Remedies: Heriot
REMEDIES – OUTLINE
CHAPTER 1
Hypo –
Bad person steals baby’s $100 mutual fund money (crappy mutual fund).
Person then uses money to win $1,000 gambling.
What should the Plaintiff’s remedy be?
Competing
Principles:
CB 1-37
NOTES
Nature of Remedies –
·
remedies law is somewhere between
Procedural and Substantive law
Categories of Remedies
1.
Compensatory Remedies –
compensate plaintiffs for the harm they suffered
2.
Preventive Remedies –
aimed to prevent harm before it happens, so that issue of compensation never
arises – 2 forms
a)
coercive
remedy –
i.e. injunction – order from court to litigant ordering them to do or to refrain
from doing some specific thing
a.
i.e.
specific performance decree – perform a contract
b)
declaratory remedy –
resolves disputes about parties’ rights; they resolve uncertainty about their
rights before either side has been harmed
a.
declaratory judgments
3.
Restitutionary remedies
– take what defendant has
gained at plaintiff’s expense and give it back
4.
Punitive remedies –
designed to punish wrongdoers; punitive civil remedies
5.
Ancillary remedies –
designed in aid of other remedies
i.e. costs
and attorneys’ fees, punishment for contempt
TWO More
Basic Categories for Remedies
CHAPTER 2 – Compensatory Damages – Paying for Harm
1.
SECTION A. Basic Principle: Restoring Plaintiff to his Rightful Position
“Rightful
Position”
Corollary
– One-satisfaction rule
·
Plaintiff
is entitled to only one recovery for each item of damage (even though may be
entitled on multiple legal theories against multiple defendants)
*Tort
Damages based on Returning the plaintiff to their rightful position had the tort
never occurred. Tort Suits – no
right to jury trials, judges need to give reasons
Facts
Direct damages
Consequential damages
RULE
2.
SECTION B. – VALUE as the Measure of the Rightful Position
Hypo –
Prof. Heriot has sentimental mickey mouse hat.
She doesn’t remember who gave it to her.
Someone negligently destroys it.
Disney Co. does not make the hat anymore.
Hat costs $9.99.
Market
Value is the solution for most cases.
People’s unique subjective values are not used.
Market value and not value to Plaintiff.
Hypo –
Prof.’s wrecked car. $3,000 fixed
car, $2,000 wrecked
Switch to Repair value from Market value?
Rule –
Give the lower value. No windfalls
awards.
Look at
Several Things
O’Brien
Bros. v. The Helen B. Moran (2d Cir. 1947) – CB 23
“Plaintiff
is entitled to be made whole in the least expensive way.”
Lemon Effect –
Buyers assume the worst about used goods so they pay low prices, so sellers get
used low quality goods.
Assume the Defendant Negligently destroyed the Church.
RULE – Reasonable costs of Reconstructions or replacement are allowed as measure
of damages where diminution of market value of property cannot be determined.
Mieske v.
Bartell Drug Co. (
Soybean Farmer – Agricultural Case – has crops damaged by defendant’s negligent
spraying of pesticide
Speculative award of damages.
RULE – measure of damages for partial destruction of growing crop is difference
in crop’s value immediately before and after the injury with market value
determined at the time of harvest
3.
SECTION C. - RELIANCE AND EXPECTANCY as Measures of Rightful Position
Know the
Basics of Reliance and Expectation (Don’t Need to Know UCC part)
Reliance
damages
are not
the same as out of pocket costs
Expectation damages
– easier to prove,
Tort Law –
you usually get reliance damages
Contracts
–
you usually get expectation damages
Neri v.
Retail Marine Corp. (NY 1972) – CB 37
Rule – UCC – Seller of goods that rejected by breaching buyer may recover lost
profits and incidental damages to put plaintiff in position he would have been
without breach of contract.
Typical Tort Case – reliance and expectation are the same thing
Smith v.
Bolles (US 1889) –
Think
about Expectation and Reliance damages for fraud even though they are Tort.
Contract
Cases – Expectation Damages
3
categories
1.
i.e.
insurance policy
Contract
Cases
Expectation Damages (1st Argument to think of)
1.
Allocation of Risk
2.
Fuller & Perdue –
2nd
Arguments - Exceptions (Reliance Damages)
Prof
Note *!! Reliance and Out of Pocket Expenses are not the Same Thing!
Chatlos
Systems v. National Cash Register Corp (3d Cir. 1982) – CB 48
Facts – Plaintiff Chatlos contended that computer system it bought from National
did not function as warranted.
Rules
Smith v.
Bolles (US 1889)
Facts – Defendant Smith fraudulently said stock had great value and sold it to
Plaintiff Bolles for $6k. P was
originally awarded damages = fraud value of stock
Rule – The proper measure of damages for fraud in the sale of stock is the
actual loss suffered due to the deception, not the purported value of the stock.
4. Section D. CONSEQUENTIAL DAMAGES
Buck v.
Murrow
(TX 1893)
Rule – Recovery for consequential damages reasonably anticipated by the parties
for the breach of a lease of real property.
Prof.
Heriot
*
Distinguish between General Damages (US v.
vs.
Consequential Damages *
Meinrath
v. Singer Co. (SDNY 1980) – CB 63
Rule – Creditor can recover only interest on late payment of money due and no
consequential damages.
*Not
really consequential damages case*
Texaco v.
Pennzoil (TX 1987)
Facts – Pennzoil contracted to by 3/7 of Getty Oil stock but really wanted
benefit of Getty’s 1 billion reserves of oil.
Value it according to either the Stock or Assets of the corporation
Important Fact –
What is Pensoil Not Asking for?
(this should tell you a lot)
Rule – Tortious interference with contract, plaintiff is entitled to pecuniary
loss of the benefit as entitled to under contract, as well as consequential and
punitive damages.
Hypo – If a Bank says customer can pick up $1 million a certain day and customer
can’t pick it up, then Courts are much more willing to award consequential
damages.
5. Section E. Limitations on Remedies
Restrictions on Consequential Damages
1)
contractual limitations on remedies
2) rules
about avoidable consequences, scope of liability, and uncertainty
*Parties
power to Specify the Remedy – SPLIT of AUTHORITY among courts*
Kearney &
Trecker v. Master Engraving 527 A.2d 429
Facts – Computer Machine tool malfunctioned 25%-50% of time.
Defendant
Policies – Freedom of contract vs. minimum adequate remedies
Rule – A consequential damages disclaimer in warranty is not invalidated by the
failure of a limited remedy provision unless it is unconscionable.
When is it appropriate for a seller to ask for a contract that limits
consequential damages?
Liquidated Damages
Liquidated
Damages
What are
the best cases/circumstances to Get Liquidated Damages?
