the plaintiff combines with the product defect to cause the harm and the plaintiff’s conduct fails to conform to generally applicable rules establishing appropriate standards of care.
(b) The manner and extent of the reduction under Subsection (a) and the apportionment of plaintiff’s recovery among multiple defendants are governed by generally applicable rules apportioning responsibility.
Daly was not a model citizen. He’s not wearing a seatbelt, the door is not locked and he’s intoxicated. Let’s march thru the court’s opinion.
1. Comparative fault and strict liability. They are on two different wavelengths. The court addresses this by saying, yes there are some semantic difficulties but we have adopted comparative fault in this jurisdiction and we think that jurors can get past the semantic inconsistencies and can treat plaintiff’s conduct for purposes of strict liability just like they would in any other negligence claim. California adopts comparative fault principals as the benchmark for strict products liability and that is now today the majority position in this country. It is also the position of the Third Restatement in § 17.
If you practice in a modified comparative fault jurisdiction, the 50% greater than less than approach; take those principals and apply them to strict liability case the same way that you would in any other case. California is a pure comparative fault jurisdiction.
Henke: I am not interested in seeing much discussion about assumption of the risk. The fact of the matter is, if you practice in pure comparative fault jurisdiction where the jury can say to the plaintiff that he was 90% at fault – the plaintiff still gets 10%. California like many jurisdictions collapsed assumption of the risk into their pure comparative fault system.
One way for you to use plaintiff’s conduct against him in a products case is traditional comparative fault principals. I would want to discuss the Daly case a little bit as well as indicating that section 17 of the Third Restatement is basically a restatement of the Daly principals.
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402A (n): Under comment n, the ALI said that the only kind of plaintiff’s conduct that would impact their recovery in a strict liability case was conduct that arose to the assumption of the risk. Mere carelessness, mere negligence, inattention – none of that type of conduct could be considered by the jury against the plaintiff when the standard was strict liability. Sandy v. Bushey Unless the guy was kicked by the horse had somehow voluntarily assumed the risk, his conduct was irrelevant. But under comment n, if the plaintiff’s conduct rises to that level, it’s a total bar to recovery. A small minority still follows comment n, the all or nothing approach to the issue.
Suter Rule: Suter v. San Angelo Foundry. In this case, the equipment had been sabotaged by the employer. Mr. Suter – uneducated without a lot of options continues to work on the product in the face of the danger and of course he is injured. The manufacturer tries to bring up his conduct. The court said this: in a fact pattern like this, “If a worker is at his assigned task with no meaningful choice but to proceed in the face of known danger, his assumption of the risk will not be counted against him because the law should recognize his inability to take care of himself.”
The Suter Rule is not a majority rule.
For an EXAM, if analyzing a fact pattern for me I would want to see a reference to the Suter Rule. Perhaps the plaintiff could get around his comparative fault by making this argument.
The Daly case recognizes that especially with the advent of comparative fault principals, why should we not allow a jury to consider that in conjunction with any defect in the product?
MISUSE
Two typical fact patterns that comes up with misuse:
1. Extension of the use
2. Total misuse altogether
Larue is a total misuse of a product.
Crashworthiness: A company has a duty to manufacture a product for both its intended uses and for its foreseeable misuses. Because an accident is a foreseeable misuse of a car, Ford needs to make a crashworthy car.
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Ford Motor Co. v. Matthews
MS, 1974
Page 775: “In strict liability cases the same duty to foresee certain unintended uses has been recognized, and ordinarily the factual issue of the foreseeability of a particular use has been left to the jury.” Larue. That issue of foreseeable misuse should be treated as a question of fact for the jury.
Several possible ways misuse can be raised by a defendant:
1. In many jurisdictions misuse is an affirmative defense. The defendant must include it in their answer to the plaintiff’s complaint.
2. A causation issue. In essence maybe it’s not an affirmative defense but maybe the defendant argues that the misuse breaks the chain of causation. Even assuming for a moment there was some defect in the product, it was not the defect that caused the accident but instead the misuse.
3. To treat it as a matter of duty. In a case like Larue, the manufacturer has no duty to make this product in anticipation of such a bizarre usage.
4. Issue of defect. Maybe there was no defect in the product at all. The sole exclusive explanation for this accident is the unforeseeable misuse.
Misuse is very important and frequent contributor to this debate. It is very common that somehow a consumer misuses a product.
CAUSATION
Graves: Warning inadequate but no causation.
Campos: Warning inadequate but was not a substantial factor.
A lot of times the plaintiff’s conduct becomes an intervening and superseding cause of the accident. The bottom line: of all the ways to trip up a plaintiff with his conduct, causation is the best one. If all you get is out of the plaintiff’s conduct is comparative fault, you’re simply getting a percentage reduction. If you can use the plaintiff’s conduct to break the chain of causation the case is over.
Most product liability lawsuits to some extent will implicate plaintiff’s conduct. You have to be ready for that in defending a products liability claim.
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SUBSTANTIAL ALTERATION OF PRODUCTS/WORKERS COMPENSATION
Calderon v. Bollengraaf
NJ, 1995, J. Dreier
Plaintiff’s employer Alpha is not a model citizen. The criminally minded, maniacal employer used blow torches and grinders to remove the safety grate. Calderon reaches into the machine and gets his arm basically cut off.
Plaintiff brings a suit against the manufacturer as well as the shady servicing company, Van Dyk.
Legal Issues:
1. Design defect claim. We have a defense called substantial alteration. If you are making a product like this you have a duty to safeguard this product against the employer. In order for a defendant to successfully plead substantial alteration as a defense, that alteration must be substantial and unforeseeable. If a company has a choice between an easily removable safety guard or an interlock device, it must choose the interlock. We assume the employer will remove the easy safety guard. What happened in this case was both substantial and unforeseeable. This claim was dismissed and not challenged.
A Warning Defect Claim Has Two Components to it:
PART 1
2. Warning defect claim. To what extent did this Van Dyk company have an independent duty to warn Alpha of the dangerous condition of the machine? The testimony is murky. Van Dyk had originally proposed to Alpha that they would be willing to have a contractual servicing schedule. Alpha declined the offer. Van Dyk shows up on an as needed basis. They didn’t get a clear sense of how dangerous this machine had become. Judge Dryer finds that somewhat hard to believe. The court found that a duty arose on the part of Van Dyk. But even if there was a breach of a duty to warn, it breaks down on causation because that information is never going to get past Alpha to the guys in the plant.
3. What theory of recovery would apply to Van Dyk? Would they qualify for 402A strict liability or would your only theory against them be negligence? The answer is negligence. Someone who is in the business of servicing a machine has nothing to do with the design or refinishing of the machine. If they make a mistake they can be charged for negligence but if there is a defect in that product that is independent of any servicing they are doing, do not apply 402A strict liability principals to one whose job is merely to service the machine.
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PART TWO
4. Is the extent to which the manufacturer of the machine breached its duty to warn? The problem once again is the heeding presumption. If the manufacturer of this machine gives Alpha additional information, does anyone think that Alpha is going to share that information? And no matter what knowledge this plaintiff has about hazards, what kind of meaningful choice does he probably have to walk away? He’s been told essentially that if he does he would be fired. The warning defect claim fails both in terms of any duty to warn Van Dyk would’ve had and any additional duty to warn the manufacturer would’ve had.
5. Judge Dryer could have ended his opinion but he decided to write another page. “The facts of this case might have also raised the issue of whether an employer’s removal of a safety device rises to the level of an intentional wrong, thereby triggering the statutory exception to the Workers Compensation Act of New Jersey.” Most jurisdictions do allow an exception to the exclusive remedy of workers comp if the employer commits an intentional wrong at which point the injured worker can escape from the system and sue his employer in tort. What constitutes an intentional wrong? An intentional wrong includes a subjective desire to injure but permits evidence of the actor’s substantial certainty that injurious consequences will result from his action as proof of a desire to injure.
Instead of taking on the true tortfeasor, we make manufacturers of products modify their machines. The workers comp statute has become a shield. For EXAM: If Calderon were your fact pattern, you would certainly want to explore what Judge Dreier explores in this case.
…And you just better believe, boy, somebody's gonna get hurt tonight, It's the working, the working, just the working life. – Bruce Springsteen.
Millison v. DuPont
NJ, 1985
Exposure to asbestos type products and over time workers become sick. DuPont has this corporate medical staff who gives these folks periodic physicals and at some point in time those physicals begin to reveal developing disease. DuPont’s staff decides not to share with the workers this growing knowledge of disease.
1. Keep in mind that the plaintiffs in this case do have a viable product liability claim against the manufacturers of the asbestos product that are in the plant. We’ve got a couple of parallel lawsuits going on here – plaintiffs vs. Owens-Corning Fiberglass et. al and an attempt to take the employer out of the workers comp system and sue them in tort as well.
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2. Intentional wrong exception. The only time that an employer can escape from exclusive remedy is literally for that actual subjective intent to harm – punching somebody in the face. Anything short of that does not rise to the level of an intentional wrong.
3. Page 8: “unholy trinity” – contributory negligence, assumption of the risk and fellow servant rule. Workers comp was a historic trade off. We’ll give you a guaranteed remedy but it will not be as lucrative as a tort claim. We won’t take into account your conduct nor the employer’s conduct.
4. Consider conduct and context. Industry knowingly exposes workers to the risks of injury and disease. May the resulting injury or disease fairly be viewed as a fact of life of industrial employment, or is it rather plainly beyond anything the legislature could have contemplated? Some degree of accidents are a fact of life but does it go beyond that in the realm of intentional misconduct for purposes of tort?
5. Conclusion of the Court. The initial exposure, pre-suppression of data, is a fact of industrial life for which workers compensation is the appropriate remedy. But from the moment the corporate physicians began to ascertain disease and fail to share that with the workers, from that point forward that is no longer a fact of industrial life that is now an intentional wrong being committed against the employees. The court creates a dichotomy of pre-suppression and post-suppression. Any aggravation of injury suffered is fair game for tort.
Henke’s battle: How could you take a progressive, irreversible disease process and attempt to somehow bifurcate it in time? You can’t divide up asbestosis. The court nonetheless divides up the harm between pre-suppression (workers comp case) and post-suppression (tort case).
6. During the litigation the workers were receiving workers compensation. Now the question becomes two fold:
i. DuPont argues that having elected to receive comp awards, these people precluded from trying to sue in tort – they’ve already elected a remedy. In her words, you have the gall to suppress the evidence in the tort case but they’ve waived the tort case by taking comp when you were suppressing the data.
ii. Isn’t it true that there may be double recovery? The court addresses that issue on page 14: DuPont or its carrier will be able to offset comp benefits previously paid to the extent that the civil damage award would be double recovery.
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7. Workers Comp acts as a two way shield. It shields the employer at the front end from the worker and the back end from any contribution claim. The carrier would have a lien against any tort claim. If the machine company tries to get contribution from the employer, in most jurisdictions it can’t.
8. J. Handler dissenting. Let’s not forget who the agent of DuPont is in this case. Shouldn’t a plaintiff be able to bring a regular negligence based med mal claim against the physician here as you would in any other context? He finds it quite offensive that the only type of conduct that would be compensable against a physician/agent is an intentional wrong. The rebuttal would be if physicians could be charged with negligence in these circumstances, does that create a disincentive for a company to set up a medical plan like this? It’s analogous to the 911 discussion we had earlier in Riss.
FEDERAL PREEMPTION AND OTHER GOVERNMENT ACTIONS
If a federal statute is found to preempt state tort law under Article 6, Clause 2, the Supremacy Clause of the Constitution, you could have the most severely injured person you’ve ever seen but their case will not see the light of day. It’s a very dramatic defense.
The Supreme Courts interest in this area is renewed with Cipollone v. Liggett Group, Inc. which is discussed in Lohr. Cipollone was the cigarette case. The issue was, did the Cigarette Act passed by Congress in 1965 and amended in 1969, which required Phillip Morris to put the warning on the box of cigarettes, preempt a state tort law claim for an inadequate warning? If Phillip Morris complied with the statute, could they say there is no warning defect? That was the crux of Cipollone. The court said about Federal Preemption:
1. J. Stevens: “Because the States are independent sovereigns, we have long presumed that Congress does not cavalierly preempt state tort law.” The bottom line is when you begin a preemption analysis, you should start with a presumption against preemption. A federal judge who is asked to rule on preemption should do everything in their power to reconcile state tort law with the federal statute. It must be the clear and manifest intent of Congress to have wanted to preempt state tort law.
Two Different Types of Federal Preemption:
1. Express Preemption; and
2. Implied Preemption.
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EXPRESS PREEMPTION
The Medical Device Act that is at issue in the Lohr case has an express preemption provision. Congress wrote an actual preemption clause into the statute. If there is an express preemption provision, it’s the court’s job to see how far it extends. Even with the express preemption clause there was room for state tort law to act in essence as a supplement to the federal scheme. J. Stevens says that if the whole point of this is to make medical devices safe, how Congress could have really intended to preempt any and all claims that you might bring under state tort law? He says they couldn’t have meant that.
The court concludes that this particular express preemption provision does not foreclose the possibility of a state tort lawsuit premised on either design or warning defect and allows the claim to proceed.
There are several areas in which federal preemption is huge.
1. Cigarette litigation
2. Medical Device cases
3. (Most recent case) Bates v. Dow-Agrosciences. Federal Insecticide, Fungicide and Rodenticide Act (FIFRA). FIFRA is Congress’s attempt to regulate the use of pesticides, etc. FIFRA has an express preemption provision having to do with EPA approved warnings. If you do product liability work and you do pesticide work, you are going to be all over the preemption thing.
4. National Highway Safety Traffic Act (NHSTA). The subject of a 2003 opinion in Geyer v. Honda.
IMPLIED PREEMPTION
What if a federal statute contains no language and is otherwise silent as to preemption? The Supreme Court has indicated that there are two ways in which preemption can be found impliedly:
1. Implied field preemption. Congress has written a statute that is so broad that it regulates the entire field leaving no room for state tort law supplement. There is nothing that a state could add by way of further regulation that Congress missed.
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2. Implied conflict preemption. That was the issue in Geyer where a he has an 80s Honda and it doesn’t have an airbag. At the time Congress said that 15% of a manufacturer’s cars had to have them. Airbags were not yet a standard feature and not yet required for 100% of the vehicles. Honda was in compliance but his car didn’t happen to have an airbag. He brings a design defect claim. We have a conflict between the regulation and state tort law. They had a reasonable alternative design. What’s really interesting is that there is an express preemption provision in the statute. The court said there was an implied conflict preemption and that’s how he threw out the claim.
Page 783, Note 4: Government Standards. This was used on a previous Henke exam. Carefully distinguish a statute that preempts an entire area versus a federal standard that acts as a minimum standard of reasonable care. Federal preemption should not be confused with compliance with government standards. Most jurisdictions permit a defendant to introduce evidence of compliance with government standards on the issue of reasonable care. It’s like the discussion of compliance in the industry.
Michigan provides an absolute defense to a warning claim if the FDA approved the label. Michigan has given it federal preemption status. In most other jurisdictions FDA approval only creates a rebuttable presumption of adequacy.
Note 5: Government Contractor Defense. An alter ego defense. A contracting company with the government is treated the same as the government and are immune from tort liability.
Page 786, Note 8: Successor Corporations. A successor is generally not liable for the defects in products of its predecessor. It is riddled with exceptions. If it agrees to assume liability, the transfer was fraudulent (trying to dump liability by moving assets around), mergers or the successor is a continuation of the original company. Some jurisdictions have adopted that if the company continues the product line but under a different name may still be liable.
TERMS OF ART
Seller. What constitutes a seller for the purposes of strict liability? We need a seller in order for strict liability to apply.
Peterson v. Lou Bachrodt Chevrolet Co.
IL, 1975
If you sell a car with a defect, should a used car salesperson be treated as a seller for purposes of 402A? Should they be treated as a wholesaler, retailer or a distributor? The Supreme Court of Illinois says no. A used car seller is not technically in the chain of distribution. Anybody who is in the actual chain has the ability to affect the decisions at the person at the top.
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If a Honda dealership is getting a lot of complaints, they can go upstream. The court feels here that the used car dealership doesn’t have those same abilities. Plenty of jurisdictions disagree with this case. Someone who is in the business of selling used cars could very well be subject to strict liability.
Page 786, Note 3: If you rent a defective car from Hertz, you can absolutely sue Hertz in strict liability. One who is in the business as leasing is treated just the same as one who is a seller. This is in line with the Third Restatement.
Note 5: The occasional seller is not subject to strict liability. If you sell your used car and it malfunctions, you are not going to be subject to strict liability.
Note 6: Component part or raw materials. These folks are likely to be subject to strict liability. MacPherson v. Buick. In a modern case, you could sue Imperial Wheel also.
Glass in Tuna example: When you are doing a product liability analysis, be mindful of the possibility that notions of contribution and/or indemnity may very well resonate in this arena.
Note 11: Lessor of Real Property.If you own a building and a unit has a defective dishwasher and someone is injured, can you be tagged for strict liability? I would suggest probably not. Arguably a management company may be.
