Law School Outline - Spring Torts Outline 
I. Duty of Care a. Pure Economic loss i. Recovery for pure economic loss only is prohibited for negligence. LA v. M/V Testbank (fifth Cir. En bank) 1985 ii. It may be reasonably foreseeable that this type of harm would occur, but the scope of liability would be too large, thus no duty of care is pertinent to limit such liability. iii. This first cost liability would be better for insurance as it would spread the losses around and not put all the losses on one company. iv. Those businesses that lost a lot will get picked up more predictably by their own insurers at a more finite and readily discernable. b. Negligent Mental Disturbance and Resulting Injury i. Generally, no cause of action for pure emotional pain (no duty) ii. The exceptions: 1. If a person suffers a physical injury then he can recover for the emotional distress suffered as a result of the injury. 2. Pure emotional loss recovery permitted if there was some sort of contemporaneous physical impact on P’s body from D. 3. If the emotional disturbance causes a normal PHYSICAL MANIFESTATION of the emo distress objective physical manifestation then recovery. a. Exceptions to physical manifestation: b. Negligent transmission of death telegrams companies liable for emo distress if send them by mistake (minority) c. Negligent interference sued for emo distress (minority) 4. Zone of danger rule a. Zone of danger requirement says P can recover for pure emotional loss if he was in the zone of threatened physical injury and P feared for own safety. b. Prob with this rule was: i. If P sees a family member hurt but P not in zone of danger they could not recover so the ct. changed it in: 5. Dillon rule in CA based on reasonable foreseeability of emotional loss (if so then can recover) P can sue a D for emo distress caused by seeing a negligently inflicted injury of a 3rd person only if P is a. Proximate—be near b. Visibility – see c. Relationship—if closely related, then recovery i. Serious emotional distress 6. Thing three a. Close rela b. P present at scene at time occurs then aware injury to victim c. As a result severe emotional distress beyond that of disinterested witness and i. not an abnormal response 7. Direct victim cases— a. Molien the doc’s negligence caused emo distress, thus doc will pay b/c of special/fiduciary rela, not b/c of zone of danger, etc. b. Or if highly forseeable injury to other would cause severe emo distress to victim c. Unborn Children i. Child can sue those who injure it in utero 1. At common law had to be born alive, then could sue 2. If not born alive then no cause of action ii. Majority of states do allow a stillborn child to sue for wrongful death 1. NY child killed in utero cannot recover a. mother will recover iii. Does a woman have a duty to protect her fetus? 1. Reasons for: a. If someone else does it, then they might be liable for hurting the child, so mothers should definitely be liable, too. b. Mother is in control of instrumentality of child’s injury— special relationship. c. Deterrence and compensation 2. Reasons against: a. sanctity of a woman’s body b. restrictions may be too great (no lunch meat, no cat box cleaning, no alcohol) c. What is reasonable care? (too difficult to define) iv. Wrongful birth—(parent can sue) negligence caused child to be born, when if given choice, not born 1. This is the preferred cause of action, still VERY controversial 2. Damages limited to emo distress and extraordinary medical expenses incurred on behalf of defective child. v. Wrongful Life—(child can sue) for having to be born from physician’s negligence 1. Few jurisdictions allow wrongful life suit 2. Damages are limited to expenses from condition 3. No pain and suffering vi. Wrongful pregnancy—woman pregnant b/c of docs negligence 1. Doc messed up sterilization II. Owners and occupiers of land (Duty of care) a. Outside the premises i. Whether owners of land have a duty of care to be reasonable landowners and prevent an unreasonable risk of harm to others (from roadside trees) is a question of fact for the jury to depend on the particular situation at hand. Taylor v. Olsen (OR, 1978) ii. How duty is placed on owner’s of land iii. Traditional Use of land--Natural/artificial and Rural/Urban 1. The above distinctions are still pertinent to the discussion b/c it defines what reasonable care is in the situation 2. Probability of injury changes depending on where you are (rural/urban) and what you are doing (natural use of the land/artificial use of the land) iv. Costs of precautions changes from owner to owner 1. Large rural lot would bring high cost of precs. a. Thus less of a duty 2. Small urban lot a lower cost of precs. a. Thus greater duty of care v. Book says there is another distinction: Static conditions/active conduct (on the premises that injured someone) 1. Static conds nat’l rural no duty 2. Artificial urban or active conduct duty of care to persons outside 3. Trend now, all