Ashcraft
v. Coady (D.C. Cir. 2001) 244 F.3d 948
Rule –
Northern
Illinois Gas Co. v. Energy Cooperative, Inc. (
Facts
Rules
Under-Liquidated Damage Clauses
Note 6 - CB 91
Avoidable Consequences, Offsetting Benefits, and Collateral Sources
CB 92
*Exception
to the “Return Plaintiff” to Rightful Position Doctrine
S.J.
Groves & Sons Co. v. Warner Co. (3d Cir. 1978) – CB 92
Rule –
Buyer may
choose any one of several available methods of mitigating damages to recover
consequential damages for the seller’s breach.
Hypo –
Tort Case – automobile is banged up.
Plaintiff who was going to sue for damages to his vehicle, doesn’t have
the money to repair the car. Car
goes into storage. Damages increase
for storage fees daily.
Offsetting Benefits – CB 101
Hypo – if you patient goes to get certain procedure, but surgeon removes
something else too to prevent pain and suffering later.
Hypo – False story in newspaper saying Prof. Heriot was a murderer.
She sues for being fired from USD and losing her job
and income.
COLLATERAL SOURCE RULE – Exception
*Bad
Explanation by the CA Supreme Court of
Reasons
for the Collateral Source Rule
Helfend v.
Southern California Rapid Transit District (
Rule – The collateral source rule – prohibits the intro of evidence of
compensation paid to plaintiff by a 3rd party independent source
(insurance) to reduce defendant’s liability.
Torts Example
Hypo -
Taxi lets passenger out of cab and runs over rider.
Ambulance takes away severely injured person to the hospital.
Doctors operate and rider dies 1 week later.
Subrogation Clauses –
let insurer assert plaintiff’s claim against the wrongdoer or get reimbursed
from plaintiff’s recovery
Contract
Law - Duty to Mitigate
Tort Law -
Doctrine of Avoidable Consequences
Scope
of Liability
Pruitt v.
Allied Chemical Corp. (E.D. Va. 1981) – CB 110
Facts –
Defendant Allied polluted waterways and wildlife.
Rules
Hypo –
Suppose some company dumps chemicals onto a field of land somewhere and wipes
out wheat in
1.
Who gets hurt?
Common Law
Traditional Rule
– Nobody on this lists collects remedies except for the “wheat farmer” – who was
actually affected. (impacted)
2.
Act of Compensation – Causes Ripple Effect
Economic
Harm Rule –
plaintiffs who don’t suffer physical harm to his person or property can’t
recover for – economic harm/other losses.
Hadley v.
Baxendale (1854) – consequential damages will not be awarded unless the
defendant was put on notice of the special circmstances
CB 117
People
Express Airlines, Inc. v. Consolidated Rail Corp. (NJ 1985)
Contractual Overtones
Evra Corp.
v. Swiss Bank Corp. (7th Cir. 1982) – CB 119
Rule –
Plaintiff cannot recover consequential damages when such were consequences of
defendant’s negligence which were Avoidable by the plaintiff.
Southwestern Bell Telephone Co. v.
Rules –
A telephone company is not liable for special damages for failure to connect a
person to fire department if it had no notice of the circumstances out of which
the damages might arise. No
foreseeability.
Dissent –
Monopoly telephone service has duty of reasonable care.
*The Certainty Requirement
Bigelow v.
RKO Radio Pictures (US 1946) – CB 129
Rule –
A jury may make a just and reasonable estimate of damages based upon the
evidence presented, and its award doesn’t need to be based on precise
calculations.
Dissent –
Justice Frankfurter –
In the absence of proof of actual injury, no violation of the Sherman Act can be
found.
Note 5 CB
137
Brink’s
Inc. v. City of
Substantive Policy Goals
Brunswick
Corp. v.
Facts –
Pueblo (P) sued Brunswick (D) because D had acquired bowling centers in
violation of federal antitrust laws.
(P) contended that it was damaged by amount of profit it would have
realized if the acquired bowling centers were to close down instead.
Rule –
Antitrust relief is not available in every case in which a large corporation
takes over smaller businesses and causes readjustments in the market share of
other participants.
SECTION F.
6.
Damages where Value cannot Reasonably Be Measured in Dollars
1.
Personal Injuries and Death
Hard to
Value Pain and Physical Suffering
18th
Century didn’t provide damages for pain and suffering
Deterrence
Policy – Punitive Damages Recovery
Debus v.
Grand Union Stores, 159
Facts – Debus (P) was injured in a store owned by Grand Union Stores (D) when a
palette of boxes fell on her. (P)
suggested daily pain and suffering award according to life expectancy - $346k.
Rule – Per
diem damage arguments are not overly prejudicial and should be allowed.
Wrongful
Death Cases –
Recovery
for funeral expenses, financial support, loss of inheritance, loss of society,
pain and suffering, loss of companionship, loss
Courts
allow recovery for emotional distress in context of constitutional and dignitary
torts, but not for death of a loved one.
(monstrous verdicts fear?)
Extraordinary variations in valuation of human lives across cases and states.
Etheridge
v. Medical Center Hospitals (VA 1989) – CB 162
Facts – Wilson (P) underwent surgery at (D) hospital for jawbone.
(P) was negligently injured.
Rule –
Statutory limitations on the amount of recovery for medical malpractice are
constitutional.
Reasoning
–
Unless a statute restricts a fundamental right, the rational basis test is
appropriate. The VA statue has a
reasonable relation to a legitimate public purpose.
Smith v.
Department of Insurance (
Facts –
Rule –
A statutory limitation on damages for noneconomic losses violates the Florida
Constitution. Right to redress
injuries is a constitutional right, need to show public necessity.
Affordable insurance coverage not shown to be a public necessity.
2.
Dignitary and Constitutional Harms
*Dignitary
Torts – assault, false imprisonment, intentional emotional distress, libel
Levka v.
City of
Facts – Chicago PD subject woman to strip search.
Jury award $50k for mental anguish, humiliation, etc.
Rule – A
court may exercise its discretion in reducing a jury verdict when the evidence
indicated the verdict is grossly excessive.
Prof.
Heriot – Misapplication of the standard.
This result was fine.
Remittitur
–
procedure where trial and appellate judges reduce jury verdicts
Emotional Distress Recovery
Carey v.
Piphus (US 1978) – CB 193
Piphus had
a procedural right to a hearing before being suspended from school.
Rule –
Absent proof of actual injury caused by a denial of procedural due process, only
nominal damages may be awarded without proof of actual injury.
$1.
Remedies?
CB 200
Note 5
Laje v.
42 USC
§1983
– Attorneys win large fees if they win these cases.
7. Taxes, Time, and the Value of Money – CB 201
Norfolk &
Western Railway Co. v. Liepelt (
Rule – It
is error for a trial judge to refuse to admit evidence of the nontaxability of
jury awards or to instruct the jury thereof.