Hector v. Cedars-Sinai Medical Ctr.
CA, 1986
402A is a historical moment in the development of products liability. If you have a seller of a product and that’s clear, you don’t need to talk about 402A much at all. Just go right into whatever type of defect it is and whatever theory of recovery would be most advantageous. When you need to talk about 402A is in a case like Hector or in Calderon. We had that Van Dyk merely servicing the machine.
Strict liability doesn’t apply to them – they’re not a seller, they are a service. This sales/services distinction that comes up in Hector necessitates a discussion of 402A.
In Magrine v. Krasnica a Novocain needle breaks in the mouth. The plaintiff attempts to sue the dentist as a seller for purposes of strict liability. The court said no. Strict liability should not apply when the essence of the transaction is the provision of professional services. The product was ancillary to the provision of professional service. You don’t go there for the needle, you go there for your teeth. If there’s going to be a cause of action it has to be for med mal. Physicians do not advertise, they are not commercial people.
In Newmark v. Gimbel’s plaintiff goes to Gimbel’s department store for hair treatment and it catches fire. The court said the product dominated the transaction and is fair game for strict liability. It was also a product you could put in yourself.
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Breast Implant litigation: Medical Malpractice policies do not cover defective products.
Bad blood: Most jurisdictions have passed bad blood statutes that insulate blood providers from strict liability.
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FINISHING PRODUCTS LIABILITY
In 1965 the ALI took the California and the New Jersey Supreme Court decisions and sat down and wrote Section 402A of the Second Restatement. There are two terms of art in Section 402A of the Second Restatement – Seller and Product. If you have a seller and if you have a product, you really don’t need to talk about 402A much at all. The only time you really have to reflect and expound upon Section 402A is if you are wrestling with whether you have those elements in place.
If your dentist is using that needle and it breaks off in your jaw and you try to sue your dentist in strict liability, is your dentist a seller to whom strict liability should apply? Is the implanting breast implant surgeon a seller to whom strict liability should apply? We talked last week about these transactions where the provision of services and the presence of a product intermix. What you need to do again is to see whether services or product dominate the transaction. Almost invariably when you have a provider of medical services, if that doctor or dentist is involved with a defective product in some way, the chances are your case against the physicians will be limited to a malpractice negligence based claim. In the breast implant cases not a single jurisdiction applied strict liability to implanting surgeons as sellers. Perhaps someday a provider is going to be found strictly liable.
Another example: The plaintiff in this case had a problem with bugs in their apartment. They hired the Terminix company and they used this pesticide, they don’t do a very good job and an injury occurs. Could you sue Terminix in strict liability? Probably not. Terminix is in the business of providing a service.
Calderon case: If Van Dyk does a poor job in servicing that machine, sue them in negligence. They are not a component part manufacturer, they’re not a retailer or distributor – all they do is service the machine.
This is a sales vs. services, product vs. services dichotomy in what constitutes a seller. If that is not clear, you need to start out with a discussion of 402A and the need for a seller of a product.
Note 2 Page 792: A pharmacist is not a seller of a drug but a provider of service and thus no strict liability and that’s pretty good law.
Note 4: Blood transfusion. What happens if you get tainted blood? As a matter of statutory law in most jurisdictions this is not a strict liability claim, you have to show negligence if you have a case at all against the provider of blood. Blood providers tend to be insulated from strict liability treatment.
Note 5: Examines the word product. Is a hamster a product? Section 19 of Third Restatement says yes it is, therefore strict liability applies.
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Electromagnetic fields, electricity: 9 times out of 10 you’re going to have a seller. Once the current passes thru the meter it becomes a product.
Note 3, Page 796: Discussion of tort reform. Products liability has not been eviscerated in the same way that medical malpractice has been in many jurisdictions and other areas. How will you change the law?
MISREPRESENTATION
Elements:
1. A misrepresentation very element driven, can be broken down into four species:
a) Silence (A failure to speak being a misrepresentation)
b) Negligent speech
c) Deceit (synonymous with intentional misrepresentation and fraud)
d) Innocent misrepresentation (a good faith statement that turns out not be true)
2. of a material fact, something of no consequence – no harm, no foul
3. made with an intent to induce reliance, a statement is made or not made to reel the person in
4. actual reliance, you got me
5. reasonable reliance, to what extent do you have to be savvy or a dupe?
6. and damages.
Misrepresentation is such an important tort because it can be the foundation for a lot of different remedies. You might seek a tort action based on deceit, breach of contract, rescission of a contract, equity, restitution or unjust enrichment.
A lot of misrepresentation claims may also act as a springboard to punitive damages. The Gore case was a misrepresentation claim. Not only did they fail to disclose the touch-up on the paint but also they actively concealed it by painting over it. Misrepresentation is a really important cause of action that can lead you in a lot of different directions. We explore that more in an Equity and Remedies course.
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FAILURE TO SPEAK OR SILENCE
Swinton v. Whitinsville Savings Bank
MA, 1942
1. Concealment;
2. Failure to reveal.
This is a misleading case. Modern law: The failure to disclose defects will most likely result in a rescission of contract. In many jurisdictions you have a statutory duty to reveal these things. In other jurisdictions you have a common law duty to disclose these things as the doctrine of caveat emptor is slowly eroding.
This case suggests that you could be aware of the fact that your house is infested with termites and you can sit quietly by and not tell the buyer about the infestation. I think this case is misleading.
Page 1029, Note 2: Sellers knowing of a termite infestation are often obligated to disclose. Henke: That’s the truth and this case standing alone is misleading in the modern context.
Having said that, when does a duty to speak arise? Knowledge is within the exclusive domain of the speaker. Somebody does something affirmatively to make it harder for you to ascertain the problem. The best example of this is on page 1026 Note 6: Salzman case. The defendant is selling the plaintiff sheets of aluminum. The defendant placed good, undamaged sheets on top of corroded ones. They are bulky and heavy and the plaintiff cannot rip them apart.
There is nothing to suggest in the Swinton case that made if more difficult for the plaintiff to find out about the termites. There was no active concealment to conceal the termites in this case. Presumably if the plaintiff had hired a termite inspector the problem would have been discovered. Distinguish between cases where there is a mere nondisclosure versus nondisclosure plus affirmative conduct to make it even more difficult to find the problem
Stambovsky haunted house case. The owner of a home in New York claims that her home is haunted and has trumpeted the fact many times to the media. Suspiciously when she wants to sell the home she is suddenly very quiet about the alleged poltergeists in her home. It is the only recorded decision that I have ever read where the court quotes Ghostbusters. Who ya gonna call to find the poltergeists? The problem was the knowledge was peculiarly within the domain of the seller perhaps suggesting that there is a duty to disclose a latent defect.
Page 1024: There is nothing to show a fiduciary relationship between the parties or that the plaintiff stood in a position of confidence.
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Look to 1025 Note 3(b), examples of relationships of confidence or fiduciary relationships that may create a duty to speak:
Principal and agent, attorney and client, physician and patient, priest and parishioner, partners, tenants in common, husband and wife, parent and child, etc. There’s nothing in the Swinton case to suggest the type of relationship that might create a duty to speak – that is also missing in this particular case. The court concludes that there is no duty to speak although again I caution you in a modern real estate context, Swinton is at best dubious law and perhaps just bad law. You proceed at your own peril today if you’re selling especially residential real estate that has some latent defect that you fail to disclose. Take this case with a couple of grains of salt.
Griffith v. Byers Construction Co. of Kansas, Inc.
KS, 1973
1. Nondisclosure plus active concealment.
New home buyers discovered that their lots contained a high saline content, making it impossible to landscape the home sites. Byers sold the home sites directly to a builder who had constructed homes on them and sold them to the plaintiffs. Plaintiffs sued for an implied warranty of fitness and fraud in the concealment of a material matter.
The lots were part of an abandoned oil field which contained salt water disposal areas and because of the high salinity of the soil, your plants die after you planted them.
Two threshold issues – a material fact and privity:
1. Is this a misrepresentation material fact – the inability to landscape? The reasonable person would rely on the fact that they could landscape.
2. What about privity? The builder is not going to inhabit these places; they’re going to sell them to third parties. The court gets past any privity obstacle and extends the misrepresentation to the third parties – the would be purchasers or the foreseeable class of users.
To compare and contrast this case with the Swinton case, one could expect to have the house inspected for termites but not for soil. Page 1026:
“It was alleged that Byers graded and developed the whole addition for homesites in such a manner that it became impossible for a purchaser to discover the presence of these salt areas.”
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Not only are the not disclosing the saline content but they are bulldozing and grading in such a way that even if you took the extraordinary step of hiring somebody, it may not be good enough yet. They have grated this in such a way to frustrate your would be expert. This is a nondisclosure plus active concealment based upon these shenanigans with how they graded the soil. This case was decided in the proper fashion. The Gore case was an active concealment and nondisclosure case as well.
NEGLIGENT MISREPRESENTATION
Derry v. Peek
UK, 1889, Lord Herschell
This is an important case for not only misrepresentation but also for defamation. Lord Herschell says some things that are echoed almost verbatim by Justice Brennan in the defamation case of New York Times v. Sullivan.
We start out by asking the question, to what extent can careless speech be actionable? To what extent does a person have a duty to speak carefully in a given circumstance?
There’s a representation made to the plaintiff that this new enterprise that he wants to invest in is going to be aided by steam generated mechanical power as opposed to the use of animals. Based upon that representation he decides to buy stock in the company. It turns out that there was no such approval for this type of transportation and the enterprise folds and he loses the money he has invested in the company.
He is attempting to sue the defendant for this negligent misrepresentation about the steam generated transport. Lord Herschell rejects the notion that negligent speech should be actionable as a misrepresentation.
Page 1031: “Where rescission is claimed it is only necessary to prove there was misrepresentation; then however honestly it may have been made, however free from blame the person who made it, the contract cannot stand.”
He is saying that an innocent misrepresentation or a negligent misrepresentation would be fair game to rescind the contract. If the remedy you were seeking was the rescission of the contract then even an innocent misrepresentation would allow for that. But when the remedy that you seek is money damages, innocence or negligence is not enough.
From the statements on page 1031 and 1032, cross reference to page 875: The exact same statement appears in the New York Times case for deceit. Justice Brennan uses Lord Herschell’s formula for deceit when he talks about actual malice for defamation. Look at his definition for fraud or deceit:
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Fraud or Deceit: A false representation that is made knowingly or without belief in its truth or recklessly careless whether it be true or false.
A knowing falsity or a statement made with reckless disregard to the truth of the matter asserted – that qualifies as deceit for intentional misrepresentation. He adds one more thing: Deceit would be proven if I thought a person making a false statement had shut his eyes to the facts. Cross reference Harte-Hanks Communications case page 882: Turning a blind eye to the truth may also be deceit. Ultramares Case, J. Cardozo: A jury might find that, with suspicions thus awakened, they closed their eyes to the obvious, and blindly gave assent. Henke: That’s the same thing as deceit or a knowing falsity.
Page 1032: Reasonable person standard: By asking ourselves whether a reasonable man situated as the defendants were with their knowledge, might believe what they state they did believe. When talking about this standard, ask yourself the reasonable person question – would the reasonable person in the defendant’s shoes have had any belief in what they were saying? Or would the reasonable person in the defendant’s shoes with suspicions thus awakened taken further steps to ascertain the truth? We inject the reasonable person standard into this issue of deceit.
This court rejects the notion of negligent misrepresentation but in so doing Lord Herschell gives us a very good working definition of deceit or intentional misrepresentation. We know from the next case International Products that in the modern context, negligent misrepresentation may be a viable cause of action.
Note 4: It is generally agreed that a bad motive, as distinguished from an intent to mislead, is not essential to the tort of deceit. You don’t need ill will or evil motive for deceit. But if you have it, that may be a very important facet to your punitive damage claim. In order to get compensatory damages for misrepresentation, all you need is deceit. But if you have the opportunity for punitives, this is where bad motive and ill will may be very relevant. You don’t need bad motive for your compensatory damage case. All you need is the knowing falsity or reckless disregard for the truth.
This note is also relevant in the defamation cases. The analogies between misrepresentation and defamation are very similar.
International Products Co. v. Erie R.R. Co
NY, 1927, J. Andrews.
Once again Judge Andrews is talking about duty. He is talking about circumstances in which someone may have a duty to speak carefully.
The facts are some goods are being shipped; the person to whom they are being shipped wants to take out insurance on them. There is a representation made about which dock they are going to arrive at. It turns out to be the wrong dock so the insurance he has taken out is essentially null and void after the goods are destroyed.
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He is suing for negligent misrepresentation. Lord Herschell categorically rejected the notion. Andrews is not so black and white. Judge Andrews suggests that there may be circumstances in a commercial setting like this where there is a duty to speak carefully.
The test:
“There must be knowledge that the information is desired for a serious purpose; that he to whom it is given intends to rely on it and if it’s false or erroneous, you will be injured.”
What about the relationships of the parties? Is the relationship of the party’s one of trust or confidence that might give rise to a duty? If those factors are in place, Judge Andrews suggests that a duty to speak carefully may in fact arise. Obviously these are very fact sensitive, case specific types of analyses but the point here is, you should take Derry v. Peek with a lot of grains of salt.
Negligent misrepresentation is certainly a viable cause of action in this country today if you can prove those factors that Andrews suggests on page 1035:
1. Is it for a serious purpose?
2. Is there detrimental reliance?
3. Will there be some kind of injury?
4. Is there a relationship of trust?
If you’ve got those things in place, you have a nice argument for negligent misrepresentation and a duty.
Winter vs. G.P. Putnum’s Sons
9th Circuit, 1991
1. No products liability or negligent misrepresentation
2. Expression of ideas are protected under the First Amendment
Winter relied on a book of wild mushrooms published by Putnam and after cooking and eating the harvested mushrooms he became critically ill and required a liver transplant.
The products liability aspect and the First Amendment:
Is a book and the ideas expressed therein a product for purposes of strict products liability?
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At the end of this opinion, the court says, “Were we attempted to create a duty, the gentle tug of the First Amendment and the values embodied therein would remind us of the social costs.”
We have this tension here between the tort law of misrepresentation and products liability and the interests that it seeks to protect running headfirst into the First Amendment. This is the tension in defamation cases. We ask, to what extent can your reputation be sullied because we are looking out for the First Amendment? The question here: To what extent can a misrepresentation be made because we don’t want to clip the wings of free speech?
Is it a different case if you buy a new book and the ink was toxic and you were harmed, could you sue them in strict liability? Presumably if the raw materials of the book were toxic, you might be able to start a products case.
If we just looked at the six elements of misrepresentation, does the case fall apart or do these elements simply give way to the countervailing First Amendment concerns? I think that if we did not consider the First Amendment here, to me this is a very good misrepresentation claim. The countervailing concern of the First Amendment seems to win out here.
Is there a duty to warn? Does Putnam have a duty to check the authenticity and accuracy of every reference and representation in this book? Presumably it would be too costly for the publisher. Where is the author in all of this? We can speculate on a thin pocket.
Is the book a product? The ideas or expressions are not to be treated as products for purposes of strict liability treatment, however; if the component materials of the book are defective, that would be fair game.
Video games: Can beneficiaries bring wrongful death claims in products liability against the manufacturers of video games? If a manufacturer of a product has the ability to incorporate a reasonable alternative design and they instead blow-off the reasonable alternative design and slap a warning on it, generally a warning cannot be a substitute for a reasonable alternative design. Is there some utility to playing these games? If it you are doing a negligence analysis assuming the manufacturer has a duty and they breach that duty, can you in essence argue that the intervening criminal conduct of the viewer/player is an intervening and superseding and unforeseeable cause of the death? Most of the cases of this type fail on First Amendment issues and they fail on causation. Generally speaking, the criminal conduct tends to act as an intervening and superseding cause breaking the chain.
Note 5: There are exceptions: Soldier of Fortune Magazine sued for deaths and injuries resulting from ads for “guns for hire”. Rice v. Paladin Enterprises Inc. (Publishers of Hit Man: A Technical Manual for Independent Contractors): Liability found for advice on how to commit murder. Henke: Every once in a while in this type of a case, you do see an extension of liability for these sorts of things.
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Hanberry v. Hearst Corp.
CA, 1969
1. Reasonable reliance
2. Fact vs. opinion
Good Housekeeping issued its seal of approval to a pair of slippers which Hanberry claimed were defective.
The test is misrepresentation of a material fact. In this case we have this discussion of whether or not the Good Housekeeping Seal of Approval is a statement of a material fact or is it a statement of an opinion that should not be actionable.
In terms of misrepresentation and defamation, I want you to generally avoid this dubious distinction between statements of fact and statements of opinion. The best rebuttal to this dichotomy is in Note 4: on page 1064. I think this is irrefutable logic: “The statement of any opinion is a statement of at least one fact – the fact that the defendant does have such an opinion.”
If you ever represent someone in a misrepresentation case and if your adversary asserts that the statement made is an opinion of which there is no cause of action, you would triumphantly stand up and say, with all due respect, the statement of an opinion is the statement of at least one fact, the fact that this defendant holds that opinion. To me that is a wonderful statement.