landowners have duty of reas care to avoid hurting those off premises, those historical categories determine reasonable care. b. On the premises i. Trespassers (Sheehan v. St. Paul & Duluth Ry. Co. 1896) 1. RR co is not bound to act for trespassers on such places; the trespasser who walks on the track (where free track is expected) assumes all risks of the conditions that might be there, including cars and engines coming at him. a. No duty to use reasonable care to make the premises safe for trespassers 2. Duty to trespassers is to not willfully nor wantonly injure them. 3. Majority says when trespasser is discovered the owner must exercise ordinary care to avoid injuring the trespasser by active operations. ii. Licensees (Barmore v. Elmore) IL 1980 1. Licensee --A social guest (companionship, diversion, or entertainment) or one who enters the premises of the owner by permission, but for the licensee’s own purpose. 2. A licensee must take the premises as he finds them. a. An owner of premises has a duty to warn the licensee of any hidden dangers that the owner has knowledge of b. To avoid willful or wanton harm, too. iii. Invitees (Campbell v. Weathers) KS, 1941 1. An invitee is someone who is either expressly or impliedly invited onto the premises of another for business of that other. a. Mutually beneficial business relationship. b. If you go into a store with a view to doing such business then you are an invitee. 2. The public has a general invitation to be a customer/invitee. Thus the owner has a duty to protect those invitees with reasonable care to keep the premises reasonably safe for use by the invitee. 3. Note 6 491—Yale wanted donations, thus P (alumnus) was an invitee. iv. If a business transaction is over one is thus no longer an invitee, and just a liscensee. Whelan v. Van Natta KY 1964 1. It is to his benefit to let me into the area to get the box, increases the good will of the business, 2. If the invitee goes outside the area of his invitation he becomes a trespasser or a liscensee, depending upon whether he goes there w/o the consent of the possessor, or with such consent. 3. If you go into a part of a store that is a residence then you are a licensee. a. Must give people a chance to leave once invite them onto your property, however. v. Warning—Wilk v. Georges OR 1973 1. D put up a sign warning of slippery stuff. D put asphalt down to make the planks less slippery. a. Warnings can work, it depends on what is reasonable care under the circumstances b. Landowner who anticipated the slippery walkway, should have watched the slippery walkway closer. c. If Invitee knows of danger (b/c of warning) the owner can still be negligent if it not difficult to eliminate the danger and if D (owner) can reasonably anticipate P could still slip warning notwithstanding. 2. If the possessor should anticipate an unreasonable risk of harm to the invitee notwithstanding a warning or knowledge on P’s part, D’s duty may require him to take steps to ameliorate the danger. a. Take affirmative steps to make the premises safe 3. If the jury feels that the condition was unreasonably dangerous – one that cannot be overcome even if the danger is known and appreciated – then the owner has to do more than warn, he must do what is reasonable to minimize the danger. 4. Note 4: Criminal activity posing a danger to invitees a. Argue that inviter should have taken steps to minimize the criminal activity i. Cts sometimes find duty to protect invitees b. Don’t want to second guess actions taken during ongoing crime i. Cts do not recognize a duty of inviters to stop crime on going (give in to hostage taking, etc.) vi. Persons outside of the established categories invitee/liscensee/trespasser. 1. Owners of property must exercise a high standard of care toward children. As we all want children to be safe from harm. a. Attractive nuisance doctrine --land owner puts a thing that will attract children, then have a duty of care to them to be reasonable in keeping the kids from getting hurt i. Like RR turntables vii. Artificial Conditions Highly Dangerous to Trespassing Children--1. A landowner is subject to liability for physical harm to children trespassing thereon caused by an artificial condition on the land if a. Place where cond. exists is one where the possessor knows or has reason to know that children are likely to trespass b. The condition is one of which the possessor knows or has reason to know and which he realizes or should realize will involve an unreasonable risk of death or serious bodily harm to children, and c. The children b/c of their youth do not discover the condition or realize the risk involved in fooling with it or in coming within the area made dangerous by it d. The utility to the possessor of maintaining the condition and the burden of eliminating the danger are slight as compared with the risk to children involved, and (B