Policy
What if
Jury didn’t say what damages were for lost wages and what was pain and
suffering?
IRS –
they gave up and decided not to tax any of the damages resulting from physical
injury awards.
PRESENT VALUE
Lump Sum
Rule –
Jury is
going to be asked to boil damages down to a single lump sum.
Not later, but now.
*Now is
Better than Later.
City of
Rules - A
genuine dispute over liability does not justify a court’s departure from the
general rule that prejudgment interest should be awarded in maritime cases.
Modern
Economic Reality –
traditional rules gave defendants substantial incentive to delay when damages
were large and interest rates were high.
*Calculating Present Value of a lump sum award for future damages.
Jones &
Laughlin Steel Corp. V. Pfeifer (
Rule –
Federal courts may choose the manner in which to discount the present value of
future earnings and are not bound by a rule of state law.
Formula –
Plaintiff’s future losses should be discounted to present value at compound
interest rates. 1/(1+i)^n
Courts –
are split on who bears the burden of introducing evidence of an appropriate
interest rate and method of discount.
3
Categories that Work
·
(Real Rate
of interest = 1% - 3%)
Need
experts to testify on
1)
prevailing wage rates in the industry
2)
Inflation rate – investment that we would expect plaintiff to invest
Caveat –
must account for inflation only once
Factors to
Consider
CHAPTER 3 – Preventing Harm: Injunctions – CB 233
Equity
Trumps Law
Know the
histories to understand the difference between Equity and Law Courts.
Certain
Rules Changed when Equity and
Irreparable Harm Rule –
equity courts could not issue an injunction unless it could be shown that money
damages could not do “justice”.
3 Kinds of Injunctions
Injunction
– Federal Rule of Civil Procedure 65(d) –
must be specific in terms, reasonable detail, reasons for its issuance
Contempt
Power of courts –
enforces injunctions, criminal offense
Ripeness
Rule
Requirements –
1) moving
must prove some real likelihood that wrong will occur
2) If the
wrong does occur, then will it harm the moving party?
Law
Side of Injunction
Writ of
Mandamus –
Writs of
Prohibition –
order to prevent exceeding of jurisdiction or authority
Habeas
Corpus –
order to a person holding another in custody to bring the prisoner to court and
justify the prisoner’s further detention
1.
PREVENTIVE INJUNCTIONS
Humble Oil
& Refining v. Harang (
Rule – A
preliminary injunction will not issue absent a substantial likelihood of
irreparable harm.
Note 5 – CB 236
Scope of
the Injunction = Scope of past violation
Rule – The
scope of injunctive relief should not be broader than the evidence warranting
it.
Individual
and Class Injunctions
*Mootness
- Cessation of illegal activity does not render injunction against it moot
Rule – For
a permanent injunction to issue, there must be some cognizable danger of
recurrent violations. No evidence
here was shown that violation would recur.
*Prof.
Heriot’s most interesting case
Occasion
where Ripeness Rule – focused on the record being “incomplete”
“Nuisance”
Nicholson
v.
Holding
Rule –
Equity will not grant injunctive relief where land use is reasonable and the
plaintiff is alleging the fear of future actions as its grounds for injunctive
relief.
Brainard v. Town of
Note 1 –
CB 253 – Similar Case –
Jack v.
Torrant –
court held any funeral home would be nuisance no matter how it was run
Strategy –
Bring a motion for an injunction even if you know the court will deny it because
their reasons will be stated on the record.
2.
REPARATIVE INJUNCTIONS – CB 260
Reparative
Injunctions should
1.
The
injunction should restore plaintiff as closely as possible to the rightful
position.
(risk divided between parties)
2.
The
injunction should restore plaintiff as closely as possible to the rightful
position, subject to the constraint that the injunction should never make
plaintiff better off than the rightful position.
3.
The
injunction should restore plaintiff as closely as possible to the rightful
position, subject to the constraint that the injunction should never leave
plaintiff worse off than the rightful position.
These
principles place the risks on the plaintiff, defendant, or on neither of them.
Burden on
the Plaintiff – Civil Lawsuits
*Court can
order an Injunction Repairing the harm of a past violation
Rule – A
federal court can retrospectively void a state election in which the election
process and practices violated the constitutional rights of voters because of
race.
Note 5 CB
200
Laje v.
“Duplicative Recovery – Election of Remedies Doctrine”
Forster v.
Boss (8th Cir. 1996) – CB 264
Rule –
Where two remedies would make a plaintiff whole, the defendant must choose
whether it wants to receive compensatory damages or an injunction.
*Permanent
injunction not appropriate – temporary injunction 2 years
Winston
Research Corp. v.
Rule –
Unfair competition should be enjoined for the amount of time it would take to
develop a similar product after public disclosure.
Prevent unjust enrichment and protect trade secrets.
“What is
Plaintiff’s rightful position?”
Bailey v.
Proctor (1st Cir. 1947) – CB 276
Rule -
Court of equity has inherent power to liquidate an investment rust where fraud,
mismanagement or abuse of trust is present – regardless if insolvency is
likewise present – to protect investors.
Prophylactic Injunctive Remedy –
Bailey Case, abortion clinic protesting, etc.
3. STRUCTURAL INJUNCTIONS
1. Scope of Structural Injunctions
School
Desegregation Cases
De jure
segregation – deliberately caused by state authorities (Constitutional violation
De facto
segregation – from all other causes except from state conduct
Swann v. Charlotte-Mecklenburg BOE (
Rule - “school boards must ‘ achieve the greatest possible degree of actual
desegregation.’”
– CB 290
Milliken v. Bradley (
Rule –
Federal court decrees exceed appropriate limits if they are aimed at eliminating
a condition that does not violate the Constitution or does not flow from such a
violation.
Precedent
– Swan, Milliken, and
Multi-Dimensionality
Hutto v.
Finney (
Rule – A
court may place limits on certain types of punishments which are not per se
unconstitutional. – Justice Stevens
Lewis v.
Casey (
Rule – The
nature of the remedy is to be determined by the nature and scope of the
constitutional violation.
*Remedy
must match the Constitutional violation
Rule –
Remedial decrees must be shaped to place persons who are unconstitutionally
denied an opportunity or advantage in the position they would have occupied
absent the discrimination.
2. Modifying Injunctions
*Flexible
modification standard in Institutional reform cases
Rufo v.
Inmates of
Swift v.
Tyson (
(*closer
to Rule 60(b)(5) than it is to Swift)
Rufo Rule
–
“under the flexible standard we adopt
today a party seeking modification of a consent decree must establish that a
significant change in facts or law warrants revisions of the decree and that the
proposed modification is suitably tailored to the changed circumstances.” –
CB 335
3. Rights of Third Parties
Hills v.
Gautreaux (
Rule – A
court may order a housing authority to correct segregation it has facilitated
over an area outside the locality in question.