In a case like this, instead of splitting hairs and trying to say, is this a statement of a fact which might be actionable or is this a mere opinion in which may not be actionable? Look to element number 5 and ask yourself, is the Good Housekeeping Seal of Approval a statement that is worthy of reasonable reliance? The answer in this case is yes it is. The Good Housekeeping Seal of Approval is given with the intent to induce reliance. It is something that a company puts on its product to get you to buy it. The woman in this case said she relied on it and this court feels that her reliance was reasonable and it was the right call.
There maybe issues having to do with comparative fault and misuse. Comparative negligence is certainly a viable defense to an action for negligent misrepresentation. On the other hand, many jurisdictions do not allow the defendant to raise comparative fault/negligence when the misrepresentation is a deceit. All jurisdictions allow comparative negligence principals to come in if you have a negligent misrepresentation. Many jurisdictions do not adopt comparative negligence or comparative fault principals when the form of misrepresentation is deceit or intentional misrepresentation.
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One of the very clear benefits from a plaintiff’s standpoint to an action in deceit is that the extent of the plaintiff’s conduct also contributed somehow to the damage – that may not be admissible. But in a case like this it is obviously a negligent misrepresentation and it would be fair game assuming there is such evidence in the case.
Saxby v. Southern Land Co.
VA, 1909
The Winslow estate is being sold. The seller makes representations as to the total acreage of the estate as well as the number of acres that have been burned. The representation was there was 150 acres altogether 20 of which have been burned. The actuality is there are 120 acres, half of which have burned. Is that an actionable misrepresentation? The court in this case says it is not.
The court suggests that this is mere “shop talk” or “trade talk” between these equally savvy parties. This is not a relationship of confidence or any fiduciary relationship – there’s no special relationship here. Wouldn’t you assume that if you about to make a purchase of this magnitude that you would hire a surveyor to maybe check this out? The accuracy of this statement is well within the discovery of the buyer. Henke: Fair enough.
Vulcan Metals Co. v. Simmons Mfg. Co.
2nd Circuit, 1918, J. Hand
1. Trade talk is not actionable
Simmons Manufacturing sold vacuum cleaner manufacturing machines to Vulcan Metals claiming that they were (inter alia) "perfect," and that the vacuum cleaners had never been marketed before.
“Such statements, like the claims of campaign managers before election, are rather designed to allay the suspicion which would attend their absence than to be understood as having any relation to objective truth.”
Is this case like Baxter? Would the result be the same if this were a consumer? The consumer in this case could test out the product. That’s not possible in Baxter. No amount of investigation by the Baxters will unearth the problem. Until the rock hits the window, you don’t know.
The argument can be made by the manufacturer of the vacuum cleaner that it is within the reasonable means of the consumer to ascertain this defect. As between a manufacturer and a customer it may not be so. In this case these statements for the most part are not actionable – this is mere puffery or trade talk. These are two parties of equal bargaining position making these representations.
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REASONABLE RELIANCE
McElrath v. Electric Investment Co.
MN, 1911
1. Predictions of non-fact based events are not reasonable reliance
Is the prediction of a future event that turns out not to be true, is that something that is worthy of reasonable reliance? Two representations made in this case by the person who is attempting to lease this property to the plaintiff:
1. There is going to be a completion of this rail line that will take happy people out to this resort that the plaintiff is going to open.
2. Once the rail line is completed and once you open this resort you will make a tremendous profit.
The court in this case breaks up the two representations. The court concludes that the first representation was actionable, the second was not. The second representation was pure speculation, pure conjecture and is not based on fact at all and not actionable.
The general rule of thumb is that the prediction of future events is not worthy of reasonable reliance. The first statement seems to be more fact-based than the second statement. They are both predictions of future events but I do see an arguable distinction between the two and the court’s decision is defensible.
Note 2: Trustees of Columbia University v. Jacobsen: A university student claimed that the University represented to him that he would acquire “wisdom, truth, character, enlightenment, etc. The student fails to graduate because of poor scholastic standing. What result? Representations of a university are not found to be reasonable reliance.
Credit Alliance Corp v. Arthur Anderson & Co.
NY, 1985
A really good decision and good writing style (precedent, rule of law, application to the facts and conclusion)
Andersen contended it could not be found liable for negligently preparing financial statements relied upon by Credit Alliance, as they lacked privity.
Accountants may be liable to persons not in privity for negligently preparing financial reports if the accountant knew the report would be relied on for a specific purpose by a known party.
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We’re asking this question about the duty of the accounting firms not only to the actual client that hires them but also to potential third parties who might rely upon their work.
Example: If you hire me as an accountant and you are doing this because based upon the audit that I draft, you are then going to attempt to get financial backing and it turns out that I do a negligent job on your audit. You take my negligent work and go to the bank and based upon my negligent work, the bank gives you a big loan which then turns out you are unable to fulfill.
What goes into our consideration of my duty to that potential bank? Assume that I have some knowledge not only for the purpose for which you are using my work but I also have some knowledge of the identity of the person that you are then going to take my work to. If you shop six other unnamed banks for the best interest rate, do I owe a duty to those banks?
From the Ultramares case, J. Cardozo: No one would be likely to urge that there was a contractual relation, or even one approaching it, at the root of any duty that was owing to the accountants now before us to the indeterminate class of persons who presently or in the future might deal with the accountant’s clients in reliance on the audit.
Would a half dozen unnamed banks qualify as an indeterminate class of persons? I’m not sure. These cases are not exact science. Is a half dozen too many? Clearly, if we have the actual identity we’re fine. I’m not sure what an indeterminate class of persons means.
We are once again dealing with a threshold issue of privity. Obviously there is no privity of contract between the accountant and the bank. What we are trying to do in these cases is create a relationship between myself and a named bank that comes as close as possible to privity without being technically privity.
Cardozo says the same thing in essence in Ultramares to get around privity here that he said in MacPherson:
“We do not need to state the duty in terms of contract or privity. Growing out of a contract, it has nonetheless an origin not exclusively contractual. Given the contract and the relation, the duty is imposed by law.”
If I have this kind of duty to this class of persons, how might that impact my relationship with you? If my liability is that open-ended, what happens when you get your bill from me? That’s the problem. One of the things we are wrestling with in these cases is companies buy insurance. You buy insurance to protect against an unanticipated risk. If my potential obligation extends to an indeterminate class of potential plaintiffs who could sue me, I’m going to slough off some of that indeterminate liability in the rates that I charge you. That’s the practical consideration that’s underlying this case. If we’re willing to extend this duty, it can’t be infinite.
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The court frames the issue: In what circumstance will a duty extend to a third-party? In what circumstance will the relationship between the accountant and the third-party approach privity? The court marshals precedent by talking about the Glanzer case, the Ultramares case and the White case – three prior New York court of appeals cases in which the Court wrestled with this issue.
Glanzer is the classic triangular relationship – you, me and a third-party. Cardozo in Glanzer said that even though there was no privity, the weigher of beans knew the exact identity of the person who was relying on him. Glanzer is at one end of the spectrum, Ultramares is on the other end of the spectrum – an indeterminate class of people. The court takes those three precedents and out of those cases the court distills a very nice rule. Here’s what you need to create a duty:
(1) The accountants must have been aware that the financial reports were to be used for a particular purpose or purposes;
(2) In the furtherance of which a known party or parties (narrower than indeterminate) was intended to rely; and
(3) There must have been some conduct on the part of the accountants linking them which to that party or parties, which evinces the accountants' understanding of that party or parties' reliance The Glanzer case.
Application
In the appeals we decide today, application of the foregoing principles present little difficulty. The court applies the rule of law to the two consolidated appeals and they find no relationship in the Credit Alliance case but they do find a relationship in the European American case.
Ultramares Corp v. Touche, Niven & Co.
NY, 1931, C.J. Cardozo
Negligent words are not actionable unless they are uttered directly, with knowledge or notice that they will be acted on, to one to whom the speaker is bound by some relation of duty, arising out of public calling, contract, or otherwise.
Cardozo rejects the negligent misrepresentation claim. He then talks about deceit. There is a $706,000 fictitious accounts receivable in the ledger. The accountant knew about the entry and does nothing. Suspicions thus awakened, they turn a blind eye.
“We are to bear in mind the principle that negligence or blindness, even when not equivalent to fraud, is nonetheless evidence to sustain an inference of fraud.”
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Footnote to a products liability discussion: One of the things that this accountant was doing was random testing and sampling. The defendant’s attempt to excuse the omission of an inspection of the invoices proved to be fictitious by invoking a practice known as testing and sampling. This same issue happens sometimes in product liability lawsuits.
Example: A person was smoking in a car and they dropped their cigarette and the ashtray is slightly ajar and the edge of the ashtray has a manufacturing defect with a jagged edge and as the guy leans down to get his cigarette he pokes his eye out. He brings a manufacturing defect claim against the automobile company and they say, we did random testing and sampling of some ashtrays, we didn’t look at all of them. The court rejected the argument in that context. It’s really a BPL issue – what is the burden on the company to look at all the ashtrays vs. poking your eye out?
Note 1: This part of the Ultramares case involves liability for fraudulent, as distinguished from negligent, misrepresentation. The defendant's conduct being more reprehensible, the opinion indicates that a wider circle of liability is required. When the defendant's conduct is not only reckless but also intended to deceive, it would appear that the scope of liability would be even broader.
It always behooves you to try and prove intent. In a tort lawsuit, you certainly can make the general statement that as you go up the ladder of culpability, the net of potential liability in damages grows broader and broader. If you can show deceit, your case may be worth a hell of a lot more than if you can merely show negligence or innocent misrepresentation. You may not even get damages at all for innocent misrepresentation. There are so many reasons to attempt to show deceit.
Constructive Property Interest: Allied Chemical released a chemical that polluted the Chesapeake Bay and took out all of the harvestable seafood for that particular season and sometime thereafter. They are sued by dozens of classes of plaintiffs – commercial fishermen, bait and tackle shops, marinas, bed and breakfasts, seafood restaurants, etc. Allied makes an argument that a line must be drawn in the sand. There has to be a line beyond which we can’t be held for these lost profits. An interesting tort based limitation on damages is called the economic harm rule. Under the economic harm rule, in order to recover lost profits in a tort based case you must show personal injury or property damage. The court in this case asked who had suffered property damage. The judge said that any plaintiff whose interests were in the water had a constructive property interest in the harvestable species in the Chesapeake Bay. And because they had a constructive property interest and because their property was then destroyed by the chemicals, they have suffered property damage justifying recovery of lost profits. It’s a great legal fiction.
The court is very honest and says, “We perceive a need to draw a line here beyond which liability will not extend. If our only consideration was foreseeability, every one of these entities would recover.” Is it foreseeable that a bed and breakfast isn’t going to have any business that summer if the place smells like a cesspool? Yes but if that’s all we kept in mind, this company would be bankrupted by this lawsuit and we’re not going to go there.
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You could just as easily argue, so what? And you could make the same argument in these accounting cases. If you hold yourself out as the accounting guru and you screw up and the net of liability is only limited by Chapter 11, plenty of people would argue, ok then get in line. In these types of cases as well as in the Allied Chemical case, a court either draws a line somewhere short of the bankruptcy courthouse steps or they say to the hell with it – if that’s the outcome then so be it.
ACTUAL RELIANCE
Williams v. Rank & Son Buick, Inc.
WI, 1969
Williams bought what he thought was an air-conditioned car from Rank & Son Buick, Inc. Later, he found it was not air conditioned. It’s March, 19th, it’s Wisconsin, and it’s in the late 1960s where consistently in late March it was extremely cold. If you go out in this car on March 19th, do you flip on the air conditioning switch? It’s probably not the first thing that comes to mind but it if you are claiming that the basis of the bargain was a representation that there was air conditioning, the court basically says he had an hour and a half – flick the switch. This is a failure to flick case. The only problem is the ad upon which he claims to have relied appeared two days after his purchase. He’s got a reliance problem.
Note 5: Compare – Purchasers expressed concern about the house's roof, had notice of water spots on its carpet and had personally inspected the roof. Representation was made by sellers that the roof was in good repair. Sellers' assurances that the roof was in good repair were reasonably relied on since the spots were irrelevant to present state of roof and the inspection could not have uncovered the structural defects. Sellers' assurances of repair reasonably precluded the necessity for an independent inspection. Sippy v. Cristich, 4 Kan.App.2d 511, 609 Phd 204 (1980). A reasonable inspection would not have uncovered the defect.
Note 10: The great majority of the cases now hold that the plaintiff has no duty to make inquiry or investigation as to the truth of an apparently reliable statement made to him. Henke: I think that note may be a little sweeping in its reach. I’m not so sure that the case law really allows you to be so gullible.
Note 2, Page 1072: A great lawyering note. How do you characterize a lawsuit for purposes of the remedy that you seek? Consider the following possible advantages of the action in deceit over a contract action for breach of the promise itself:
A. The deceit action may avoid the statute of frauds. If you go down the deceit road, you probably don’t have to worry about the statute of frauds. An oral promise or representation which may run afoul of the statute of frauds may work perfectly fine if the underlying characterization that you seek is deceit.
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B. It may avoid the difficulties of the parol evidence rule, which prevents any promise not integrated into a written contract from being regarded as a part of the contract.
E. It may avoid the defenses of the statute of limitations, since a longer period may be applicable in the deceit action, or the statute may run only from the plaintiff s discovery of the fraud. It may avoid a limitation of liability contained in the contract itself. If it’s a contract action the clock may be ticking from the start. If it’s a deceit action for fraud, in essence the SOL may be tolled until such time as you reasonably come to the truth.
F. It may avoid a limitation of liability contained in the contract itself.
G. It may avoid a defense against the contract action such as infancy.
One of the beauties of this profession is the creativity that it allows you and demands of you. You make look at something and say that it behooves me to characterize this as a deceit action. I may have a statutory problem here unless I could prosecute this claim as one in deceit as opposed to a mere contract action.
Gore case: The contract promised you a new car and you got a touched-up car. Arguably the Gore lawsuit is about a $5000 economic loss. But some very clever lawyer in Alabama said wait a second, this isn’t a simple breech of contract, this is an active concealment, an actionable misrepresentation and I’m going to use this as a springboard to a punitive damage claim. If Gore is litigated as a simple contract case, it’s a $5000 case. The lawyer that turned it into $4 million punitive damage case based upon Note 2.
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FINISHING MISREPRESENTATION
1. A misrepresentation For prima facie misrepresentation there are four elements:
a) Silence or non-disclosure. Swinton and Griffith cases: When someone may have an affirmative duty to speak.
i. If some knowledge is peculiarly within the expertise or advantage of one person and its difficulty for a person to get that information – maybe it’s very expensive or as in the Stambovsky haunted house case you don’t know who to call.
ii. Relationship between the parties. Are the parties in a fiduciary or confidential relationship? That may give rise to a duty to speak.
iii. Distinguish between a mere failure to speak and an active concealment. Griffith soil case, Salzman aluminum sheet case. Certainly the more you get closer to active concealment, the better case you have for misrepresentation, Gore v. BMW case.
b) Negligent misrepresentation. Derry v. Peek. Lord Herschell’s definition of deceit: An intentional deceit is a knowing falsity or a statement that is made with reckless disregard as to its truth. Turning a blind eye to the truth might constitute deceit or intentional misrepresentation. Cardozo builds on that in the Ultramares case “With suspicions thus awakened.” The accountants turn a blind eye from what is really going on. In a given circumstance there may be a fine line between negligent misrepresentation and intentional misrepresentation.
c) Deceit, intentional misrepresentation and fraud. The more culpable the conduct, the greater the potential range of damages. A deceit case may ultimately lead to punitive damages. Derry v. Peek is an important foundational case in the law of misrepresentation.
The accounting cases: Circumstances that will give rise to duty between an accountant and a third party with whom there is no privity. Credit Alliance case, review for substantive law and style of presentation. Look at the factors on page 1049.
d) Innocent misrepresentation. It is possible to make a statement with a good faith belief in its legitimacy and be wrong. In most circumstances an innocent misrepresentation will lead to a rescission to a contract. Whether or not an innocent misrepresentation will allow for a tort based remedy in damages is unclear. You’ve got an uphill battle to fight if you’re seeking money damages for an innocent misrepresentation.
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2. of a material fact, It has to be of some fact that ultimately becomes a basis for the bargain.
3. made with an intent to reduce reliance, All of the cases have this element whether they are nondisclosure or deceit. In every case we’ve read these statements are being made in an attempt to lure you in.
4. actual reliance, Williams v. Rank & Son Buick, Inc. The only problem is the ad which he claimed to rely upon had not been written at the time he purchased the car. It’s sort of hard to imagine actual reliance in the absence of an advertisement yet appearing.
5. reasonable reliance, Fact vs. opinion cases: Hanberry v. Hearst Corp. Saxby case, Vulcan Metals case. Prediction case: McElrath case. Think in terms of whether or not the representation is worthy of reasonable reliance. Don’t go down the fact/opinion road or the prediction road. Analyze it within the context of the fifth factor.