later money 4. All future income to be reduced to present value a. convenient formulas and tables b. note 11 pg. 532 (look at interest rate) 5. These lump sum awards are problematic, but to have periodic payment would be a massive hassle a. A value to the finality of judgments, b. If do periodic damages, then P may not want to benefit themselves 6. Note 12 532 future inflation? a. Most jurisdictions recognize a need for that, but they disagree on HOW to adjust for inflation vi. Compensatory damages are not subject to Fed. inc. tax or state income tax (most states) 1. Punitives are taxable 2. Most courts do not tell juries that vii. Shortened life expectancy, no recognize 1. Common law rule against viii. Damages for pain and suffering only awarded if P actually suffered them 1. Instant wrongful death then no pain and suffering 2. Loss of enjoyment of life—must also be consciously endured a. Coma or killing them may be better for D with regard to paying for pain b. Wrongful death gets lost earning capacity ix. P’s lawyers describe suffering on daily basis (per diem strategy), this greatly increases the pain and suffering award 1. P and S are really just guesswork 2. Some commentators and D attorneys think all P and S awards are bum—do nothing for P’s pain a. but w/o P and S b. P and S are usually lawyers fees (both are generally 1/3 and 1/3) x. Collateral Benefits rule, Montgomery Ward v. Anderson (AK): 1. Tr. ct. must exclude evidence of payments received from a source collateral to the wrongdoing, such as private insurance, employment benefits, or gov’t benefits. 2. To take benefits into acct. then lessening of deterrence for the action 3. Someone will get a windfall, either D or P, it should be P, who gets the windfall 4. Insurance agreements usually say will pay, but if get tort damages then have to pay them back 5. D has to pay for the reasonable value of medical nursing services, even if P can find some cheaper form of that care (spouse, mother, etc.) xi. Avoidable consequences rule Zimmerman 1. Mitigate damages (must do it) cannot claim damages if permanency of injury could have been avoided by reasonable actions to reduce such damages 2. Factors on reasonableness to mitigate damages include: a. Risk involved b. Probability of success c. Expenditure of money and effort 3. P cannot get more damages than could be avoided if P acted reasonably after D committed the wrong. a. Must be affirmatively proven by D 4. Reason for this is a moral hazard, don’t want to encourage people to not mitigate their damages 5. No one is forced to have surgery, but D no pay if P should have taken a reasonable step to mitigate xii. Damages for loss of property—much simpler 1. There is a property market 2. If taken forever, or destroy it then market value before damage III. Punitive damages awarded for punishment of D and for deterrence a. Some argue these are unjust b/c are more a criminal fine i. Argue bad for P’s in product liability, b/c want to pay first then have money run out on the valid P’s ii. The anti-litigious folk say that punitives encourages lawsuits iii. Respondents say that gov’t no time to regulate all these people, and need torts to do it b. Conduct that is just negligent is insufficient to justify punitive damages c. What is good for punitives? i. Willful misconduct, wantonness, indifference of care, reckless behavior d. Factors showing wantonness thus punitives for product liability Gryc v. Dayton-Hudson Corp. i. Existence and magnitude of danger to public ii. Cost to reduce danger to accept level iii. Manu awareness, magnitude of danger, and avail of a feasible remedy iv. Nature and duration of the reasons for the manufacturer’s failure to act appro. To discover the problem v. Extent to which manu purposefully created the danger vi. Extent to which D’s are subject to fed safety regs vii. Probability that compensatory damages might be awarded against D’s viii. The amt. of time, which has passed since the actions sought to be deterred. e. Sup. ct. says an award of punitives can be grossly high, the guideposts for too high (violates due process under 14th amendment) i. Degree of reprehensibility— ii. Degree of harm and potential harm to P and rela of punitive damages iii. Difference ‘tween award to P and civil and criminal penalties authorized in other situations f. Evidence of D’s wealth can be a consideration too on punitive damages—if they are rich, $50,000 no big deal then should raise the punitive award to make it more of a deterrent. IV. Defenses to Negligence (Prox. Cause, duty, defenses are all a way to limit liability) D has burden of proving a defense—all affirmative defenses, D pleads and proves after P has proven his prima facie case. a. Plaintiff’s Conduct i. Contributory negligence--A person is required to use common and ordinary caution to avoid being injured. Butterfield v. Forrester 1. Even if a P was a little negligent then D would get off, even if D was grossly negligent. a. Barred P from any recovery b. This rule has stuck around for a long time b/c we want to deter unreasonable conduct by Ps and Ds c. P’s negligence is a superseding cause (D’s negligence then no longer proximate). 