Jenkins –
Hard to
Justify Jenkins based on the Milliken Case – it is not quite clear how 3rd
parties have to be integrated into this scheme.
General
Building Contractors Association v.
Rule – A
party not violating antidiscrimination laws may not be assessed a share of the
costs of implementing a decree remedying the discrimination of others.
CHAPTER 4 – Choosing Remedies – CB 363
A.
SUBSTITUTIONARY or SPECIFIC RELIEF
EQUITY vs. LAW
Preventive, structural, and reparative injunctions – apply the same lessons as
to Damages.
1.
Irreplaceable Losses
Historically – Irreparable Harm Rule
Irreparable Harm Rule
Support
Reasons:
·
This
reason cuts both ways. The damage
remedy could be the thing that causes courts trouble.
·
Fairly
complicated damage remedy.
·
No
traditional right to a jury trial on the equity side
·
Plaintiffs
are most interested in having a jury trial.
·
Applies to
preliminary injunctions and temporary restraining orders
Against it
– definition of legal remedy being adequate
Be able to
argue the Irreparable Harm Rule alive or dead in a given case.
*Irreparable Harm Standard - Equity appropriate in land cases.
Pardee v.
Camden Lumber Co., 70 W.
Legal
remedy was inadequate, so equity intervened.
Rules
·
An
injunction against the cutting of another’s property is appropriate.
*REPLEVIN
legal case - Irreparable Harm Rule does not apply
BROOK v.
CULLIMORE & CO., 1967 OK 251 (
Rule – A
successful litigant in replevin action has a right to the subject property,
rather than cash.
*
Injunction okay when damages too hard to measure
Continental Airlines, Inc. v. Intra Brokers, 24 F.3d 1099 (9th Cir. 1994)
Rule –
A party is entitled to equitable relief of injunction when economic damages
would be difficult and expensive to prove.
Specific Performance –
type of injunction ordering affirmative action
*Unconscionable contract – no specific performance issued
Campbell Soup Co. v. Wentz, 172 F.2d 80 (3d Cir. 1948) – CB 383
Rule –
Even with a legal contract entitling both parties to legal relief, equity will
not provide specific relief to any party who has driven too hard a bargain or
obtained too one-sided an agreement.
CB 386 –
List of cases –
Balancing the Equities – “undue hardship” vs. benefit to plaintiff
*Efficient
Breach of Contract
Van Wagner
Advertising Corp v. S&M Enterprises (NY 1986) – CB 394
Reasoning
Rule –
Point of breach of contract that is addressable by specific performance lies not
in physical uniqueness of a property but in the uncertainty of valuing it.
2.
Burdens on Defendant or the Court
*Intentional encroachment – Then No balancing of equity- relief vs. undue
hardship
Ariola v.
Nigro, 16
Rule – No
traditional balancing of equities in deciding for an injunction to remove
encroachment on land where the encroachment was found intentional.
*Deliberate wrong-doer – denied specific relief to plaintiff – grossly
disproportionate
Peevyhouse
v.
*Specific
performance more likely when Public Interest is involved
*public
interest here = timely burden on court to supervise the specific performance
CIS v. Argyll Stores (Safeway) – CB 411
Rule – A
court can’t order specific performance of a covenant to maintain business hours
when lessee believes it would be financially detrimental to keep it open.
CB 419 – Judicial Economy for the Court
Note 5 *No
specific performance
Corp. v. E.W. Bliss Co. (Del. Ch. 1968) – CB 419
Note 6
City Stores Co. v. Ammerman (D.D.C. 1967)
3.
Reasons of Substantive or Procedural Policy
*minority
view
*PA says
damage remedy at law is adequate even if it can never be collected.
Willing v.
Mazzocone (PA 1978) – CB 421
Rule – A
court may not enjoin defamatory speech.
The propriety of equitable relief or remedies at law does not depend on a
party’s insolvency.
Mazzocone
v. Willing (PA 1976)
Rule –
Defamation may be enjoined. Public
officials have higher standard to get past the First Amendment objections to an
injunction against defamation
Collateral
Bar Rule –
an
injunction that forbids protected speech must be obeyed;
Multiplicity of Suits – legal remedy inadequate because plaintiff would have to
repeatedly sue as defendant repeated the libel
*Courts
rarely compel specific performance of employment contracts
ABC v.
Wolf (N.Y. 1981) – CB 435
Policy –
13th Amendment – prohibition of involuntary servitude
Rule –
With terminated personal service contract, equitable relief (specific
performance) is available only when a danger of unfair competition or other
tortuous conduct exists. (trade secret leaks)
B. Preliminary or Permanent Relief – CB 440
Temporary
Restraining Orders (TRO) –
usually last 1 or 2 days
Preliminary Injunctions –
require a hearing in a court room and are appeal-able
1)
likelihood of success on merits, 2) irreparable harm, and 3) balance of
hardships
4)
advancement of the public interest
*Preliminary Injunction Case – preserve the status quo
LA
Memorial Coliseum Commission v. NFL (9th Cir. 1980) – CB 440
Rule – An
injunction will not issue unless the petitioning party can demonstrate
irreparable harm and that the equities favor the injunction.
CB 446 –
Judge Posner’s Formula –
Grant the preliminary injunction if but only if
P(denial
error) x Hp(harm to plaintiff) > (1 – Pdenial error) x Harm to the defendant.
*Preliminary injunction can change the status quo – minority view
Lakeshore
Hills, Inc. v. Adcox (Ill. App. Ct. 1980) – CB 447
Rule – A
preliminary injunction may be framed so as to change the status quo.
Preliminary injunctions usually preserve the status quo.
*Injunction bond – deterrent to plaintiffs – bond is discretionary requirement
Coyne-Delany Co. v. Capital Development Board (7th Cir. 1983) – CB 450
Rule – A
prevailing defendant is entitled to damages on an injunction bond unless good
reason for not awarding damages existed.
A court shouldn’t fail to award damages to (D) merely because (P)’s
failing action was filed in good faith.
*TRO
requires notice so a hearing can be had – First Amendment
Carroll v.
President of Princess Anne (
Rules – In
the absence of a showing of impossibility, ex parte abridgements of First
Amendment rights without notice are improper.
*TRO > 10
days without notice = really Preliminary Injunction – FRCP 65
Sampson v.
Rule – A
preliminary injunction is not proper in a wrongful discharge suit.
Wrongful termination leads to lost income which is compensable at law.
(not irreparable).
C. Prospective or Retrospective Relief – CB 477
1.
Suits Against Officers in Their Official Capacities
*Eleventh
Amendment & immunity of states against lawsuits by citizens
Edelman v.
Rule – A
federal court cannot fashion an equitable remedy compelling a state to make
payments out of its treasury, either in a legal or equitable action.