6. and damages.
DAMAGES
What are you likely to get out of a misrepresentation case?
Note 4, Page 1075: Of the two "normal" measures of damages discussed here, the contract or benefit-of-the-bargain'' measure will usually result in greater damages. Thus: Price paid $5,000; Value of property purchased $3,000; Value as represented $7,000. Here the tort, or 'out-of-pocket" measure results in damages of $2,000, while the "benefit-of-the-bargain” measure is $4,000. Should you be limited to your actual out-of-pocket loss or should you be able to recover the typically more lucrative benefit of the bargain?
Note 7: In addition to out of pocket loss or benefit of the bargain damages, misrepresentation may be a cause of action that leads to consequential damages for personal injury. In the Baxter case, your complaint would have a count for breach for express warranty, misrepresentation, strict liability but misrepresentation could certainly result in consequential damages for personal injury or even punitive damages.
Juxtapose with notes on 1022 and 1023 (rescission of contract) and combine full range of possible remedies (punitive damages)
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DEFAMATION
Defamation: libel per se is "any publication which exposes a person to distrust, hatred, contempt, ridicule, obloquy". "A civil action for libel will lie when there has been a false and unprivileged publication by letter or otherwise which exposes a person to distrust, hatred, contempt, ridicule, or obloquy or which has a tendency to injure such person in his office, occupation, business, or employment (Reference with slander per se). If the publication is false and not privileged, and is such that its natural and proximate consequence necessarily causes injury to a person in his personal, social, official, or business relations or life, wrong and injury are presumed and implied, and such publication is actionable per se." * * *
One of the most vexing issues is the relationship between defamation and harm. New York Times Case: Commissioner Sullivan makes a demand in his complaint for $500,000 and gets it at trial. What harm has he suffered to justify a $500,000 award in the early 1960s? What is the nexus between the libelous material and harm or damages? What is your reputation worth? To what extent will a plaintiff have to show a nexus between the defamatory material and some kind of harm?
THE LIBEL/SLANDER DISTINCTION:
Libel: (1) Libel consists of the publication of defamatory matter by written printed words, or by its embodiment in physical form (on a statue, sign, books and periodicals, motion pictures, a hanging effigy, and erecting gallows for example), or by any other form of communication which has the potentially harmful qualities characteristic of written or printed words.
When you are thinking about defamatory material that is libelous, you want to be thinking of things that are permanent whereas slander is more transitory, more fleeting.
Slander: (2) Slander consists of the publication of defamatory matter by spoken words, transitory gestures, or by any form of communication other than those stated in Subsection (1).
We care about the difference because at common law if you could prove libel, damages were presumed. If you could make out the prima facie elements of libel, damages were presumed allowing you to essentially circumvent that part of the definition in the Belli case. It allowed you to avoid arguing about nexus. As long as you made out the prima facie case, it was presumed you were harmed.
Today in 2006 it is different because of what the Constitution has done. If the defamatory material was mere slander, then you had to show special damages – actual harm unless you fit into one of the four categories of slander per se.
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Four Categories of Slander Per Se:
1. Imputations of Major Crime.
2. Loathsome Disease. Cross reference Note 3, Page 836: How do we judge whether certain things are libelous or slanderous? The issue is embedded in time, place and culture. Something that may have been libelous 20 years ago may or may not be libelous today. Perhaps defamation mirrors the changing norms as in the modern example of an AIDS allegation. You have to be mindful and sensitized to time place and culture as you try and determine whether or not something is defamatory.
3. Business, Trade, Profession or Office. If someone slanders you in your profession, that’s a form of slander per se.
4. Serious Sexual Misconduct. The principal application of this is to charge unchastity in a woman.
Belli v. Orlando Daily Newspaper, Inc.
5th Circuit, 1967, J. Wisdom
Melvin Belli, the king of torts, is invited to speak at a conference in Florida. He waives any appearance fee or other fees for services rendered but the Florida Bar agrees to put him and his wife up in a hotel. About 8 or 9 years after the convention a story appears suggesting that Belli and his wife went on a shopping spree and charged all of these clothing bills to the hotel. The charge is patently false so he brings a claim for defamation.
What’s really striking about this case is the trial judge found as a mater of law that these allegations could not bear a defamatory meaning (That Belli stole from a hotel). The defendant brought a motion for summary disposition. The trial judge dismisses the case as a matter of law.
The case makes it way up to the 5th Circuit. Judge Wisdom tells us about the relative role of judge and jury in a defamation case. Commonsensically, can you think of an area where a jury of your peers is more important than in a defamation case? Who better to make a call as to whether you have been ashamed, humiliated and held up to scorn in your community than your community?
Judge Wisdom is shocked by what happened in the lower court. Page 831: “We consider it a close question whether the publication is so clearly defamatory that as a matter of law the case should not be submitted to the jury.”
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He says, if anything, this case doesn’t go to the jury for the other reason – that this statement would not be capable of anything but a defamatory interpretation. “It is our role as judges in the first instance to see whether something is so clearly defamatory or not that as a matter of law we can dismiss it or we can direct a verdict. Henke: It’s up to a jury to determine really how this should be commonly understood. This is a short case but I think it is an important one.
We should be sensitized to the role of a jury in a defamation case. Who better to make a determination of whether you have been held out to shame in a community than a jury of your peers? Judge Wisdom quite appropriately is cautioning trial judges against throwing these cases out on summary disposition and I couldn’t agree with him more.
There are clearly four categories of slander per se. What I don’t want you to think is that there are only four categories of libel per se, there are much more than that. Plenty of other things could qualify as libel per se. The notion of libel per se is a much broader category of material than slander per se. Do not collapse those together.
Function of the jury: “Since one’s reputation is the view which others take of him, whether an idea injures a person’s reputation depends upon the opinions of those to whom it is published.” i.e. a jury of your peers. Henke: This is a very nice statement of the underlying principal in these cases.
Grant v. Reader’s Digest Ass’n
2nd Circuit, 1945, J. L. Hand
The point of the case is pretty straightforward: All that you need to be defamed is for someone to read or to hear what has been said about you and have it humiliate or ridicule you. You don’t need a majority of the population or as Judge Hand says, “Right thinking or wrong thinking people.” Defamation is not about majority thought. If someone were to read this material and it would hold you up to scorn or shame in their eyes, that’s enough. And that’s the teaching of this case.
I would add the following comment to that: In terms of what your case is worth, the more people who would read the statement and find that it humiliates you, the greater the value of your case. You don’t need a majority to make out your prima facie case but the more people to find it to be bad, the greater the value of your case. Numbers matter for value but they do not matter to make out the prima facie case.
Pleading Defamation:
Note 6: If you have a case of libel, you will have one of two things:
1. Libel per se. All you need are two things:
a) Defamatory words
b) Publication
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2. Libel per quod.
Something is either libel per se or you may need additional information beyond just the statement to arrive at its defamatory meaning.
Example: “He burned down his own barn.” Standing alone, so what? Maybe the barn was dilapidated or a fire hazard so he burned it down. Standing alone it’s not defamatory but let’s make it defamatory. The elements you need in a case for libel per quod:
A. Defamatory Words.
B. Publication: Communication of words to a third person. Publication does not mean printed. If you slander someone orally, publication occurs when a third party hears it. Publication cuts across both libel and slander.
C. Extrinsic Facts: Because of which the words were reasonably understood to convey a meaning defaming the plaintiff. This is called “inducement” – X knew plaintiff had an insurance policy. The inducement is the additional information that begins to cast a suspicious glow on the original statement. Suddenly you are thinking that he torched the place to get insurance money.
D. Colloquium: A formal allegation that the words were spoken of and concerning the plaintiff. The most litigated form. The person reading the statement must be able to reasonably conclude that they are talking about so-and-so. Is there enough there to make the association? Bindrim v. Mitchell
E. Innuendo: An allegation of the particular defamatory meaning conveyed by the words. You take the inducement (the additional facts) and put that together with the original statement to create a defamatory innuendo. What was once a benign statement now takes on a defamatory innuendo.
F. Special Damages. When they are necessary to the cause of action.
If something is not libel per se, you need to march thru these elements and make sure that they are all in place.
Killian v. Doubleday Y Co., Inc.
PA, 1951
1. The defense of truth
This case raises an important defense. Wolf, the editor was the Tom Brokaw of his day. He compiles a book of witnesses to atrocities of World War II. To make it more authentic he had the actual people submit their essays.
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Originally the author of this particular essay, O’Connell writes a piece and submits it. He writes it in the third person and submits it to Wolf. Wolf asks him to rewrite it in the first person and make it sound like you were at Litchfield and that you in fact witnessed the atrocities by this Colonel Killian. He rewrites the essay and creates a defamatory document.
The defense that is raised is the defense of truth. Truth is an affirmative defense to a defamation claim. The case law seems to indicate that what you have to show is substantial truth. You don’t necessarily have to show 100% accuracy. When we think about truth as an affirmative defense in a defamation claim we give you a little bit of leeway.
So they raise the defense of truth. Why does the defendant rely upon the fact witnesses that they did to argue truth? Don’t let this ever happen to you. If you’re trying a case, the court will require you to list all proposed fact witnesses with relevant testimony. Depos will be taken of these people at discovery. By all means, list people who are going to be helpful.
While, in order to support a defense of truth, it is necessary merely to prove that it was substantially true, and while, therefore, if the testimony of those witnesses had shown a variance merely in the details of events (New York Times case) described in the article it would nevertheless have been admissible as giving support to the plea of truth, it furnished no such support by proving that other and wholly different incidents occurred although these also may have been equally blameworthy.
Note 3: Burden of Proof. This is another moment where we have to make a contrast between the Common law and the Constitution. It has long been customary for the plaintiff to allege in his complaint that a statement is false. The common law raised a presumption of falsity of all statements defamatory. As a result, truth has been consistently treated as an affirmative defense raised by the defendant and burden of proof – maybe not so anymore. Supreme Court decisions have now rendered doubt about this. Philadelphia Newspapers in an action against a media defendant for speech of a public concern, the plaintiff has to prove falsity.
For the moment think about truth as an affirmative defense but keep in mind that by the time we are done with this discussion, we may shift the burden to the plaintiff to prove falsity. Historically truth was an affirmative defense. In recent cases the Supreme Court seems to be suggesting that the plaintiff in the first instance in fact may have to prove falsity and that is a very important difference.
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Neiman-Marcus v. Lait
NY, 1952
1. Colloquium case
2. Group libel
Lait published a book in which he referred to Neiman-Marcus models and saleswomen as being call girls and which referred to Neiman-Marcus salesmen as fairies. There are 382 saleswomen, 25 salesmen and 9 models.
The plaintiffs are a category of people at Neiman-Marcus who may or may not have been defamed. A group of saleswomen, models and salesmen, each of whom have been accused of different things. This is another one of those time, place and culture issues. One of the allegations is that one of the salesmen is a homosexual or something along those lines. In any event, we wrestle with this issue of group libel.
If someone made a statement that a member of the San Francisco Giants takes steroids, could that person bring a claim for defamation? Note 3 page 843: The Restatement § 564A, comment b has tried to make this somewhat formulaic. Groups that are generally successful in pursuing group libel actions number 25 or less. Some jurisdictions have begun to question this “numerical” approach.
What we are looking for within these group libel cases: If you are analyzing a group libel situation for me, make reference to or acknowledge the fact that the Restatement in compiling case law and data has suggested that groups of 25 or less tend to be more successful but I would want you to go beyond that and say – more significant than the number is the extent to which an individual within the group can point to things in the statement that single him out from the group at large. I think that is a sounder way to think about this as opposed to being mechanical or formulaic and saying if it’s more than this, less than this you have a cause of action or you don’t. The element we are dealing with is Colloquium – is this of and concerning any individual within the group or is the statement so amorphous that there is no particular taint on anybody? You can argue these defamation cases both ways.
Page 845, Note 6: Who can be defamed? You need to be alive. Even a child 10 minutes old may have a cause of action. It is generally agreed that there can be no actual defamation of the dead.
Note 7: A corporation can have no reputation in the personal sense, and cannot be defamed, neither can a partnership. “The venereal disease was not a partnership malady. That was individual property.” A corporation can maintain an action for defamation that casts an aspersion upon its honesty, credit, efficiency or other business or moral character. A Tobacco company brought that suit.
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Incremental harm doctrine: Are some people’s reputations so dubious to begin with that any defamatory material against them only would result in incremental harm? That in a sense you are libel proof? That any damage that might have been arguably caused by the defamatory material really doesn’t do you any harm because your reputation is already so bad. Be skeptical in concluding that someone’s reputation is so bad that there’s nothing further could happen to him or her.
Example: Masson v. New Yorker Magazine. A deliberate alteration of words constitutes knowledge of falsity in a libel action if the alteration results in a material change in the meaning conveyed by the statement. Suppose the plaintiff pleads as defamatory only part of a published work. Can the nonpleaded portions of the publication be considered in determining whether the pleaded portions inflicted reputational harm? In Masson v. The New Yorker Magazine, Inc., 895 F.2d L535 (9th Cir. 1989), the Court had relied on this “incremental harm” doctrine as an alternative basis for affirming the decision of the District Court. The Court ruled that "given the many provocative, bombastic statements indisputably made by Masson and quoted by Malcolm, the additional damage caused [by the pleaded imputation] was nominal or nonexistent, rendering the defamation claim as to this quote nonactionable." Id, at 1541. The Supreme Court stated in Masson that this “incremental harm” doctrine is not part of First Amendment jurisprudence although may be accepted under state law. 501 U.S. 496 (1991). The doctrine is a specific application of the law that a plaintiffs reputation may be so reduced that he is unable to show that the imputation materially worsened his reputation-that the plaintiff is "libel proof." The 9th Circuit, on remand from the Supreme Court, dealt with the "incremental harm" doctrine, among other issues, 960 F.2d 896 (1992). The Court noted that the doctrine was one of state law and quoted the words of then-Judge Scalia in Liberty Lobby, Inc. v. Anderson, 746 E.2d 1563, 1568 (D.C.Cir. 1984). "The theory must be rejected because it rests upon the assumption that one's reputation is a monolith, which stands or falls in its entirety. The law, however, proceeds upon the optimistic premise that there is a little bit of good in all of us-or perhaps upon the pessimistic assumption that no matter how bad someone is, he can always be worse. ('He was liar and a thief, but for all that he was a good family man.')" Then Jeffrey Dalmer comes into play – “He an organized, non-social, lust murderer, but not such a bad person.”
The notion has been generally rejected. Most of the case law as Scalia says in that note in Anderson – it’s a very difficult burden of proof to show that your reputation is so sullied that it cannot be further marred. I would be very careful if you’re doing an analysis and skeptical of concluding that someone’s reputation is so bad that there’s nothing further that could happen to them.
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Bindrim v. Mitchell
CA, 1979
1. A good colloquium argument
A woman attends a nude marathon group therapy session and she signs agreements not to release any information or techniques. She violates the agreements by writing a novel depicting the treatment. Of course she makes a couple of minor changes in the actual doctor – psychiatrist vs. psychologist, thin, clean shaven vs. rosy cheeked, cherubic silver-haired figure. She changed his name of course but other than that this guy is pretty much the guy at the head of the whole thing.
Interesting note 1: Jury verdict for substantial damages and the court grants a new trial or remittitur. How many people reading this book would know whom she’s talking about? Defamation is not about a majority of people but you usually need a lot of people to understand that it is defamatory before you hit a homerun on damages.
Interesting note 2: The defendant contends that this is a “novel” and that should bar any claim that any writer or publisher could be found to have implied that the characters were factual representations. The response by the court to that defense is the appropriate and correct one. The test is whether a reasonable person reading the book would understand that the fictional character was in fact the plaintiff. Forget about these attempts by a writer to insulate him or her from responsibility by making that kind of disclaimer – that this is a novel. Don’t assume that that kind of disclaimer gives you a license to defame.
Interesting note 3: The defendant says, is there even a publication where the communication is only to one person or a small group of persons? The court says publication for the purposes of defamation is sufficient when the publication is to only one person other than the person defamed. If one person hears it, it’s enough. It’s perplexing though that the relatively small number of people that read this led to such a blockbuster verdict.
Shor v. Billingsley
NY, 1956
If you are doing a radio show and you’ve got a script but then you adlib something, the question becomes, if you go off the script and you adlib can adlibbing in that sense be libel? Or is it only libel if you defame someone off a script? This court suggests that it can be libel even if it’s adlibbed but the more important point of case is Note 2 after the case:
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This matter is now primarily regulated by statute. Most statutes enacted under lobbying from broadcasting companies provide that broadcast definition is slander, script or not. A number of jurisdictions treat broadcast as libel as opposed to slander so you could argue that either way.
Terwilliger v. Wands
NY, 1858
1. Slander per se
2. Males need to show special damages
You have this man beating a path to this woman’s door to engage in sexual relations while her husband is in the penitentiary. As a result of people talking about his conduct finds himself prostrate in health and attempts to bring an action for slander. The court says you must show special damages because you are not in one of the four categories of slander per se. If we flip around the sexes in this case it’s a different story.