2. If P not Contributorily negligent with respect to the type of harm/risk that hurt him, then P not barred a. Breach—did P act below the standard of care or reas. Prudent person b. Causation in fact—but for P’s breach, would P be injured? c. Prox. Causation—with respect to what risks was P contributorily negligent? ii. Exception to contributory negligence Davies v. Mann Exchequer, 1842 1. Doctrine of last clear chance—if the D could have avoided the accident after P could not, then D should bear the loss. a. P not barred if the negligent D had the last clear to avoid the injury (more proximate cause). Donkey run over. iii. Comparative Negligence—the rule in almost every jurisdiction today McIntyre v. Balentine (TN 1992) 1. The “Pure” comparative negligence doctrine states that Ps damages are reduced in proportion to the percentage negligence attributed to him by the jury. a. If P was 90% negligent then he gets 10% damages b. Ct. here feels this stupid as a barely negligent D might have to pay a grossly negligent P. 2. The 2 “Modified” (50% (1), 49% (2)) comparative negligence doctrines state: a. 1) (P’s neg. not greater than D) if the P’s negligence is less than or equal to D’s negligence then P gets 50% or more of damages b. 2) (P’s neg less than D) if the P’s negligence is 49% at MOST then P will recover 51% or more of his damages. i. If P 50% negligent or more then complete bar to recovery (GA) 3. Reasoning: a. 1) The old exceptions no longer work, just talk about last clear chance and remote contributory negligence when trying to assess relative degrees of fault. b. 2) If have multiple tortfeasors, P can recover if his negligence is less than combined fault of all tortfeasors. c. 3) Fault trumps joint and several liability--i. 4) there will no longer be any situations where D pays too much (more than his ‘share’ of damages) iv. What is being compared --how to figure fault? (note 7 p. 599) 1. Jury should consider 2 factors in apportioning fault a. Relative culpability of each party i. How far each from standard of reas. Prudent person b. Causitive potency of each party’s conduct i. Relative closeness of each party’s breach of st. of care and the injury c. Jury question BIG TIME v. Joint and Several liability—each D is responsible for the entire harm to P. 1. P only gets to recover once, can sue each D or sue 1 then that D liable for all damages then that D could sue for contribution from the other D’s 2. TN abolished j and S liability, would be bad on D’s b/c would impose too much liability on 1 D 3. In TN if a P sues several D’s then gets what each should pay, thus an insolvent or missing D would cut into P’s recovery. vi. Assumption of Risk 1. Express--Two ways to invalidate express a. (1) Such exculpatory agreements are usually not good against willful, wanton, reckless, or gross negligence. (Winterstein v. Wilcom) MD 1972 2. (2) The outline for determining whether such waivers will be held invalid (and against public policy or when a transaction is affected with public interest) is: a. Business of a type that is generally publicly regulated b. Party wanting exculpation performs a service of great importance to the public i. Often a practical necessity for some members of the public c. Party holds himself out as willing to perform this service for any member of the public who seeks it d. Party seeking exculpation has a decisive advantage of bargaining strength against any member of the public who seeks his services e. Usually a K of adhesion, that offers no way of buying more protection against negligence f. Decisive advantage in bargaining power over the P g. As a result of transaction the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents h. We are getting to where one cannot assume a risk that is statutorily protected. 3. Implied assumption of risk—Rush v. commercial realty Co. a. Implied assumption requires (a complete defense) i. Voluntary assumption (If P has no choice then no assump. Of risk) ii. A known risk (subjectively knew) b. Dist. ‘tween assump. of risk and contrib. Neg. i. P had to have knowledge of risk for implied assumption of risk (not so case in contrib. neg.) ii. Contrib. Negligence=P’s conduct had to be unreasonable (not so in case w/assump. Of risk) 4. In cases of comparative negligence no implied assumption of risk— Blackburn v. Dorta FL 1977 a. There is redundancy in recognizing assumption of risk and comparative negligence. 5. Secondary assumption of risk (qualified assumption of risk) is now also merged with comparative negligence) 6. Failure of P to take advance precaution against extent of injury. Example: not wearing seatbelt a. Some states don’t allow failure to wear seatbelt to reduce damages b. Restatement of torts says no wearing should be reduce (D’s liability to P) if no statute exists to prevent such a reduction b. Statutes of Limitation and Repose--purpose of SOL’s is for piece of mind, trail gets cold (hard to find old documents), fairness and ability to let justice be administered Teeters v. Currey (1974)— i. Old/minority rule: mere ignorance or failure to discover the existence of the cause of action can prevent the running of the SOL. ii. New/majority rule: The suit needs to commence within 1 year after the cause of action accrues. 