CB 489 -
Ex parte Young (US 1908)
2. Sue
Officers in their Personal Capacities
*Suit
against officers in their personal capacities
Harlow v.
Fitzgerald (
Facts – Fitzgerald (P) blew whistle at Air Force for questionable weapons
procurement practices. (P) sued
Harlow (D) White House aide for firing him.
(D) claimed absolute immunity.
Rule –
Presidential aides have only a qualified immunity from suit for acts done in
their official capacities.
CHAPTER 5
Preventing Harm without Coercion:
Declaratory Remedies
1. Declaratory Judgments - New – 20th century statutory
*Declaratory Judgments can issue when actual controversy exists.
Rule –
Federal courts can issue declaratory judgments when an actual controversy
exists.
*Declaratory judgment requires actual case or controversy - i.e. threat of
infringe suit
Cardinal
Chemical Co. v. Morton International (
Rule –
Courts can’t refrain from deciding a counterclaim for declaratory judgment
regarding the validity of a patent in infringement cases.
The Desire to avoid threat of infringement action is sufficient to
establish a controversy under Declaratory Judgment Act – so no mootness even if
infringement action is dismissed.
Tactical Advantage and Declaratory Judgments – CB 526
Courts Do
not Permit Declaratory Judgments where:
*Declaratory Relief against State Statute – Federal plaintiff must beat state
prosecutor to the courthouse.
Steffel v.
Thompson (
Rule –
Federal declaratory relief may be given when threat of enforcement of a disputed
state criminal statutes exists.
Declaratory relief is not coercive (no threat of contempt).
*watch ripeness – i.e. federal courts only decide actual controversies,
no advisory opinions.
Ex parte
YOUNG Dilemma –
choice between foreiting asserted constitutional rights or risking penalties is
irreparable injury.
Younger v.
Harris (
Ripeness –
must show real threat of prosecution before getting declaratory relief
*3
plaintiffs – M&L barred from d.relief/injunction because of Younger doctrine
Doran v.
Salem Inn. (US 1975) – CB 541
Rule -
A party cannot evade Younger restrictions on federal injunctions against state
criminal actions by joining parties (other 2 restaurants) not affected by the
restrictions.
2. B. Quiet Title, Cancellation, Rescission,
*Okay for
action to quiet title to personalty (equity besides for realty)
Newman
Machine Co. v. Newman (N.C. 1969) – CB 546
3. C. REFORMATION
Reformation –
contract stays in effect with modifications
Rescission
–
reverses the transaction –
*Contract
Reformation – for Fraud - Not Typical Case
Hand v.
Dayton-Hudson (6th Cir. 1985) – CB 554
Rule –
Reformation is allowed despite the lack of a mutual mistake if there is fraud by
the other party. General Rule was
parties responsible for signed contracts, and reformation available only where
mutual mistake of fact. Exception
for Fraud.
CHAPTER 6
RESTITUTION
Benefit to Defendant as the Measure of Relief – CB 565
(*putting
defendant in his/her rightful position*)
Unjust
Enrichment – 3 varieties
SOFT
WRONGS –
torts claims – Judge Learned Hand Formula –
HARD
WRONGS –
A. DISGORGING PROFITS
*The Basic
Principle – Simple Case – Hard Wrong – Disgorge Gain
Olwell v.
NYE & Nissen Co. (
Rule –
Where defendant tortfeasor has benefited by his wrong, the plaintiff can waive
the tort and bring an action for restitution (defendant’s profits + plaintiff’s
loss)
·
Restitution via (savings of expense) wages of labor saved – defendant would have
had to hire more labor
CB 572 –
Note 5
Edwards v.
Lee’s Administrator (
·
Court
awarded plaintiffs - Profits
attributable to the defendant’s use of Plaintiff’s 1/3 of the cave.
CB 576 –
Note 15 *Strict Tort Liability Damages or Restitution ?
Vincent v.
Lake Erie Transportation Co. (
·
Plaintiff
has dock. Defendant keeps his boat
tied to the dock to save it from the severe storm.
·
$500
damage to plaintiff’s dock. - By-passing the market made sense
*Deterring
Deliberate Infringement – Courts decide Degree of Culpability
Maier
Brewing
Rule –
In trademark infringement, plaintiff may recover defendant’s profits even if
defendant was not in direct competition with nor diverting trade from plaintiff.
Equitable concepts – restitution and unjust enrichment.
CONSTRUCTIVE TRUST – QUASI-CONTRACT
“Quasi-Contract” – (Olwell Case)
behaving as if it is a contract
Constructive Trust
– usually goes towards the higher end of the measures
5.
All
Profits – made on eggs
*Constructive Trust is a proper means to disgorge all profits - Unjust
Enrichment
Snepp v.
Rule –
A constructive trust is a proper manner of disgorging the profits of one who
abuses a confidential position.
Snepp was in a position of trust and harmed CIA, so profits derived
there-from rightfully belong to the trustor.
*Measuring
the Profits in Proportion to Infringed Usage
Sheldon v.
Metro-Goldwyn Pictures (US 1940) – CB 603
Rule –
A court may apportion profits in a copyright infringement suit based upon the
actual use of copyrighted material in the making of all the revenue.
*Defendant’s accounting of profits – minus – allocable expenses
Hamil
America, Inc. v. GFI (2d Cir. 1999) – CB 611
Rule –
A liable defendant for willful copyright infringement may exclude an allocation
of general overhead expenses in calculating its profits on the infringed
product.
Section B. – Restitution and Contract
Rescission
and Restitution –
puts each party in the position before the contract – available for fraud,
mutual mistake, duress, material misrepresentation.
*Rescission of Contract - Straight forward
Mutual
Benefit Life Insurance Co. v. JMR Electronics Corp (2d Cir. 1988) – CB 621
Rule –
Insurers can get rescission under any insurance policy where the applicant made
material misrepresentation as to their medical history.
*Quasi-Contract – Defendant need not receive benefit but merely (P)’s
performance
Farash v.
Sykes Datatronics, Inc. (N.Y. 1983) – CB 629
Rule – A
party can recover for expenditures made in reliance on the promise of another,
even though the promisor received no benefit from the expenditures.
*If
benefit conferred intangible/speculative then no restitution -> reliance damages
Glendale
Federal Bank, FSB v.
Rule
– A non-breaching party to a contract should not be entitled to restitution when
the gains of the breaching party are speculative and indeterminate.
EarthINFO,
Inc. v. Hydrosphere Resource Consultants, Inc. (CO 1995) – CB 652
Rule - If
defendant had intentional wrongdoing, recovery of profits maybe granted to
non-breaching party, but an apportionment must limit the plaintiff to the
profits attributable to his share.