One of the categories of slander per se is serious sexual misconduct, imputing unchastity to a woman. This would be slander per se and she would not have to show special damages. The assumption has always been that the imputation of unchastity is not so damaging to a man and it is still held that it is not slander per se unless it fits into one of the other categories. There have been equal protection challenges to this quirk in the common law but this still may be the case 150 years later.
The important point of case: The court suggests to us the type of special damages that this guy would need to recover:
1. Loss of a marriage;
2. Loss of hospitable gratuitous entertainment;
3. The loss of customers by a tradesman;
The bottom line: For the moment special damages means pecuniary loss. You’ve got to show here some pecuniary or actual financial harm. It can’t be just humiliation and I’m stressed out. The reason that Terwilliger remains important today is because of the Gertz case (page 898).
Note 2: When either the cause of action is made out as libel or slander per se, or by proof of special damages of a pecuniary character, then the plaintiff can get his additional damages. If this guy had been able to show pecuniary loss, then he could have gotten his consequential damages for emotional distress and so forth. But had he proven direct harm (pecuniary loss) then his consequential damages are fair game.
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Note 3: Primary vs. Secondary Publishers. What happens when defamatory material is republished? How does liability square between the original publisher and the re-publisher? The original rule was that the defendant was liable only for damages due to his own publication and was not responsible for repetition by others. Later decisions tend to hold that the original publisher is liable for damages if the repetition might have been reasonably foreseen.
Note 4: The party repeating the defamation is himself liable for its publication even though he states the source. This may be a very good example of joint and several liability. You may be able to sue the original publisher as well as the secondary publisher and let them fight out contribution and the like.
Libel Per Quod: In some jurisdictions damages are only presumed in libel per se and if it is libel per quod some jurisdictions treat that like slander and require that special damages be actually proven. Restatement (Second) provides that special damages are not required in any libel action but some states conclude otherwise.
PUBLICATION
Economopoulos v. A.G. Pollard Co.
MA, 1914
Publication is communication to a third party. There is no publication because no one understands one another.
Note 1: Publication is a term of art. It does not mean printing, writing or even publicity. It’s just communication of the defamatory words to someone other than the person being defamed. A third party has to hear it. You are free to defame your friend if it’s just the two of you. Some third party has to hear it and that’s what publication is all about.
Pages 859 & 860: These are the kinds of notes that make great fodder for bar exam multiple choice questions. Note 4: Stenographer cases. A few courts held that there is no publication when the defamatory words are dictated to a stenographer, who was regarded as such an indispensable means of transcription in business as to be treated as merely equivalent to the defendant’s own writing. Most courts have held that there is a publication but it may be privileged when the words are taken down.
Note 6: Important not only for trickery. For there to be publication it must be done intentionally or negligently. The Concealed Listener Scenario: What if you say something about somebody and somebody is hiding in the bushes? That is not defamation. If you had no reason to know that the concealed listener was hiding in the bushes, that is not an intentional or negligent statement.
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Note 7: If the defamatory matter is sent to plaintiff in sealed letter which is unexpectedly opened and read by a third person – there is no publication. But if you send somebody a sealed letter and you know or should have known that that person’s secretary routinely opens their mail that very well may be a publication. It’s all about foreseeability in these circumstances.
Note 9: Publication by the Plaintiff. You send a defamatory letter to someone who is blind or illiterate and you know in fact that the only way that that letter is going to be communicated to them is by a third party reading it to them. In this circumstance the blind or illiterate plaintiff effectuates the publication by calling upon the third party to read it to them.
Carafano v. Metrosplash.com, Inc.
9th Circuit, 2003
There is an interesting interplay between technology and law. This played out typically in toxic tort cases where every day we learned more about the nexus between exposure to things in the environment and ensuing disease. We learned thru epidemiology of the association between these factors and various diseases. You start a tort case and the scientific method has yet to say that X causes Y but maybe the scientific process says maybe it does. What is enough to get to a jury in cases like that? Science and the legal system try to keep up with one another.
Here we go again with the Internet and its impact on the law of defamation. Matchmaker.com, is an online dating service which allowed its members to post profiles that included their pictures and written descriptions of themselves. An unknown person purporting to be Carafano posted a free trial profile, under the name of "Chase529," in Matchmaker.com's Los Angeles section. When people tried to contact Carafano at the listed email address, an automatic reply provided them her home address and telephone number. Carafano herself knew nothing of the posting when it happened and did not consent to it. Within two weeks after the posting, Carafano received sexually explicit voice mail on her home telephone and a threatening, sexually explicit fax whose threats also applied to Carafano's son.
This is a case involving a cruel and sadistic identity theft. On a Saturday Carafano’s assistant contacts the site and demanded that the profile be removed immediately but Matchmaker.com refused to do so because the assistant had not personally posted the profile. Matchmaker.com blocked the profile from public view the following Monday morning. What if on Sunday afternoon one of these predatory people gets to her and she’s injured? Having acknowledged all the things we’ve talked about with the immunity generally, if you’re put on notice and then in a 48 hour window something horrible happens to this woman, do you have a negligence claim? Did a duty arise at that point? You have to wonder in that circumstance whether the immunity will still hold.
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Congress passed the Communications Decency Act in 1996 for two basic policy reasons:
1. To promote the free exchange of information and ideas over the internet: and
2. To encourage voluntary monitoring for offensive or obscene material.
The immunity provision of the Communications Decency Act, immunizes an interactive computer service (ICS) from liability for publishing false or defamatory material if another party besides the ICS provides the objectionable material.
There is a rather broad immunity for these entities under this act. Has an ISP a duty to ascertain the authenticity of what they put out there?
If we are giving this information First Amendment protection it should be for speech that matters I would think. With print journalism, a writer has every incentive to be cautious before they print. What incentive does this act create for the ISP to proceed with any due care or caution?
866 note 2: A leading case on the application of the Communications Decency Act of 1996 is Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir. 1997). Plaintiff sued defendant for failure to remove defamatory material and post a retraction on one of its message boards. An AOL member had posted a series of statements claiming that he had a number of items for sale, including shirts, bumper stickers, and keychains that had tasteless slogans on them (most of them related to the bombing in Oklahoma City in 1995). The (“advertisement” listed plaintiffs home phone number as the business number to call to order, and subsequently plaintiff received a high volume of offensive calls, including death threats, at his home (at one point reaching a rate of one call every two minutes). Plaintiff notified AOL of the posting and the calls, requesting that they remove the postings and print a retraction of the information on the message board. AOL did remove the messages and blocked the user from posting again, but refused to print the retraction. The court ruled that plaintiffs claims were barred by the Communications Decency Act of 1996, 230(c)(1). See also PatentWizard, Inc. v. Kinko's, Inc., 16B F. Supp. 2d 1069 (D.S.D. 2001) and Knievel v. ESPN, Inc., 223 F. Supp. 2d 1173 (D.Moot. 2002).
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REVIEW OF COMMON LAW DEFAMATION
If you are talking about defamation, you want to start with the basic definition:
Defamation is some statement written or oral holding someone up to scorn, shame or obloquy in the community. It’s a defamatory statement, it’s a false statement. We also said it is an unprivileged statement. We will talk about situations where there is a limited or an absolute privilege to say something that might be defamatory.
You want to make the distinction between libel and slander:
Libel: Written defamation, something that is permanent in nature.
Slander: Defamation that is more fleeting or transitory.
The reason why we cared about the distinction at common law was because of presumed damages. If you made out a case for libel at common law then compensatory damages were presumed. Whereas, if you made a case for slander, unless you fit into one of the four categories of slander per se, you had to show special damages defined as a pecuniary loss as we saw in the Terwilliger case.
If you have defamatory words and if those defamatory words on their face are published meaning, communicated to a third party, then you have libel per se. On the other hand, if the matter is not libelous on its face, you are then going to have to go thru the other common law elements of Defamatory Words, Publication, Extrinsic Facts, Colloquium, Innuendo and Special Damages.
Colloquium: So often a person is not named specifically in a defamatory communication. You have to wrestle with whether or not the reasonable reader would know whom it is about. We had the group libel case of Neiman-Marcus, the nude therapy case of Bindrim and the New York Times case – after all Commissioner Sullivan’s name never appears in the advertisement.
Innuendo: Taking the inducement – the new information and combining it with the preexisting statement to create the defamatory innuendo or connotation.
Defamation and the Internet: ISP’s under the Communication Decency Act have been given broad immunity from defamation as we saw in the Carafano case. I suppose the idea is that the benefits of information derived from the internet outweigh the occasional circumstance in which an individual may be harmed or defamed. Even as we wrestle with these issues and try to impose some legal structure on them, the technology may render the law obsolete.
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Ogden v. Association of the United States Army
DC, 1959
This case raises the issue of Statute of Limitation. The basic question in the case is: Does the defamation SOL begin to run once and for all upon the initial publication of the defamatory material or does the clock begin to run anew each time the defamatory material is republished?
Single Publication Rule: If analyzing SOL issues in defamation you should generally be guided by the date of initial publication. There may be circumstances where a new statute would start at some point. If a new or expanded edition of a book came out or the book comes out a year later in paperback, etc., you may be able to make certain arguments but for the most part think in terms of single publication and the clock running from the initial time of publication.
CONSTITUTIONAL DEVELOPMENTS
I can’t help but compare this to our punitive damages discussion. Before 1964 the United States Supreme Court had virtually no interest in the law of defamation. Defamation developed as a matter of state tort law. Just like 15 or 20 years ago the US Supreme Court didn’t have a lick of interest in punitive damages – states were free to do what they wanted. For reasons that make much more sense to me in the context of defamation, the US Supreme Court decides 42 years ago to insert itself into this discussion and begin to really embrace a First Amendment aspect to this discussion. The New York Times case is the case the court chooses to begin this new jurisprudence.
New York Times Co. v. Sullivan
Supreme Court, 1964, Justice Brennan
1. Actual malice standard
Make No Law: The Sullivan Case and the First Amendment by Anthony Lewis
On March 29, 1960, the New York Times ran a full page advertisement entitled "Heed Their Rising Voices," placed by several black clergymen of Alabama.
There are four clergymen who are joined in this lawsuit as codefendants with the New York Times which is odd. They are most likely in the case for strategic reasons. Appreciate if you will in the 1960s the New York Times Company and its lawyers showing up in Judge Jones’s courthouse. You know you are going to get your butt kicked; it’s just a matter of how much. Your only hope is to get this case into Federal Court. Quite frankly, if it’s only Sullivan v. New York Times you have perfect diversity jurisdiction. You have a New York corporation and you have an Alabama citizen. The New York Times can then remove the case to Federal Court. If you wanted to defeat
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diversity jurisdiction, tag along four Alabama clergymen in the complaint and it’s all over – you are stuck in Judge Jones’s courtroom.
At trial, police commissioner Sullivan gets $500,000. I don’t know that there is another area of tort law in which the relationship between harm suffered and money received is more elusive. What harm has Sullivan suffered? If the advertisement were true, his reputation would be elevated among his peers. Almost all damages in a defamation case are general damages. Unless you’ve been so humiliated and your reputation has been so destroyed and you wind be being hospitalized because you are upset. Absent that kind of physical manifestation of harm, this is all about the amorphous value of your reputation. Where did that $500,000 number come from? From thin air without even a suggestion of actual harm.
Let’s look at the ad. There are two paragraphs of the ad that allegedly refer to Sullivan. There’s reference in paragraph 3 to “truckloads of police” and a reference in paragraph 6 to “southern violators”. Evidently it is those two phrases that lead the reader to say, gee, they’re talking about Sullivan. Does anyone read the advertisement and reasonably say that they are defaming Sullivan?
Justice Brennan on Standards: Knowing falsity or reckless disregard for the truth. That is strikingly similar language to Lord Herschell’s definition of deceit in Derry v. Peek. Justice Brennan adds that it must be shown with convincing clarity. So the burden of proof is beyond the usual burden of proof in a civil lawsuit, which is a preponderance of the evidence. The only other time we have suggested a clear and convincing evidentiary standard was when we talked about punitive damages. We said that in most jurisdictions today a plaintiff who tries to make out a punitive damages claim also must show clear and convincing evidence – same thing here with defamation.
What impact does this rule have on state court judges? Clearly if you are a Federal District Court judge presiding over a defamation claim of a public official, we know from this case that a Federal District Court judge has to give an actual malice charge. Justice Brennan makes a statement that you very seldom see in a tort opinion case. He says, “The constitutional guarantees require, we think, a federal rule.” The court having infused a First Amendment discussion in the analysis now articulates a federal rule of tort law equally binding on both Federal Court judges and state court judges and that’s a remarkable thing. You do not see that very often.
Back to the advertisement. When truth is an affirmative defense we require substantial truth. We don’t necessarily require that every single word in the publication be 100% true. There were some discrepancies in the ad.
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The jury charge that Judge Jones gave left the New York Times absolutely no room. The words were defamatory on their face. He didn’t get into colloquium. He said that the jury must find that this was of and concerning Commissioner Sullivan. Then he said that in essence truth would only be a defense in this case if every aspect of this ad was materially true to the letter. It’s not, but I will say this: I think that a very legitimate argument can be made in this case that this ad is substantially true. If you were analyzing this case for me, you could clearly persuade me that this ad is substantially true. Is it true in all particulars? No, but is the meaning of this ad really changed by four arrests versus seven arrests or different songs being sung? I frankly don’t think so and substantial truth may be a defense here – at least it’s a pretty good argument.
Amazingly in 1964 the US Supreme Court finds the Sedition Act of 1798, which made it a crime to publish defamation against high officers of the United States, and reached the conclusion at this late date that the Act was unconstitutional. “What a State may not constitutionally bring about by means of a criminal statute is likewise beyond the reach of its civil law of libel. The fear of damage awards under a rule such as that invoked by the Alabama courts may be more inhibiting than the fear of prosecution under a criminal statute.”
He is suggesting that if you had a Sedition Act, you have a criminal statute on the books that makes it a crime to criticize public officials and that may not be as much of a deterrent to freedom of speech as the fear of compensatory damages under the law of libel.
Do you think that’s true? If you were a reporter and you were thinking of writing a story about a government official and the two possibilities were:
1. If I write this, I might end up in jail.
Or
2. If I write this, my newspaper may be sued but they have lots of insurance and in- house counsel.
Is the latter more of a deterrent than the former?
Page 871: “We are required in this case to determine for the first time the extent to which the constitutional protections for speech and press limit a State’s power to award damages in a libel action brought by a public official against critics of his official conduct.”
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Why is this the moment? The Judge Joneses of the world had created a situation in which anybody who had the temerity to write something akin to what the New York Times had written would face an automatic defamation suit. They then had to face the dynamics of a Judge Jones courtroom and at the end of the day face jury charges which basically meant they were going to get whacked – that’s what he is saying.
It comes to no surprise that in the heart of the civil rights era the US Supreme Court looks at this milieu and says wait a minute; defamation is becoming a sword for these kinds of judges to silence any criticism of the government whether it is local or federal.
This is a conscious choice by the court to address a developing dynamic of the silencing of speech that dared to question the status quo. The law of defamation had become so skewed in this point in the civil rights era that it had become a heavier club than the criminal law.
Did the New York Times act with actual malice? Was this advertisement written with knowing falsity or reckless disregard for its truth? The court said no. The ad may have been negligently written. If you drop the level of fault to negligence maybe it gets someone close.
What I find interesting about Brennan’s opinion is on page 877, almost as an afterthought, after articulating this new standard, after infusing the Constitution in this discussion he says, and oh by the way, there’s no colloquium anyway. “We also think the evidence was constitutionally defective in another respect: it was incapable of supporting the jury’s finding that the allegedly libelous statements were made “of and concerning” respondent.” Justice Brennan could have written a one page decision here. He could have said that the jury charge was defective because there was no colloquium and the reasonable reader would not have read this to be of and concerning Sullivan. Case reversed.
Not only are you going to have to identify the type of person, you are also going to have to identify the type of concern. Is it a public concern? Is it a private concern? The only cryptic reference to public concern appears at the bottom of page 875 and Justice Brennan is quoting the Kansas case of Coleman v. MacLennan. He says, “In such a case the occasion gives rise to a privilege qualified to this extent. Any one claiming to be defamed by the communication must show actual malice, or go remediless. This privilege extends to a great variety of subjects and includes matters of public concern, public men and candidates for office.”
Justice Brennan does not overtly or directly insert public concern into the analysis but he does quote a case that did. And we know within the few short years in the Rosenbloom case the court is also going to embrace this idea that what type of interest is involved also matters.
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Damages
Defamation Chart in supplement: If a public official shows actual malice by clear and convincing evidence, they are entitled to presumed compensatory damages. Punitive damages if the facts allow. You need to show actual malice for presumed compensatory damages but you need to show common law malice for punitive damages. In most circumstances, common law malice is going to be more egregious conduct than actual malice.
