Business and Its Legal Environment (Mgmt 246) Professor Charles H. Smith Torts (Chapters 12 and 13) Fall 2010

Types of Torts Intentional torts – arise from an act defendant consciously performs –Key is the intent to perform the act and not necessarily the intent to do harm (e.g., shooting gun into the air). –However, proof of intent to cause harm (e.g., defendant says “I’m going to kill you” before shooting gun at plaintiff) is the best way to prove an intentional tort. Negligence – #1 theory for tort cases –No intent required; instead, focus on whether defendant’s act (or omission) creates risk of harm. –Negligence caused by an accident, carelessness, a mistake, or a misjudgment. –Even though no bad intent, someone has to pay and that someone should be the party who caused the injury. Strict liability – liability without fault –Traditionally, harm caused by ultrahazardous activity or consumption of drugs/food/beverages. –Theory extended to product liability starting in the mid-20 th Century.

Causation Causation is required for any tort –The link between defendant’s bad act and injury/loss suffered by plaintiff. –Requires a reasonable relationship between defendant’s bad act and plaintiff’s injury/loss. –Example – Von’s truck driver at the loading dock.

Damages Damages are required for any tort –Tort law based on compensation for plaintiff’s injury/loss that can somehow be measured in money. –If no damages, then no compensation is necessary and defendant will win. –Many ways to show damages; examples include Medical bills, loss of income, pain and suffering, emotional distress, and property repair bills due to vehicular accident. Loss of income and damage to reputation due to business tort such as fraud, defamation or wrongful interference. –Easy to think that if plaintiff has suffered damages – especially significant damages – then plaintiff is entitled to judgment; however, need link of causation between defendant’s bad act and plaintiff’s damages to win a judgment.

Intentional Torts Intentional infliction of emotional distress – “outrageous” conduct by defendant causes plaintiff to suffer severe emotional distress; e.g., Stern case. Defamation – based on defendant’s false statement of fact to 3 rd party causes damage to plaintiff; statement can be spoken (slander) or written or on the internet (libel); can result in damage to business (e.g., loss of income) or person (e.g., emotional distress).

Intentional Torts cont. Wrongful interference – the “love triangle” of tort law; defendant’s wrongful act interferes with relationship between plaintiff and 3 rd party with whom plaintiff had relationship (which may or may not be based on contract). Conversion – defendant initially entrusted with plaintiff’s property (e.g., company car or money) for certain purpose only (e.g., company business) but defendant then uses (converts) the property to own use (e.g., unpermitted use such as using company car or money for personal use).

Intentional torts cont. Privacy – threshold question is whether there is a reasonable expectation of privacy; theories include –Use of person’s name, picture or likeness for commercial purposes without permission. –Intrusion into person’s private life. –Public disclosure of private facts. Fraud – also called misrepresentation or deceit; plaintiff must prove –Defendant made false statement of material fact with knowledge of falsity and intent to deceive plaintiff. –Plaintiff’s reasonable reliance on this statement caused damages to plaintiff.

Negligence – Elements Plaintiff must prove all of the following or defendant wins without having to put on a defense –Duty of care – defendant owes a duty of care to plaintiff, who may be specific person or part of group. –Breach – defendant breaches the duty of care owed to plaintiff. –Causation and damage – defendant’s breach of the duty of care owed to plaintiff causes damage to plaintiff; see Palsgraf v. Long Island Railroad Co. (pages ) re causation. But, even if plaintiff proves all of the above, defendant may still have some defenses (see following slide).

Negligence – Defenses Assumption of the risk – plaintiff cannot win negligence case because he/she injured while in dangerous situation; e.g., “fireman’s rule” (inherently dangerous job), recreational or sports activities. “It’s someone else’s fault!” –Comparative negligence – liability proportionate to percentage of plaintiff’s fault; recognizes that plaintiff may contribute to the accident but should still be entitled to some money. –3 rd party’s fault – liability proportionate to percentage of negligence or other tort of 3 rd party. –Superseding/intervening cause – is there a break in the causal connection between defendant’s bad act and plaintiff’s damage?

Strict Liability Liability without fault as a matter of public policy based on considerations such as –Whether the activity involves potentially serious harm to persons or property. –Whether the activity involves a high degree of risk that cannot be guarded against completely by the exercise of reasonable care.

Product Liability “Product liability” is part of strict liability; sometimes called “products liability” or “strict products liability.” Recognizes that there will be defects in mass-produced products even if used as intended; someone other than the injured consumer or bystander should be legally responsible for damage caused by those defects. Three types of product liability –Manufacturing defect. –Design defect. –Warning defect. –Case studies – McDonald’s coffee case; aerosol spray case. Alleging product liability and negligence together – gives plaintiff options since (1) no need to prove fault for product liability (while negligence requires fault in form of breach of duty) but (2) if fault for negligence can be proved, jury may award more money vs. “blameworthy” defendant who “did a bad thing.”

Remedies in Tort Cases Special damages –Can be measured in exact terms. –Easiest to prove since usually documentation and/or another clear way to show nature/amount. –Examples include medical bills re personal injury case, contract re fraud case or to show loss of income. General damages –Intangible “quality of life” damages, so can be hard to prove with any precision. –However, in ordinary injury cases, settlements often based on multiplying the amount of special damages by three to calculate the amount of general damages. –Examples include emotional distress or pain and suffering; not available for Br/K but could be available for fraud based on contract.

Remedies cont. Punitive damages –Assessed as punishment in addition to special and general damages. –Based on (1) defendant’s oppression, fraud or malice (how “bad” was the defendant?), and (2) defendant’s wealth (in order to truly punish the defendant) –Available – but not required – in intentional tort cases only; not available in negligence, strict/product liability, or Br/K cases. –Subject of much political debate re “tort reform” though rarely awarded. –U.S. Supreme Court has ruled there should be a single- digit ratio between (1) amount of punitive damages and (2) amount of general and special damages.

Remedies cont. Injunction – court order which usually tells defendant to stop doing something –Temporary restraining order (TRO) – plaintiff must show (1) more likely than not he/she/it will win and (2) irreparable harm if injunction not immediately granted; lasts only about 20 days; generally requested right after case filed; defendant may or may not have opportunity to oppose. –Preliminary injunction – same as TRO but lasts until judgment entered; defendant will have opportunity to oppose. –Permanent injunction – part of judgment in plaintiff’s favor after trial or summary judgment.