Contract Damages
–
plaintiff’s
Expectation interest –
where would plaintiff have been if contract performed
– can’t be too speculative
Reliance interest –
put plaintiff back in position as if contract never occurred
Equitable Equivalents
Specific performance –
injunction
Rescission –
(equal to restitution and reliance),
avoids valuations
equitable
counterpart of the Reliance interest
equitable counterpart to the defendant focused Restitution remedies
REMEDIES OUTLINE - POST MIDTERM MATERIAL
Disgorgement of consequential gains from plaintiff’s performance of the contract
that leads to a different and far more controversial remedy.
C.
Tracing Defendant’s Benefit: RESTITUTION AND INSOLVENCY
Constructive Trusts –
Makes a difference in defendant bankruptcy cases: 2 requirements
1)
Victim’s ability to identify his/her property taken
2)theft (misappropriation), fraud, or
mistake
·
Equity’s remedy when one party is unjustly enriched - restitution
Strongest Remedy –
Choice of Constructive trust and equitable lien – If traceable property is worth
less than she lost, (P) will seek money judgment for full loss and an equitable
lien on the traceable property.
General Bankruptcy Rule –
1st Government gets its share 2nd senior creditors get
priority
Exception – Defrauded parties can prove which funds were theirs.
Rescission/constructive trust
award – (P) gets a higher priority against other creditors than in an
award of money damages.
Hypo –
Thief steals Prof.’s wallet and takes money and puts in his bank account.
The thief declares bankruptcy.
That money does not become part of his bankrupt estate; no other
creditors have rights to it before the Prof.
*Free Choice of Remedies – adequacy of legal remedies vs. equitable remedies
Hicks v. Clayton (CA 1977) – CB 659
(D)Clayton was lawyer for (P). (D)
swindled certain real property in exchange for worthless stocks and notes; he
failed to pay the notes, and (P) was unable to pay off his own loan on the
property. (P) sued for rescission of
conveyance. Trial court awarded
damages- not equitable remedies.
(D) was insolvent.
Rule – Equitable relief should be granted when damages will prove inadequate.
Court – If the Hicks can show that they were the victims of theft, fraud,
or mistake, and if they can trace the assets, it’s theirs.
*Opposite Hicks Case
In Re North American Coin & Currency (9th Cir. 1985) – CB 662
(P)Customers who placed orders Sept 13-17. (D)NAC created special trust account
for $600k received from (P). (D)
filed for bankruptcy, and (P) tried to claim constructive trust over the $600k.
general creditors
Rule –
Constructive trusts will not be given effect over federal bankruptcy proceedings
unless there has been actual fraud.
(D) committed no fraud – no equitable basis to distinguish the customers by
order dates
*Tracing of Trust Funds: liberalized standards
In Re Erie Trust Co. (PA 1937) – CB 665
Erie Trust Co. converted funds from Gingrich trust.
He died, and beneficiaries had a receiver that tried to get the funds
from bankrupt
Rule - Wrongfully converted funds
may be traced into commingled accounts without precise identification.
Restatements of Trusts §202 approach - Beneficiary is entitled to a
proportionate share of remaining trust funds and withdrawn funds.
Court treated all the cash accounts as “one” account.
TRACING RULES
1) Strong presumption –
that the bad guy spends his own money first
2) Wrongdoer Invests (P)’s money first.
When money is spent and invested – the victim can choose the money invested.
3) Lowest intermediate balance rule –
if account balance drops below (P)’s money deposited, then the lowest balance
the account ever reaches = limit on (P)’s claim. When money is dissipated and
then replenished by thief’s earnings – it is treated as his money.
4)
Direction exchanges – don’t
require additional fictions – i.e. real estate sold and money used to buy stock
*Figure out the
*Prof. questions this case – Restitution – Constructive Trust
1st Wife and children of man is promised $15k life insurance policy
in separation agreement. Man
changes companies and insurance policies (still $15k); he remarries 2nd
wife Judith who got “unjustly enriched.”
1st wife sues 2nd wife for insurance proceeds via
constructive trust.
Rule – Constructive trust arises when a person holding property would be
unjustly enriched by it.
The result is right but not out of traditional reasoning.
Court assumes that the life insurance policy is a piece of property.
Life insurance right was somehow converted into cash that then was used
to buy the 2nd policy.
(weak argument)
*Difference Between Constructive Trust and Equitable Lien – Mistaken Improvers’
Choice
Robinson v. Robinson (
Ann(P) and Wylie(D) built a house on (D)’s parents’ farm land.
Common Law Rule – If your mistake, then no remedy unless the real
property owner knew and let it go.
Equitable Lean = money judgment/value of that improvement at the moment the
court makes judgment. Remedy for a
debt; attaches to a specific property
Rule –
A land owner permitting another to make improvements on his property is liable
for the value thereof.
SUBROGATION – CONTRIBUTION – INDEMNITY
*Distinction between Subrogation and Indemnity – Subrogation is an
equitable procedure allowing one who indemnifies another to proceed against
another when normally it would be an outsider to the transaction.
Contribution – partial indemnification – if 2 or more parties are jointly liable
for the same obligation, and 1 pays more than his share, he is entitled to
contribution from the others, so that each pays his share
American National Bank & Trust Co. v. Weyerhaeuser Co. (7th Cir.
1982)
American National Bank is an agent of the Investment Board (Principal), takes
care of the trust fund and has stock in Weyerhaeuser which offered to buy back
3.5 million. Subrogor (Investment
Board) -> Subrogee (ANB) Board
tells Agent ANB to sell but never consummated.
Rule –
An Agent who buys stock from a principal due to the negligence of a 3rd
party has standing to sue that 3rd party.
Classic Subrogation – insurer pays damages to insured, and subrogation
gives the insurer the right to sue the party who damaged the insured.
VOLUNTEERS -
Note 2 – Armco, Inc. v. Southern Rock
(5th Cir. 1983)
1)
Replevin & Ejectment –
restore to plaintiff the property lost
·
(P) has a choice to sue for the goods or for their value
·
Constitutional – Fuentes v. Shevin (
2)
Trover
(Conversion) – this property was converted to the use of the defendant with no
intent to give it back (action for damages) – value at the time it was taken
*Conscious Wrong Doer here – Tort Conversion of a Chattel – (P) waives tort and
sues in assumpsit
Welch v. Kosasky (MA 1987) – CB 713
(P)Welch had 12 lots of antique silver stolen.
(D) later bought 11 lots which he knew or should have known were stolen.
(P) recovered the silver at a dealer, but (D)’s alterations resulted in
$22,000 lost value.
Rule –
Rightful owners may recover converted property and its estimated appreciated
value if subsequent alterations have damaged the property.
(i.e. Estimated value $25k – Current Value at Return $3k)
CHAPTER 7 – PUNITIVE REMEDIES – CB 719
A. PUNITIVE DAMAGES
Punitive damages are meant to compensate those things which the common law
doesn’t. Punitive damages always
exceed > the plaintiff’s loss.