Common law malice: To include things like: having a personal vendetta against the person, writing something with evil motive or bad motive and ill will.
Actual malice: Simply writing something with reckless disregard to the truth. It may or may not qualify for punitive damages – you are probably going to need more.
There is no question that in fact pretty outrageous police misconduct was occurring on a daily basis and if this ad does not get it right in all of its particulars, again is what they are saying generally reflective of what’s going on in Montgomery? Yes. The only thing that is not open to debate is this is not actual malice. It may support a finding of negligence and I would agree that the issue of substantial truth is also fairly debatable.
The First Amendment, said Judge Learned Hand, "presupposes that right conclusions are more likely to be gathered out of a multitude of tongues, than through any kind of authoritative selection. To many this is, and always will be, folly; but we have staked upon it our all." United States v. Associated Press, 52 F.Supp. 362, 372 (5.D.N.Y.1943). * * *
Curtis Pub. Co. v. Butts (Note 4)
Supreme Court, 1967
This is the case that extends the New York Times test to public figures. The Saturday Evening Post published a sensational article that football games had been rigged in the football mad southeastern conference of college sports. It said that Wally Butts, the athletic director at the University of Georgia, had given the Georgia team’s secret plans to the Alabama Coach, Bear Bryant before their big game. The story is based on a strange experience of an Atlanta business man who was trying to make a telephone call when he found himself connected to a conspiratorial conversation between Butts and Bryant. Butts sued Curtis Publishing for libel. A jury awarded him $60,000 in compensatory damages and $3 million in punitive damages later reduced by the court to $460,000.
Reviewing that judgment, the Supreme Court focused on the question of Wally Butts’ status. He was not an official because he was not on the State payroll. By special arrangement he was paid out of alumni funds. But he was a public figure – someone well known to the public. Should he have to meet the same test of knowing or reckless falsehood? The court said yes.
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You typically have two types of figures:
1. A Limited or Vortex Public Figure: Someone who is typically a private person but they voluntarily thrust himself or herself into the vortex of a particular public dispute or public issue and for that moment in time they leave their private status and they become a limited public figure. You should further distinguish the limited public figure between voluntary and involuntary limited public figures. Most limited public figures do so voluntarily but occasionally you do have an involuntary public figure. The classic example of this in the last decade or so was Richard Jewell, the guy who was erroneously charged with setting off the Atlanta Olympics bombs. Here’s a private guy who suddenly gets charged with a heinous crime who becomes an involuntary public figure.
2. All Purpose or Universal Figure: Certain celebrities and sports figures – people who are inevitably, irretrievably public in everything that they do. There are not a lot of folks that qualify for that status but they’re certainly out there.
St. Amant v. Thompson
Supreme Court, 1968
1. Subjective standard
If there’s any one case that’s responsible for decade long battles, it’s this case. The issue in this case is a simple one but the answer is profound. The question here is for purposes of actual malice when considering knowing falsity or reckless disregard for the truth – is the standard an objective or subjective one? Do we say, would the reasonable person in this writer’s shoes have thought about whether or not what they were saying was true? Is it a reasonable standard or to prove actual malice does the plaintiff have to show what was in fact in the mind of this particular writer?
In this case the court chose a subjective standard. In order to show actual malice the plaintiff must show that the subjective state of mind of the actual writer should have led them to entertain serious doubts about the truth of what they were writing. You’ve got to get into their head.
You can tell that Justice White is concerned about where the court is going on this. He says, “It may be said that such a test puts a premium on ignorance and encourages the irresponsible publisher not to inquire and permits the issue to be determined by the defendant’s testimony that he published the statement in good faith and unaware of its probable falsity.” Henke: I think that is a very legitimate concern. You can’t use this test to hide behind a total veil of ignorance. He goes on to say, “Where a story is fabricated by the defendant, is the product of his imagination, or is based wholly on an unverified anonymous telephone call.” Henke: At some point you do have a duty to investigate but by requiring you show the actual state of mind of the writer is opening Pandora’s Box.
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Herbert v. Lando (Note 2)
2nd Circuit, 1986
This case is a good example of the mischief of St. Amant. If you want to know what St. Amant leads to, you have to read the Herbert case.
Colonel Anthony Herbert was a Vietnam vet who said he had been punished by the Army for trying to bring to its attention massacres by American forces. CBS did a program, The Selling of Colonel Herbert that was skeptical of his claims. Colonel sued CBS, producer Barry Lando and others for libel. In discovery Herbert’s lawyers asked to look at CBS files and segments of filmed interviews that had been left on the cutting room floor. He wanted to explore why some things were used and others left out. After answering up to a point, CBS resisted, arguing that exploring editorial decisions in this way would lead to fear on the part of editors and thus to the very self-censorship that the New York Times case was supposed to prevent.
But when CBS made this argument to the court, the court rejected it. Justice White noted that public figures or officials have the burden under Sullivan of proving probable falsity. If they could not discover what the publisher knew they might effectively be barred altogether from recovering damages, a step the court had refused to take. The decision was therefore that libel defendants must provide the material of the kind demanded by Colonel Herbert. Justice Brennan said later, “It would scarcely be fair to say that a plaintiff will only recover if he establishes intentional falsehood and at the same time to say that he cannot inquire into the defendant’s intentions?” How else are you going to find out this stuff if that’s the standard?
The Herbert decision became a significant factor in the rising cost of libel suits. If they could afford the cost of discovery, plaintiffs now routinely explored the files and minds of journalists. Not to be outdone, defendants subjected plaintiffs to probing discovery to the point where some plaintiffs lawyers complained of intimidation by large press enterprises. The Herbert case showed what a burden discovery could be. It went on for 12 years until finally in 1986 the US Court of Appeals in New York ordered the Colonel’s libel claims dismissed and the Supreme Court declined to review the case a second time.
This guy litigated this case 12 years for a 0. By then Lando had been questioned at 28 depositions that produced 3000 pages of transcripts and 240 exhibits. He also had to turn over all his files and videotapes of the interviews. For their part CBS’s lawyers got 12,000 pages of documents from Colonel Herbert. In 1982 Mike Wallace of CBS who took part in the program and was a defendant in the libel case, estimated that CBS spent $3 to $4 million in legal fees.
That’s what happened because of St. Amant – getting into the state of the mind of the writer and the only way to do that is get a hold of all of the editorial processes that goes into a publication. I think the St. Amant case is very important. It is a subjective standard and I think the Herbert case is a really good example of where that leads us.
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Harte-Hanks Communications, Inc. v. Connaughton
Supreme Court, 1989
1. The refinement of actual malice
Connaughton ran for Municipal judgeship and was trying to unseat an incumbent judge who is being supported by the local newspaper. On the eve of the election one of the campaign managers of the incumbent suddenly resigns under a cloud of suspicion. In the grand jury testimony this Miss. Thompson comes forward and essentially says that Connaughton was one of the main instigators of this guy’s demise. The newspaper supporting his opponent takes her testimony without any further inquiry and writes this piece. Meanwhile there were five other witnesses willing to refute the testimony of Miss Thompson. The newspaper decides not to ask any of those people what they might know.
Be careful what you find out, you may not like it. In this case the court really hearkens back to a concept we talked about in misrepresentation. Remember what Judge Cardozo said in the Ultramares case? “With suspicions thus awakened, turning a blind eye to the truth.” In misrepresentation we said that a form of deceit is to turn a blind eye to the truth and we’ve been analogizing between the definitions of misrepresentation and defamation. I think the analogy comes full circle here. The bottom line here: this publisher with suspicions thus awakened turns a blind eye to the truth by failing to elicit any further testimony from any of these fact witnesses. I think that the Harte-Hanks case addresses that concern in St. Amant – the concern that the actual malice test might arguably put a premium on ignorance. This suggests that at some point your willful ignorance will become actionable because your willful ignorance will be turning a blind eye to the truth.
I think that you really have three possible manifestations of actual malice:
1. Knowing falsity;
2. Reckless disregard for the truth; and
3. Turning a blind eye to the truth.
Anderson v. Liberty Lobby (Note 2)
Supreme Court, 1986
We’ve talked about the relative role of judge and jury in defamation cases. Judge Wisdom in Belli said that only in the clearest case should a trial judge take the issue away from the jury. Anderson in a sense reexamines the issue. If a defendant moves for summary judgment, what is the burden of proof on the plaintiff to survive a summary judgment motion? Justice White said, “We conclude that the determination of whether a given factual dispute requires submission to a jury must be guided by the substantive evidentiary standards that apply to the case. This is true of both directed verdict and summary judgment.”
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So if the New York Times case applies, the trial judge’s summary judgment inquiry as to whether a genuine issue exists will be whether the evidence presented is such that a jury applying that standard could reasonably find for either the plaintiff or defendant. This case suggests that even at the summary judgment stage, you’ve got to have your case sufficiently lined up so that you can show actual malice by clear and convincing evidence. And if you can’t, the judge can bounce your case.
Has Anderson substantially changed defamation law? No. Very few trial judges bounce these cases at the summary judgment phase. What I think Anderson stands for is the notion that, if you’re a trial judge with some chutzpah and you really want to put a plaintiff’s feet to the fire, take this case seriously.
Gertz v. Robert Welch, Inc.
Supreme Court, 1974, Justice Powell
1. Based upon negligence, must show actual injury
Welch published "American Opinion," a John Birch Society newsletter. The defendant printed an article about Gertz that was untrue, discrediting Gertz’ reputation and motives in representing a police officer convicted of murder in the civil trials that followed the criminal conviction. Defendant’s article said that Gertz was part of a frame up of the officer, labeled him a Leninist and that Gertz had a criminal record. Gertz claimed that the falsehoods published by Welch injured his reputation as a lawyer and a citizen. Elmer Gertz ultimately gets about $400,000.
Would a civil liberties lawyer in the 1960s be damaged by a defamatory publication by the John Birch Society? This is the era of Woodstock. Where’s the harm here? Anthony Lewis on Gertz:
“Gertz was a charming man who delighted in his damages award. He was 76 when he finally collected the money and he used it to cruise around the world with this wife on the SS Rotterdam. Before embarking he said, “I think I should send a telegram to Mr. Welch from every port.” Gertz’s pleasure was infectious and it seems a shame to carp about his damages but it is extremely unlikely that the magazine attack did his reputation as a lawyer or a citizen any harm.”
Henke: Once again we have a very significant damages award. If we put it in 2007 dollars it’s a seven-figure award without a showing of a nickel’s worth of pecuniary harm. This is just a thematic oddity of defamation cases. Where is the relationship? Where is the nexus between damages recovered and harm suffered?
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You have two choices as a state in a private person/public concern situation:
1. Negligence as to truth or falsity standard;
Or
2. Actual malice standard.
If a private person in a matter of public concern only show negligence, Justice Powell says they must also show actual injury. Henke: Show me Elmer what your accounts receivable were before the defamation and prove to me that your business slipped after.
In Terwilliger, the plaintiff became prostrate in health. He was upset but he couldn’t show any out-of-pocket loss.
Justice Powell says, “We need not define actual injury. Suffice it to say that actual injury is not limited to out-of-pocket loss.” Henke: And there’s the missed opportunity. I think that the last 30 years of defamation law would be entirely different if he said actual injury is limited to out-of-pocket loss. You take out the word not and you make Gertz before he files a lawsuit prove, in order to recover, what his out-of-pocket loss was as a result of this statement. That’s not a meaningful standard, it’s not a limitation. Based upon negligence must show actual injury.
If analyzing a defamation claim by a private person in a matter of public concern, you do have to show actual injury – damages are not presumed.
“The first remedy of any victim of defamation is self-help-using available opportunities to contradict the lie or correct the error and thereby to minimize its adverse impact on reputation. Public officials and public figures usually enjoy significantly greater access to the channels of effective communication and hence have a more realistic opportunity to counteract false statements than private individuals normally enjoy. Private individuals are therefore more vulnerable to injury, and the state interest in protecting them is correspondingly greater.”
But what about Internet blogs and YouTube? It appears to me that making this type of self-help available is a little different than it was 30 years ago.
If an attorney takes on a controversial case knowing full well that it’s going to be in the newspapers and even the national newspapers, should that qualify them as a voluntary limited public figure? If we were to call a guy like Gertz a voluntary public figure the downside would be possibly deterring attorneys like Gertz from taking controversial cases. Certainly at least in 1974 I think that the Court appropriately finds that he does not become a public figure. I think that there is a concern that if lawyers who take a controversial case might open themselves up to this kind of vitriol and then maybe
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important cases are not taken by the best lawyers. I have a feeling today the prejudice is just the opposite and may ultimately end up helping your business.
If you were analyzing a Gertz-like case for me, I would certainly be open-minded to arguments either way. I think a perfectly reasonable argument can be made in this case that Elmer Gertz became a limited public figure for purposes of this lawsuit. In fact, I would go so far as to say that if this were a fact pattern, I think you need to analyze this case in the alternative. You need to do an actual malice analysis for the possibility that he became a public figure and you also need to do a negligence analysis for the proposition that he remained a private person because I think it is close enough to warrant that.
Notes: About 42 jurisdictions have interpreted Gertz to only require a negligence standard. There are about 8 states that require a private person in a public concern to make out the elevated burden of actual malice.
Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc.
Supreme Court, 1985
1. Prevailing law on public concern
Justice Powell once again writes the majority opinion. Justice Powell renounced Rosenbloom in Gertz. He said, “We doubt the wisdom of judges on an ad-hoc basis determining whether something is of public interest or public concern.” Fasten your seatbelt because in a remarkable twist of fate he resurrects and breathes new life into Rosenbloom.
“In Gertz we held that the First Amendment restricted the damages a private individual could obtain from a publisher involved in a matter of public concern.” Footnote 11 of Justice Brennan’s dissent:
11. One searches Gertz in vain for a single word to support the proposition that limits on presumed and punitive damages obtained only when speech involved matters of public concern. Gertz could not have been grounded in such a premise. Distrust of placing in the courts the power to decide what speech was of public concern was precisely the rationale Gertz offered for rejecting the Rosenbloom plurality approach. [C]
If somebody else wrote the majority in Dun & Bradstreet and resurrected public concern, you would expect Justice Powell to dissent. Instead you have the schizophrenia surrounding the public concern issue. The fact of the matter is it’s back. Dun & Bradstreet is the prevailing law and you need then to determine both the type of person involved as well as the type of concern.
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In Dun and Bradstreet the court holds in somewhat cryptic fashion, “In light of the reduced constitutional value of speech involving no matters of public concern, we hold that the state interest adequately supports awards of presumed and punitive damages – even absent a showing of “actual malice.”
That’s a very oblique statement. What does Dun & Bradstreet mean? If you are analyzing a defamation claim with a private person in a matter of private concern, you should argue it in the alternative. What the above cryptic statement suggests to me is at most, you have to show Gertz negligence but arguably you don’t have to show that. Arguably a private person in a matter of private concern, if they make out the elements of the prima facie case we are back to where we started – strict liability; presume damages. My own view is that it should be the latter. I fail to see any First Amendment interest in the private concerns of private people. All of the rationale that gives rise to Justice Brennan’s opinion in New York Times about the open and robust public debate – the free exchange of ideas, the fact that we want to make sure that our public officials are good qualified people. All of those rationales to me evaporate in the context of the private affairs of private people. The Court has not taken a private/private case since Dun & Bradstreet. There is no further refinement of that cryptic statement on page 904.
You need to entertain alternate possibilities:
1. Gertz negligence; or
2. Strict liability.
The fact of the matter is very few private/private cases make their way thru the system. What private person in a matter of private concern has the wherewithal to take a case thru litigation for 10 years? It’s no surprise that most of the blockbuster defamation cases have to do with celebrities and public officials.
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FINISHING DEFAMATION
We have taken what was once a common law area and we have constitutionalized it beginning with the New York Times case. From an analytical standpoint, if you are going thru a defamation problem it really breaks down into two planes:
1. Common law analysis: looking to see if you have something that is libel per se or perhaps libel per quod, in which case you will have to make out all the elements.
2. Constitutional analysis: identify the type of person implicated as well as the type of concern.
I think that it is virtually impossible in today’s culture to have a fact pattern or a hypothetical in which you have a public official or a public figure in matter of private concern. I think that coupling is almost an oxymoron.
Public figure in a matter of public concern
So if you determine that you have a public official or a public figure, determine also as a practical matter that it is a matter of public concern and if that’s the case then you have to show actual malice defined as a knowing falsity, reckless disregard to the truth or turning a blind eye to the truth. The burden of proof here is the elevated burden of clear and convincing evidence and in terms of damages, if you can make out that case you are entitled to presumed compensatory damages and potentially punitive damages if you can also show common law malice.
When we are thinking about common law malice in a punitive damages case, look to see whether there is some sort of personal ill will by the writer toward the person they are defaming. Do they have a personal vendetta against them or an axe to grind? When it becomes a personal ad homonym attack on somebody, then you might be thinking common law malice.
Private Person in a matter of public concern
The Supreme Court has said at a minimum a private person in a matter of public concern must show negligence but they allowed the states more latitude. If a state wants to impose the actual malice standard they are free to and indeed 8 or so states have applied the actual malice standard for the private person in the matter of a public concern. Most jurisdictions however only require the negligence standard.