Policy of Deterrence – Rejection of Economic View on Accident law.
Measuring Punitive Damages – some courts say punitives must be in a reasonable
ratio to compensatory damages, or no punitives without at least some
compensatory – exception if equitable relief instead
Kennedy Case
*(D)’s conscious disregard of probability that conduct will result in injury to
others
Grimshaw v. Ford Motor Co. (CA 1981) – CB 719
(D) Ford decide to ignore inexpensive
safety improvements and sell the Pinto to the public.
(P)was burned when car blew up in flames.
Punitive Damages awarded.
Rule – A company’s decision to expose the public to serious danger when
inexpensive alternatives exist is a legitimate basis for punitive damages.
“Conscious disregard of possible results” – Malice defined broadly.
Punitive damages awarded where malice is found
Determining whether Punitive Damages is Excessive – Shocking disproportion –
Product of Passion or Prejudice?
1)wealth of defendant, 2) amount of compensatory damages, 3) proper deterrence
amount
*
BMW, Inc. v. Gore (
Jury had assessed very high punitive damages $4 million.
(P)Gore bought BMW and found out (D) had policy not to disclose minor
damage on new cars. BMW Standard –
not very illustrative – punitive damages vary among jurisdictions.
States use statutes – to put limitations/caps on punitive damages, and
different standards “clear and convincing evidence”
BMW’s conduct was not indifferent to or reckless disregard for health and
safety of others. Court’s 3
guideposts – 1)degree of reprehensibility of (D)’s conduct 2)Ration of PD award
to actual harm inflicted on (P) 3)Sanctions for comparable misconduct-
Rule – Punitive damage awards must be reasonable in light of the
reprehensibility of (D)’s conduct and the ratio to the compensatory amount.
Remand - $50,000 for punitive damages
CHAPTER 8 – ANCILLARY REMEDIES – CB 775
A. ENFORCING COERCIVE ORDERS: THE CONTEMPT POWER
3 basic kinds of use of the Contempt Power (Equity - No Jury)
·
Coerce (D) to comply or penalty will be bigger – size of fine – consider (D)’s
wealth
·
Procedural safeguard– scienter “willful” requires prior notice of sanctions and
prohibited conduct
·
Criminal fines can be imposed without a jury trial up to an undefined limit
(i.e. $52 million)
Collateral Bar Rule –
(D) cannot challenge the validity of an injunction when in a prosecution for
criminal contempt of that injunction.
Walker Case (
Not applicable to civil contempt. No CBR to statutes.
Exceptions – No CBR if
no procedure for appeal, No Jurisdiction, Injunction Transparently Invalid or
frivolous pretense to validity (Walker US) (1st Cir)
*Retrospective Criminal Contempt Fines – Jury Trial needed for huge fine awards.
International Union, United Mine Workers v. Bagwell (
(D)United M Workers had 72 violations of (P)’s injunction against unlawful
strike activities. 7 contempt
hearings without a jury trial. (P)
wanted $52 million in unpaid contempt fines from (D).
Rule
– Contempt fines for these violations of the injunction constituted criminal
sanctions entitling (D) to a jury trial.
Nature of the injunction – even though the court announced the fines
before their violation, does not mean the fines were “civil in nature”.
Fines here = retrospective criminal fines – out of court violations
Anyanwu v. Anyanwu (NJ 2001) – CB 784
(D) Husband was incarcerated after failing to comply with court order to produce
his 2 children in
Rule – (D) cannot be held in civil contempt when jail for that purpose has lost
its coercive power. (D) unable to
comply with the court order. (D)’s
refusal to comply does not transform coercive to punitive order
*Split in Circuits – 5th Cir says an actual existing order must be
disobeyed for contempt to exist
(D)School Board – made tuition grants to segregated private schools.
Court order to stop, and trial whether previous year disbursements could
still be made. Before appeals court
could issue decisions, (D) paid the money and had reason to believe of court
prohibition.
Rule – Certain matter that is removed from a court’s jurisdiction constitutes
contempt. (D) = civil contempt
Dissent – 18 USC §401 – limits contempt to disobedience of existing lawful court
orders.
US Supreme Court –
B. THE COLLATERAL BAR RULE – CB 812
*Collateral Bar Rule – an injunction cannot be attacked in prosecution for
criminal contempt
(P)City obtained ex parte TRO prohibiting marches. (D)
Rule – Disobedience of a court order is punishable by contempt even if the order
is unconstitutional. Judicial order
must be obeyed until reversed.
Proper solution is to attack the order on appeal.
Dissent – No greater weight for bad order than bad statute which can be
disobeyed and attacked.
*3rd Party Rights and Liability
Court order to desegregate + ex parte order enjoining all persons from
disrupting implementation of plan.
Anyone with notice of the order and violates it would be sanctioned for
contempt. Black Front Hall (D)
violated the order and disrupted high school.
Court made controversial analysis to in rem injunctions.
Rule –
A court has power to enforce an injunctive order against a nonparty with
contempt powers if it is necessary to effectuate a binding adjudication between
the other parties before the court.
FRCP 65(d) does not restrict the inherent power of a court to protect its
ability to render a binding judgment between parties.
Other Theories – Binding 3rd Parties
– persons in active concert, successors to public office, if a successor entity
is created for the purpose of evading an injunction, courts will hold the
successor in contempt, in rem injunctions – bankruptcy petitions, Injunction
against a state binds its citizens (with respect to public rights) – Washington
Fishing Assn Case (US 1979)
CHAPTER 9 –REMEDIAL DEFENSES – CB 959
A. UNCLEAN HANDS DOCTRINE AND IN PARI DELICTO
“unclean hands” doctrine–
Equitable defense – focus is on the plaintiff (both parties need not be guilty
of the same conduct) – requires at least some connection between conduct and the
lawsuit – judicial relief should be denied to wrongdoers (P) as way to deter
illegality.
“in pari delicto” –
Law suits for damages. Parties are
guilty of the same wrongful act/conduct.
*Unclean Hands and In Pari Delicto – legal suits
Pinter v. Dahl (
Pinter(D) was oil/gas producer who had (P) invest $310k in dry wells.
(P) had other purchasers invest money in the venture.
(D) sold interests without registering under Securities Act.
(P) sued for rescission. (D)
tried in pari delicto defense but court ruled for (P).
(P) merely had knowledge, no cooperation with (D)
Rule –
(D) can only use “in pari delicto” when (P) is an active and voluntary
participant in the unlawful activity that is the subject of the suit.
(P) needed to be a promoter, not merely an Investor.