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Philadelphia Newspapers, Inc. v. Hepps
Supreme Court, 1986
Up until now we have dealt with the issue of truth as an affirmative defense. We have essentially allowed for the presumption that if you have defamatory words that are published, they are false. The burden is on the defendant to prove truth as an affirmative defense. The tables are turned in the Hepps case. Justice O’Connor does a very important thing. Justice O’Connor says that the private person in a matter of public concern must in the first instance show actual falsity as opposed to truth being an affirmative defense. Suddenly here falsity in the first instance is the plaintiff’s burden. I have to say that this is very meaningful. She makes the statement on page 909:
“There are going to be cases where a plaintiff is going read something about them that is false and defamatory and they’re not going to be able to prove it is false. The plaintiff’s suit will fail despite the fact that in some abstract sense the suit is meritorious.”
Henke: That word abstract strikes me as a little understated. What about some real sense? Or some inarguable sense? There is nothing abstract about being the victim of a character assassination that you cannot disprove. I find more appeal in what Justice Stevens says in his dissent:
“Deliberate, malicious character assassination is not protected by the First Amendment. I do not understand why a character assassin should be given an absolute license to defame by means of statements that can be neither verified nor disproven.”
We now have to say that a private person in a matter of public concern must show both negligence and falsity. I think that Hepps is a very significant addition to the Gertz test.
Does this really add that much to the plaintiff’s burden in many cases? After all if you’re a plaintiff and you’re showing that a newspaper wrote something negligently, in many cases what is negligence going to mean? It’s going to mean falsity. Justice O’Connor is saying that in a lot of cases, this isn’t going to add that much but what troubles me is that undoubtedly the shift of the burden will lead us to what Justice Stevens calls character assassination with no repercussions.
A private person in a matter of public concern shows now negligence and falsity. He or she must also prove actual injury in order to recover compensatory damages. But never forget the discussion by Justice Powell on page 898 where he gives that broad definition of actual injury. You do not have to show out-of-pocket loss. You don’t have to show the same type of special damages that we talked about in a slander case. We said that in a slander case unless you fell into one of the four categories of slander per se you had to show special damages which meant pecuniary out-of-pocket loss. If Justice Powell had adopted the definition of special damages that we’ve used in the slander context, I think he really would have accomplished a very important limitation on people bringing defamation lawsuits.
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He defined actual injury and special damages as subjective things – emotional distress, anguish, shame, etc. The bottom line is: a guy like Elmer Gertz does not have to show that his law practice suffered. He doesn’t have show that what the John Birch Society wrote about him affected his pocketbook unfortunately perhaps.
Potentially this private person may also be able to bring a punitive damages claim if he or she could show common law malice. Practically speaking, if all that you can prove is mere negligence, how likely is it that a private person in a matter of public concern is ever going to see punitive damages?
Private person in a private concern
Dun & Bradstreet case. At most a private person in a matter of private concern has to make out the Gertz/Hepps standard. But I think a perfectly legitimate argument can be made that there is no First Amendment concern in the private affairs of private people and therefore perhaps this case comes full circle and returns us to the strict liability analysis where we began.
If a private person in a matter of private concern can prove the prima facie elements, then I think a very good argument can be made that compensatory damages should be awarded.
If you represent a defendant in a defamation case, you’re going to try and characterize every plaintiff as a public person thus requiring actual malice. If you represent plaintiffs in defamation work, you are always going to be characterizing them as private people so you only need to make out the lesser standard.
Whether a person is a public or private person is a question of law – it is for the court to decide what the ultimate characterization of a person is.
Milkovich v. Lorain Journal Co.
Supreme Court, 1990
This case took 15 years to go up and down the Ohio court system and back and forth to the Supreme Court. A fracas breaks out at a wrestling match and the superintendent and the coach testify at an initial disciplinary hearing. The finding of the disciplinary commission was to essentially suspend the team for a period of time. The parents of course get into an uproar over this and basically seek injunctive relief to overturn the suspension.
At the court proceeding, the testimony of the superintendent and the coach is somewhat different from the testimony they gave at the original hearing. So this guy Diadium writes a piece in the local newspaper saying things like, what kind of a lesson has this taught the children at this school, that you can lie and cheat your way out of trouble, etc, etc.
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Milkovich brings this case against this writer who in essence is alleging he committed perjury. The defense of the newspaper is essentially to say that the statement in the newspaper was not a statement of a defamatory fact but was only the statement of a mere opinion.
Here we are again. We had this same discussion in the misrepresentation materials. We went thru that fact/opinion dichotomy. The statement of every opinion is the statement of at least one fact – the fact that the speaker holds that opinion. I think that statement resonates in Justice Rehnquist’s opinion here in defamation. Justice Rehnquist rejects the fact/opinion dichotomy and what he says is that four factors should be looked at:
1. The specific language used;
2. Whether the statement is verifiable;
3. The general context of the statement; and
4. The broader context in which the statement appeared.
Statement number 2 is the analog to reasonable reliance in misrepresentation.
Justice Rehnquist makes the statement: “It would be destructive to the law of libel if a writer could escape liability for accusations of defamatory conduct simply by using, explicitly or implicitly, the words ‘I think.’ ” Henke: you can’t insolate yourself from a defamation charge by couching it in terms of opinion.
Justice Rehnquist also talks about the doctrine of Fair Comment. Fair comment is an affirmative defense that allows editorial writers to say some of things they do in op-ed pages. The principal of fair comment afforded legal immunity for the honest expression of opinion on matters of legitimate public interest when based upon a true or privileged statement of fact.
If an editorial writer writes a piece that is based upon underlying true facts and if that writer wants to put his or her spin on those facts, fair comment allows them to do that. Comment was generally privileged when it concerned a matter of public concern that was based upon true facts, represented the true opinion of the speaker and was not made solely for the purpose of causing harm. A writer cannot engage in gratuitous character assassination under the guise of fair comment but to some degree it does insulate those who write editorials and other opinion pieces so long as they are based upon and underlying true fact.
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What Justice Rehnquist goes on to say in his opinion is look, you’ve already got the constitutional protections, you’ve got the doctrine of fair comment, we’re not also going to give you another defense. Maybe Justice Rehnquist was a little frustrated and he’s having none of it. Think about where we were before New York Times. All you had to show were defamatory words, publication and damages were presumed. And unless the New York Times could show the actual truth of every word in that advertisement, they got whacked.
If you are analyzing the opinion/fact dichotomy in a defamation setting, I would look to this case and look to see whether the statement is verifiable and then look to see whether the doctrine of fair comment is the appropriate mechanism by which the defendant can protect himself.
PRIVILEGES
ABSOLUTE PRIVILEGE
Inside the Domain
Judicial privilege: the ability of a judge in his or her courtroom to say things that might be defamatory in the context of a judicial proceeding.
Courtroom proceedings: Defamatory privilege for witnesses or others who may have to testify in court.
Legislative immunity: A senator in the senate chamber may be able to say things that might be defamatory.
Outside the Domain
Hutchinson v. Proxmire (Note 7)
Supreme Court, 1979
7. The Supreme Court in Hutchinson v. Proxmire, 443 U.S. 111 (1979), focused on the scope of immunity under the speech and debate clause. Senator Proxmire gave "Golden Fleece of the Month Awards" to highlight what he considered wasteful federal spending. Hutchinson had been given federal grants for research on aggressive behavior in primates, for which the Senator gave a Golden Fleece Award. In a speech on the Senate Floor written by an aide, he demeaned Hutchinson's work. The speech was published in a press release and a summary distributed to Wisconsin constituents. The Supreme Court held that the Senator was "wholly immune" for his statements on the Senate Floor, but not immune for statements in the press releases and newsletters because they were not "essential to the deliberations of the Senate" and were not "part of the deliberative process."
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While the Senator is in the Senate Chamber, if he wants to ridicule others then that’s fine but he is not immune to press releases and newsletters.
QUALIFIED OR CONDITIONAL PRIVILEGE
Sindorf v. Jacron Sales Co., Inc.
MD, 1975
1. Stepping outside the qualified privilege
This case represents a reciprocal duty or a reciprocity of interests. The classic fact pattern is the letter of recommendation or the oral reference. Somebody is doing a background check to perhaps hire a new person. Sindorf is a good example of this.
The plaintiff had worked at the original company and he worked on commission. He felt that when he resigned some monies were still due and owing to him so he retains some stuff as collateral from the workplace. His boss at the original place of employment puts in a call to his would-be boss at the next place, the two of whom know each other. The original boss starts to say some pretty unattractive things about Sindorf including that he was fired, when in fact he had resigned, suggesting that he had retained some of the inventory not in conjunction for collateral for monies withheld but because he was a thief.
The issue in this case is: did the employer step outside of his qualified privilege to perhaps give some defamatory information about this employee when he made some of those statements that were not true? The court concluded that in fact he went outside the privilege. The language was excessive and the facts were wrong.
These cases often turn on whether information is volunteered or affirmatively sought. When you are trying to determine how much latitude a speaker has to give this kind of information note carefully whether the information was volunteered or whether the potential employer sought the information affirmatively.
These cases almost always seem to suggest sometimes overtly and sometimes less so that:
1. A speaker has more latitude when the information is affirmatively sought.
2. Silence or failure to inform about a would be lurking problem in a person potentially may be more detrimental to you in given circumstances than saying it.
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Example: Say you have a file on an employee that has all sorts of dubious things in it such as a history of violence and somebody calls you for a reference and you don’t mention those sorts of things and that person goes to the next jobsite and they attack somebody. The person who is attacked starts an assault and battery case and when the discovery hits the fan in that lawsuit and among the things the plaintiff’s lawyer seeks is the prior history of this person at a prior jobsite, if that stuff comes to light and can be proven that you failed to mention any of those things, that could be potentially more detrimental than saying candid statements of fact about a given person. It’s a very slippery area.
REPORTERS PRIVILEGE
Reporter’s Privilege. If a reporter from a newspaper attends a public hearing or meeting and someone says that the mayor is laundering money. In the next day’s paper, the reporter writes fairly and accurately, it was reported at the council meeting last night that the mayor is laundering money. If it turns out not to be true, the reporter’s privilege will insulate that reporter from defamatory liability. Be very careful – it has to be a fair, accurate, un-opinionated rendition of what was said. If you add anything to it the privilege is over. It has to be word for word rendition of something that was said in this public context.
REMEDIES
Throughout our discussion of defamation, time and time again we have questioned the relationship between damages awarded and harm suffered. Compensatory damages are a substitutionary remedy. The substitution is never a perfect one but in a regular tort case if you have medical, hospital bills, and lost wages – those are tangible special damages. A jury can look at what you’ve lost and what your future losses are going to be. We can get some general sense of what a case might be worth and we’ve wrestled with this in defamation cases. It’s anybody’s guess what these cases are worth and it’s hard to see guidance. There are some suggestions in the notes that go to alternative remedies beyond compensatory damages.
Mitigation of Damages: Provocation by the plaintiff is generally regarded as admissible for the purpose of mitigating punitive damages. Look to see what remarks may have been provoked.
The “Libel-Proof Plaintiff: The notion here is there may be some people whose reputations are already so tarnished that they in essence become libel proof. Anything said about them could not further their sully their already poor reputation. Most jurisdictions have rejected the notion of libel proof plaintiffs.
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Incremental Harm Doctrine: The Masson case. Janet Malcolm, a reporter for the New Yorker did a series of articles on Jeffrey Masson, a rather controversial psychoanalyst who had worked on the Freud archives. She taped many of their interviews but when she wrote her pieces the quoted material did not match up with the tapes. Masson brought a defamation action against the magazine and against Janet Malcolm.
The small issue in the case, written by Justice Kennedy was. to what extent do misquotes potentially constitute defamation? If a misquote materially alters the meaning of the statement from what it actually was, it may be defamatory. The other issue in the case was the incremental harm doctrine because the great majority of what Janet Malcolm wrote was accurate. The great majority of it which was accurate and true did put Masson in a dubious light. The New Yorker argued that if 80 or 90 percent of the quoted material is accurate, does any harm ensue to the incremental part that’s not true? And the court said, "The theory must be rejected because it rests upon the assumption that one's reputation is a monolith, which stands or falls in its entirety.
Jeffrey Masson’s reputation is not a monolith; it is composed of various parts. Even if 80% of those parts have been accurately exposed as bad, he may have a nice 20% sliver that’s good and that ought to be able to stand. I would do what the next note suggests:
Bad Reputation: Instead of concluding that someone is libel proof, or that they cannot suffer any more harm, instead I would think in terms that bad reputation as a fact that is relevant on the issue of damages. Instead of using it as an all or nothing proposition, use it in damages.
Nominal Damages: Recognizing that a person perhaps has been defamed but they really haven’t suffered a lot of loss so we impose nominal damages in recognition of wrongdoing. The only problem with nominal damages is, what kind of deterrence does it create? If you get a slap on the wrist after defaming somebody, how does that make you a more careful writer or speaker the next time? It doesn’t.
I really wish that the Supreme Court had defined actual injury as out-of-pocket pecuniary loss. Instead of compensatory damages that have no parameters or guidance, why not make a guy like Elmer Gertz show out-of-pocket loss and if he can, in addition to pecuniary loss, make the defendant pay the plaintiff’s attorneys fees? Why not entertain the idea of fee-shifting in defamation cases but make the plaintiff show real out-of-pocket loss?
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Declaratory Relief: If you sue a corporation, they turn to their insurance carrier and say, you have a duty to defend us in this lawsuit and if we’re found responsible you have a duty to indemnify us. The insurance company says no and disclaims coverage. This is the moment in which the company is going to start a declaratory judgment action against its insurer. They are going to ask a court to, in essence, interpret the insurance contract. It’s like a parallel lawsuit for a judicial declaration as to whether or not a policy applies to the risk.
It’s a declaratory judgment – a situation in which you want a judicial declaration as to a certain legal state of affairs. The notion is raised here. What about declaratory judgments by courts to say, yes in fact you have been defamed and perhaps further stating that the defendant should retract the statement? Declaratory relief could coexist with nominal damages.
Injunctive Relief: Prior restraints on publications. Could an injunctive relief be a good remedy in defamation cases? Two possibilities:
1. Someone finds out that a defamatory publication is about to be written about him or her. That person goes to a court of equity seeking a preliminary injunction to enjoin the publication of that material. I have news for you – the burden of proof on a plaintiff to get a preliminary injunction is to show an eminent threat of irreparable harm. That is a standard that has a lot of teeth.
2. The defamatory material is published and then you seek a permanent injunction after the fact either to have it lifted or to not have any further publications made. There is really a taboo surrounding the restraint of written material. Practically speaking I do not see injunctive relief in defamation cases.
INVASION OF PRIVACY
Invasion of privacy breaks down into Four Branches. Of the four I think the first and the fourth are the most significant.
1. COMMERCIAL APPROPRIATION OF A NAME
Example: A private person minding his or her own business, whose name or photograph or image or likeness suddenly appears in a magazine or a newspaper and is being used by that entity for commercial gain without his or her consent.
Torts II, Week 13
Joe Dickerson & Associates, LLC v. Dittmar
CO, 2001
There is this investigative agency that sends out newsletters to law firms and other entities that may need their services. A particular newsletter trumpets the fact that the agency was instrumental in the arrest and subsequent prosecution of Ms. Dittmar who was stealing bearer bonds from her employer.
The agency used the fact of her conviction as a selling point essentially in one of their newsletters. What’s delightfully ironic about the case is that it is a little bit odd for a convicted felon to be bringing an invasion of privacy case but Ms. Dittmar is claiming a commercial appropriation of her name.
The court said, “We consider it critical in deciding this case that recognition be given to the difference between the personal, injured-feelings quality involved in the appropriation privacy tort and the property, commercial value quality involved in the right of publicity tort.”
The question on appeal is this: When a private person brings a commercial appropriation case do they have to show as a prerequisite to recovery that their name has some commercial value? The Colorado Supreme Court says very appropriately no. This branch of the tort is not about a celebrity or someone that has commercial value. It’s about a private person who is upset that their name or photo has been used without their consent.
The case that Dickerson replaces was Flake v. Greensboro News (NC, 1938) which was a good damages case. Flake found her photograph being used in conjunction with an ad for rye bread when in fact they were supposed to use a model. Upon the discovery of the mistake, the newspaper immediately retracted the picture, sent an apology and did all kinds of damage control. The court in Flake said that the appropriate remedy for her was nominal damages. The question you have to ask yourself is, what are the damages in these types of cases?
Note 4: Right of Publicity: Carson v. Here’s Johnny Portable Toilets, Inc., the court holding that under Michigan common law, distributor’s use of “Here’s Johnny” in conjunction with promotion of a portable lavatory is actionable.
Note 5: Is this cause of action tort based or is its foundation property based? If you conclude that a person has a vested property interest in their celebrity persona, it is freely alienable and it survives the death of the person. If Vanna White’s robotic turning of letters is a vested property right and somebody tries to mimic that for economic gain, if they succeed you have two remedies against that mimic:
Torts II, Week 13
1. Sue in Damages: The obvious and less lucrative choice would be to sue the mimicker in damages.
2. Restitution of Attributable Profits: Probably your better choice would be to get an expert to testify that X amount of your profits are directly attributable to your piracy of a celebrity. Forget about damages – I am now going to disgorge the unjust enrichment that you have gained as a result of stealing Vanna White’s shtick.
Malpractice Trap: One of the most prolific malpractice traps that a lawyer can fall in to is to fail to recognize that restitution is a possible remedy. If you practice law in a jurisdiction that considers the persona of a celebrity to be a proprietary property interest and that person comes to you and says, they stole my voice, etc., and you fail to understand that you could bring a restitutionary count to disgorge and instead just try to sue in damages, I think that is almost prima facie malpractice.
The arguments that you are making as a lawyer are almost like treating the persona as a trademark or a patent or a copyright. The analogy to trademark and patent law is a good one – you will sue for restitution.
Let’s take the analogy one step further. An injunction should be available for a trademark case. It’s the first thing you do to stop further piracy and then you seek restitution to disgorge for ill-gotten gain. The same thing is true here. You would go to a court of equity, you would seek injunctive relief and then you would seek restitution to disgorge those profits that have been gotten thru this piracy.
The prosecution of the cause of action
Your alternatives are:
1. Plead the case in tort and seek compensatory damages with the possibilities of punitive damages and also argue that the piracy was outrageous misconduct.
Or instead:
2. Seek restitution of ill-gotten gain.
Note this: It is almost conceptually impossible to see the coexistence of restitution and punitive damages. Restitution itself is a quasi punitive remedy. If somebody steals the robotic Vanna White image and he then uses that for his own gain, you have to know that some percentage of their gain is attributable to their own hard work and labor. Clearly not all of the profits from the tortfeasor are attributable to having stolen the likeness or trademark. In a lot of restitution cases if you can prove an intentional piracy – full disgorgement.
Torts II, Week 13
Note 6: Right of Publicity: A human cannonball had his act broadcast without his consent. Justice White said, “The interest in false light is reputational by contrast, in a right of publicity it is about protecting the individual’s proprietary interest.” How does he control his act? The state’s interest is analogous to patent and copyright law.
2. INTRUSION UPON SECLUSION
Sanders v. American Broadcasting Companies, Inc., et al.
CA, 1999
We have a reporter from ABC coming into this workplace where a bunch of people sort of sit in cubicles and they dispense telephonic advice of some psychic nature. Ms. Lescht, a reporter employed by ABC, wears a small video camera hidden in her hat and she films the various activities of these would be telepsychics. The plaintiff brings an invasion of privacy tort for intrusion upon seclusion.
The Two Elements of the tort:
RII section 652B:
1. Intrusion into a private place, conversation or matter;
2. In a matter highly offensive to a reasonable person.
Henke: The argument made by ABC is when this plaintiff enters his job site he gives up his sphere of privacy. Remember what Justice Scalia said earlier: “Your reputation is not a monolith.” You are entitled to keep in tact that part of your reputation that is good. Your reputation is not an all or nothing proposition. I think the same thing is being said by this court about your sphere of privacy.
Just because you give up some measure of your workplace privacy does not implicate or imply that you’ve given up everything – there are still limits. Just because some of your privacy has been somewhat invaded does not justify a further invasion that would be offensive.
This court says, “That privacy is not a binary all or nothing characteristic. There are degrees and nuances to societal recognition of our expectations of privacy. The fact that the privacy that one expects in a given setting is not complete does not render the expectation on reasonable as a matter of law.”
Henke: Just as your reputation is not monolithic, so too your sphere of privacy is not an all or nothing proposition. Even if you allow for some intrusion into your seclusion, a deeper intrusion may still be actionable.
Torts II, Week 13
De May v. Roberts, The physician assisting a mother giving birth arrives with an unnecessary male observer and was held to be an intrusion. Just because she allows and consents to the appropriate person being there doesn’t mean that she’s opened up the door for everybody to show up. I think it’s a great analogy.
You have to be flexible and allow for the fact that there may be some legitimate non-actionable invasion but it has limits and if the invasion becomes offensive to the reasonable person at some point it may become an actionable intrusion.
Note 2: Telephone harassment. Drunk dialing is intruding upon seclusion. Obscene phone calls may create liability for intentional infliction of emotional distress.
Note 6: Food Lion v. Capital Cities/ABC, Inc., 194 F.3d 505 (4th Cir.1999) (holding that plaintiff supermarket chain had a cause of action in trespass where defendant had breached their duty of loyalty by secretly videotaping in plaintiffs non-public areas to which they had fraudulently obtained entry). Note that the tort in this form does not possess a publication element.
3. PUBLIC DISCLOSURE OF PRIVATE (AND EMBARRASSING) FACTS
Hall v. Post
NC, 1988
This woman in her younger days has a child with this fellow. Evidently they are folks that travel with a carnival. She is referred to as an ex-carny. Because of her nomadic existence she and this first fellow essentially abandon the child but then she gets remarried later and 17 years after the fact she and her new husband seek to reconnect with abandoned child.
The local newspaper gets a hold of the story and prints some articles about not only the attempt to reconnect and what went into that but also about the actual reconnection. She brings this branch of the invasion of privacy tort – public disclosure of private facts.
Very few cases qualify for this tort. The court says, “The constitutionally suspect private facts branch of the invasion of privacy tort will almost never provide a plaintiff with any advantage not duplicated or overlapped by the tort or intentional infliction of emotional distress.”
The Supreme Court of North Carolina in rejecting this case is doing so at least in part on the theory that this public disclosure tort is duplicative of other theories that already exist and this theory may even create more First Amendment concerns than the run-of-the-mill distress theory.
Torts II, Week 13
Note 8: Florida Star v. B.J.F. (Supreme Court, 1989), a newspaper which had published the name of a sexual offense victim. The news paper reporter lawfully copied the police report which mistakenly included the victim’s name. The publication was not actionable under per se negligence theory because it was truthful information about a matter of public interest. Such publication could be proscribed only where it served to “further a state interest of the highest order.” Henke: Is there a compelling governmental interest? Does it warrant a state interest in the highest order? Ask yourself the question, what state interest of the highest order would prevent such a publication? The witness protection program. I imagine that’s a state interest in the highest order. If giving up the victims’ names of sex offenses is not of the highest order, well then very few things are.
4. FALSE LIGHT
False light is some sort of publication that a reasonable person would find to be offensive. We’re not talking about something that holds you up to the same sort of shame, scorn, ridicule or hatred that we talked about for defamation. These are shades of grey.
Cantrell v. Forest City Publishing Co.
Supreme Court, 1974
1. The difference between defamation and false light
This is a case in which there is a bridge collapse over the Ohio River and a number of people are killed. The Cleveland Plain Dealer newspaper does a story on the Cantrell family who lost a father and husband in the bridge collapse. There is an original story that is published and then about 5 months later the reporter Joseph Eszterhas comes back to do a follow-up piece for the Sunday Magazine section. He visits the Cantrell home and he writes a very creative piece. Mrs. Cantrell was not home on the occasion of his visit. Despite her absence he wrote, “Margaret Cantrell will talk neither about what happened nor about how they are doing. She wears the same mask of non-expression she wore at the funeral.” Henke: It’s not defamatory but it is offensive – it holds her in a false light.
The court sites the case Time Inc. v. Hill which was a public figure case. The Supreme Court took its jurisprudence from the New York Times case on actual malice and applied it to false light saying the conceptual similarity between false light and defamation suggests that the same actual malice test should apply in both contexts.
What was left unaddressed in Time v. Hill was, what about the private person in a false light case? Do we go down the Gertz road of negligence or do we stick with actual malice? The trial judge in this case instructed the jury that liability could be imposed only if it concluded that the false statements had been made with knowledge of falsity. No objection was made by any of the parties to this knowing-or-reckless falsehood instruction. I imagine the plaintiff’s lawyer concluded that 1) when my clients consented to do the original article they became vortex public figures; and 2) we’ve got actual malice.
Torts II, Week 13
Bottom line: If you are analyzing a false light scenario, because of this ambiguity in the court’s jurisprudence I think that the fairest approach is to apply the actual malice standard to both public and private people.
Will the day come when the court adopts the Gertz negligence standard? Maybe. Assume that you’ve got to show the higher standard for both types of people.
Actual malice vs. Common law malice
At the close of the petitioner’s case, the district judge struck the punitive claim. He found that Mrs. Cantrell failed to present any evidence to support the charges that the invasion of privacy was done maliciously within the legal definition of that term. In other words, there was no suggestion that the reporter had a personal vendetta against Cantrell or did this out of ill will or evil motive.
The court of appeals interpreted this finding to be a determination that there was no evidence of knowing falsity. The district court judge found that the reporter’s fabrications constituted actual malice for compensatory damages. But the district judge found no evidence of evil motive or ill will that would give rise to common law malice for punitives. The court of appeals then blundered by in essence lumping the two standards together. The Supreme Court said the trial judge got it right.
Actual malice is a term of art, created to provide a convenient shorthand for the standard of liability that must be established before a State may constitutionally permit public officials to recover compensatory damages for libel in actions brought against publishers. As such, it is quite different from the common law standard of “malice” generally required under state tort law to support an award of punitive damages. In a false-light case, common-law malice – frequently expressed in terms of either personal ill will toward the plaintiff or reckless or wanton disregard of the plaintiffs rights – would focus on the defendant's attitude toward the plaintiffs privacy, not towards the truth or falsity of the material published. See Time, Inc. v. Hill.
Actual malice for compensatory damages but no common law malice for punitive damages
Both defamation and false light cases are a classic examples of vicarious liability. Time and time again the publisher would be held vicariously liable for the reporter’s story.
One of the critical distinctions between false light and defamation is the publication requirement. For purposes of defamation, if even one person hears it, reads it or sees it – you’ve got publication. All you need is communication to a third-party.
On the other hand, the case law suggests that for a false light action you need a broad dissemination of the material. If only one person hears it, you’re not going to go down the false light road. Only about 20 states explicitly accept the tort of false light.
Torts II, Week 13
Some jurisdictions subsume false light into defamation. I disagree with that. I think the Cantrell case is not defamatory. I do think it puts them in a false light.
Hustler Magazine v. Falwell
Supreme Court, 1988
1. Actual malice standard for cases involving speech and a public figure
Hustler magazine did an ad parody for Campari Liqueur that read, “Jerry Falwell talks about his first time.” The Hustler parody suggests that respondent’s “first time” was during a drunken incestuous interlude with his mother in an outhouse. Not surprisingly he brings a claim against Hustler and his theories are essentially threefold:
1. False light;
2. Defamation; and
3. Intentional Infliction of Emotional Distress
Among the questions the court ponders in the Falwell case is: does the actual malice standard also apply in an intentional infliction of emotional distress speech-based case? Or you could ask the question this way: can you avoid the actual malice standard by characterizing your claim as an IIED claim? Rehnquist’s answer was no. All of the court’s jurisprudence originally adopted in the defamation context applies there, it applies to false light and it also applies to this claim in IIED.
His verdict is unanimously overturned by the Supreme Court and what I find quite stunning is Justice Rehnquist says, “This sort of robust public debate encouraged by the First Amendment is bound to produce speech that is critical of those who hold public office or those public figures who are intimately involved in the resolution of important public questions or, by reason of their fame, shape events in areas of concern to society at large.”
We’ve taken the language that gave rise to the New York Times case and we’ve transposed it for this Hustler ad. That’s quite a leap.
END
PRODUCTS LIABILITY ATTACK OUTLINE
Step 1: Identify and define the type(s) of defects in the fact pattern.
MANUFACTURING DEFECT
1. Manufacturing defect Difficult to show a manufacturer breached a duty of care.
a) Retailers and distributors would never be found negligent however under 402A they are subject to strict liability in tort in purest sense.
b) Debate on whether the defect existed at the time it left the manufacturer’s control or did the defect arise thru some later alteration.
c) Negating other possible causes of the accident.
d) Expert testimony.
DESIGN DEFECTS
2. Design defect Attempt to impugn entire product line
a) Articulate the six Risk Utility Factors
i. Fault based test
ii. If a manufacturer fails the risk utility test they are strictly liable/negligent
iii. Fully analyze reasonable alternative design
iv. Refrain from user’s subjective knowledge, instead use reasonable person standard
v. Note some jurisdictions use a separate consumer’s expectations test but majority factors it in with risk utility test
b) Custom in the industry
i. Not an affirmative defense
c) Minimal government standards
d) Lack of crashworthiness
i. Duty for foreseeability misuses
ii. Defect did not cause the accident rather enhanced the injury or killed decedent
iii. Burden of proof is on defendant in most jurisdictions
iv. Does the alternative design frustrate the very purpose of manufacture?
WARNING DEFECTS
3. Warning defect State of the art information at the time of manufacture, no risk utility
a) Duty to warn?
b) Convey magnitude of risk?
i. Question of fact for jury
c) Be on the lookout for discreet issues
i. Open and obvious danger
ii. Plaintiff’s subjective knowledge is relevant on causation
4. Learned Intermediary Doctrine Review section 6 of Third Restatement and carefully define
a) An exception to the general rule that a manufacturer has a non-delegable duty to warn end users directly
i. Do not limit to pharmaceutical companies alone
ii. Employer situations
b) Three exceptions
i. Mass immunizations
ii. Birth control/Active roll medications
iii. Manufacturer’s creating a demand of product thru advertising
5. Heeding presumption If a product has a warning the manufacturer is entitled to a presumption that it will be read and heeded
a) The inverse proposition
i. If D gets a presumption when it’s there, P should get a presumption that had it been there/better he would have read and heeded it
ii. If P uses that rebuttal it allows D to bring in prejudicial evidence
6. Post-sale duty to warn Hard to discharge
7. Issues of causation
a) Most frequently arise in warning defect cases
b) Juries find that warnings are inadequate but not proximate causes of injuries
THEORIES OF RECOVERY
In a warning or design case negligence and strict liability are functionally equivalent. Proving one is to prove the other.
8. Contract based theories
a) UCC 2-313
i. Breach of express warranty
ii. Do not create unless it is there
b) UCC 2-314
i. Limit to cases of direct economic loss
ii. Booby-traps
c) UCC 2-607
i. Reasonable notice of breach
d) UCC 2-316
i. Disclaimers
e) UCC 2-719
i. Limitations on consequential damages
f) UCC 2-725
i. Four year statute of limitations
ii. Does not include equitable discovery rule
DEFENSES/LIMITATIONS
9. Plaintiff’s conduct
a) Even if the standard of liability is strict, a plaintiff’s conduct should be treated in a negligence context
i. Comparative fault
ii. Some jurisdictions still apply assumption of the risk
iii. Suter Rule
10. Misuse Duty for foreseeable uses and foreseeable misuses
a) Extension of the intended use
i. Lawnmower situation
b) Total misuse
i. Larue situation
11. Causation Plaintiff’s conduct will break the chain of causation
a) Cause in fact
b) Proximate cause
12. Sophisticated User Knowledge instead of conduct
a) Design claim
b) Warning claim
i. The plaintiff’s sophistication may obviate the duty to warn altogether.
13. Federal preemption Cut off at the courthouse
a) Federal tort law will preempt conflicting state tort law
b) Express preemption actually in the statute
c) Presumption against preemption a trial judge must try and reconcile the two schemes
d) Implied preemption
i. Implied conflict preemption the statute tells you to do one thing, state tort law tells you to do another
ii. Implied field preemption Entire regulatory field has been occupied by federal statute.
14. Substantial alteration A duty to design with some degree of alteration in mind
a) Has to be substantial and unforeseeable
WORKERS COMPENSATION
No-fault based exclusive remedy designed to compensate workers within the scope of employment. Misdeeds not taken into account unless intentional. A growing number of jurisdictions are applying the substantial certainty standard instead of intentional misdeeds. Acknowledge both possibilities on an exam.
15. Also discuss the following:
a) Intentional vs. substantially certain harm
b) Some accidents are a fact of life
i. take into consideration context as well as conduct
c) Sacrificing workers on the alter of production quotas with no downside risk to the employer whatsoever.
SELLERS
Discuss Section 402A only if it is not clear if the person is a seller or merely providing a service.
16. Breast implant litigation Is a physician who is getting discounts a seller? This is a hybrid characterization
a) look to the essence of the transaction Does the provision of professional services dominate the transaction? Or does the sale of a product dominate the transaction?
b) Bad blood transfusion no strict liability.
c) Sellers of used cars You could persuade me they are strictly liable
d) Leasers of automobiles will be held strictly liable
GOVERNMENT CONTRACTORS
17. Three elements:
a) Government giving exacting specifications
b) The manufacturer following the specifications to a T
c) The contractor sharing knowledge that the government is unaware of
Showing posts with label Torts II. Show all posts
Showing posts with label Torts II. Show all posts
Sunday, April 27, 2008
Torts II: Notes
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