Note3 - Precision Instrument
Manufacturing v. Automotive Maint Machinery Co. (
“unclean hands” case because conduct that the plaintiff is responsible (failure
to disclose (D)’s perjury) is not the same conduct as lawsuit against (D’s
infringement). (P) invents wrench; (D) perjures PTO application saying it was
first. (D) settles with (P) and
assigns patent. (P) doesn’t
disclose perjury to PTO.
Note 6
Worden
v. California Fig Syrup Co. (US 1903) “unclean hands case” – public harm
continues - both parties’ syrup were not from CA
and not from figs. Both
engaged in fraud upon consumer –– lawsuit didn’t stop them from selling to
consumers.
Note – Best Unclean Hands Case - Highwaymen’s Case (1725)
– persons would find drunk people with money – coordinate robbery and split the
proceeds. The person stealing
didn’t split the profits, and the scoper (D) sued for accounting.
Not “in pari delicto” - No Remedies for criminal contracts.
B. UNCONSCIONABILITY AND THE EQUITABLE CONTRACT DEFENSES
19th Century of “unconscionability” only applied in Equity – law
judges stretched a little with unconscionable contracts – damages can be
fudged/minimized (deny specific performance).
Equity judges can’t budge.
Unconscionability –
most courts require 2 elements in different degrees: 1) Procedural – oppression
or surprise by unequal bargaining relationship between parties 2) Substantive –
overly harsh/one-sided results
Armendariz v. Foundation Health Psychcare Services, Inc. (CA 2000)
CB 969
(P) two female supervisors sued for sexual harassment and unlawful termination.
(D) invoked a contract clause requiring arbitration of the (P)’s claims
but not if (D) had claims.
Rule –
Employment contracts of adhesion are unconscionable if they require arbitration
of an employee’s claims but not those of the employer.
(no reasonable justification for 1 sidedness based on business reality)
C. EQUITTABLE ESTOPPEL AND WAIVER – Both Ends of a Continuum
“equitable estoppel” –
an act or statement inconsistent with the right later asserted combined with
reasonable detrimental reliance, fraud or fraudulent/unjust effects is essential
– detrimental reliance by party A upon an act or statement by party B that is
inconsistent with a right later asserted by party B.
1)Res judicata (estoppel by judgement) 2)promissory estoppel (relying on (D)’s
promise) 3)judicial estoppel
“waiver” –
intentional relinquishment of a known right or intentional conduct that is
inconsistent with claiming that right – waiver is essentially unilateral
Geddes v. Mill Creek Country Club, Inc. (
(P) Geddes had business next to (D)Club’s golf course.
(P) was consulted on placement of golf fairway and supported the project
before country planning committee.
(P) later sued for trespass and nuisance when 2,128 golf balls invaded his
property.
Rule –
If a person’s statements and conduct leads a party to undertake an action he
otherwise would not, that person is equitably estopped from asserting rights
that would have existed but for statements/conduct.
Note 8.
Government cannot be estopped by a (P) seeking public funds Office PM v.
Notes Schweiker v. Hansen (
Waiver – Some courts say the Government can waive its rights only if the
official who waived had authority.
United States Fidelity Co. v. Bimco Iron & Metal Corp. (TX 1971)
Bimco (P) held insurance policy from USF (D) covering property damage but not
theft. (P)’s building was damaged
and stolen property. (D) contended
it was responsible for property damage only.
(P) claimed (D) waived the late filing defense by admitting liability for
property damage. (D) did not
intentionally waiver.
Rule –
Effective waiver of an affirmative right must be a clear/intentional act.
Absent actual or implied intent, no waiver has occurred.
Different than Estoppel – imposed preclusion of the exercise of a right.
D. LACHES AND STATUTE OF LIMITATIONS – CB 995
Laches
– equitable doctrine that requires 1)
unreasonable delay (awareness, could be very short compared to SOL) AND 2) some
kind of prejudice to the opposing party (detrimental
reliance, loss of evidence –i.e. witnesses no longer available) Defendant
has to prove. Equity should only
aid the vigilant.
Purpose of laches –
to resolve disputes before pertinent evidence is lost.
Factors Negating Laches
– 1)ongoing negotiations and 2) conscious fraud or bad faith by (D)
Statutes of Limitations
– litigated more often than “laches” cases. SOL – limitation period begins when
the cause of action accrues – when the plaintiff can bring a cause of action –
applies in equity and law
Concurrency Doctrine –
makes SOL applicable to equitable as well as legal remedies.
Laches - equity bar
Federal Claims – SOL – reference to analogous state SOL
Ways in which SOL can become more Standard Like and Less Rule like
|
SOL |
LACHES |
Rights of Legal Remedy Only
Rights of Both Legal and Equity
(P) Seeks Legal Remedy
(P) Seeks Equitable Remedy
Rights with Equitable Remedy |
YES
YES
YES |
NO
NO |
*Laches Defense Case – 1)substantial delay by (P) 2) (P) awareness of
infringement 3)reliance by (D)
NAACP v. NAACP Legal Defense/Educational Fund (D.C. 1985) – CB 995
NAACP (P) created LDF (D) which later became independent.
(P) registered NAACP as trademark and sued (D) which said suit should be
barred by laches. (P) delayed 12
years after (D) invested in mark.
(D) wins.
Rule – Laches bars a suit where a substantial delay by (P) prejudices (D) to
invest labor/resources in mark.
*Statute of Limitations – Continuing-Violation Doctrine (weak (P) argument)
Klehr v. A.O. Smith Corp. (
(D) Smith said silo limited oxygen to prevent mold in feed stored.
(P) Klehr found mold and sued under RICO.
Predicate Act Rule – improperly extends SOL.
Continuing Violation –
each new act recommences SOL (P) must prove each new act caused the harm over
and above the earlier acts. Based
on Antitrust Law.
Rule – SOL does not begin to run anew on a claim based on the date of (D)’s last
predicate act.
*Discovery Rules Tolls the SOL until (P) knows enough facts.
DR do not apply to all SOL.
O’Brien v. Eli Lilly &
(P)O’Brien was told she had cancer 1971.
1950’s (P)’s mother took DES.
Causal Link discovery in 1976.
(P) filed suit in 1979. She missed
SOL which was 2 years.
Rule – In Personal Injury, SOL period begins to run at the time (P) finds out
injury, operative cause of the injury, and causative relationship between the
injury and (D)’s operative conduct. (objective)
*Fraudulent Concealment – equitable estoppel to SOL – (D) conceals existence of
cause of action
Knaysi v. A.H. Robins Co. (11TH Cir. 1982)
Knaysi (P) sued (D) where company knew of dangers with Dalkon Shield and
intentionally suppressed such information.
(P) miscarried twin fetuses.
Justifiable reliance on (D)’s misrepresentations.
Rule – Equitable estoppel is sufficient to bar the SOL when (D) fraudulently
conceals action/conduct unknown to (P).
(D) induces (P) to forbear suing on a known cause of action, (D) may be
estopped - SOL