1. The cause of action accrues when the negligent injury is, or should have been discovered. a. (discovery rule followed by 28 states including GA) 2. Note 9 617—any action based on a latent injury (not immediately apparent) 3. Statute of lims run after injury occurred or is discovered and limit time on when can sue iii. Repose statutes limit time on which cause of action can even arise 1. After a certain # of years after a product manu’d or sold, no claim can arise, regardless of when injury occurred a. To cut off lia for architects and engineers, too. 2. Idea is that potential liability has to be cut off at some point. a. Not as common as SOL’s c. Immunities—are conferred on people or companies because of the status or position or relation of the favored D. Immunities on the wane, i. Families (Freehe v. Freehe, WA 1972)— 1. Husband-wife immunity—came out of the unity of husband and wife at common law. (husbands were the one). Nowadays this ‘one’ does not exist. Thus we should get rid of this immunity. a. One argument was the hurt of peace and tranquility of marriage if get rid of immunity b. This will not hurt peace and tranquility of the home anymore than what they might sue each other for. c. In fact, they cannot collect through divorce or criminal law, i. Thus further disrupting the ‘peace and tranquility of the home.’ 2. If lots of collusion/fraud comes out of this then the state legislature will have to deal with it out of concerns for public policy. a. Judicial process will ferret it out b. Most states interspousal tort immunity gone 3. Parent-child immunity doctrine Renko v. McLean (MD 1997) in keeping the doctrine (GA). (some states moving toward the abolishment of these too) a. Getting rid of this immunity is meant to allow children to get recovery if in car wreck with parent (would hurt child not to get the insurance money) i. NY lets children sue parents except when parents have no duty, (ie when parents fail to supervise the child). ii. CA lets children sue based on a ‘reasonable parent’ standard. 4. Courts have struggled outside of the car context a. Child in street sue parent? b. Child bit by dog? c. Child yelled at sue for IISED? d. Cts afraid of these cases so keep it around i. Some jurisdictions have gotten rid of immunity in auto insurance cases only ii. Charities – Tort immunity nearly gone for them b/c: a. Charities can secure liability insurance. In states that have gotten rid of such immunity, there has been no precipitous drop in contribution. b. Charity is really important to society, but it should still be responsible for its own mistakes, when reasonable. c. If sue a religious hospital they wont go bankrupt d. Just too similar to private corps. V. Vicarious Liability a. Respondeat Superior (look to the person higher up)— Lundberg v. State (NY 1969) i. Respondeat superior (typically a jury question) is defined by: 1. Employer and employee relationship 2. Employee committed the tort while acting in the scope of his employment. a. Trad rule: Doing something in furtherance of the duties he owes to his employer i. If Eer’s ‘enterprise’ was benefiting from what Eee was doing then Eer should be liable for the unfortunate injury. ii. Is the enterprise such as to justify making Eer liable for EE’s tort b. When Eer is or could be exercising control over some of what Eee is doing 3. Generally, employees driving from and to work is not within the scope of employment. a. It would be if he was a traveling salesman coming home from his last business appt. ii. Theories behind Respondeat Superior 1. Eer has a deeper pocket so can compensate better 2. All areas of vicarious liability involve search for deeper pocket 3. If all cared about was compensation, then would do strict liability 4. Deterrence important too, Eers can control acts w/in the scope of employment, a. But those acts outside E’ment would make ERs too active in lives of EEs b. No matter how much care is taken by Er and still ee screws up while on job er still liable as was doing something in furtherance of his duties c. Er will be careful so as to at least make them careful, if Er knows will be liable, then will do whatever it can to reduce chances of injury iii. To hold Er liable for an injury: 1. Can sue under Respondeat superior OR they might be 2. Directly liable for own negligence (if directly negligent then can still sue them) a. Unreasonable conduct b. Cause in fact c. Proximate cause d. Example Dominoes—if encouraged to speed, then policy bad and Eer liable RS liability notwithstanding iv. Intentional torts can be imputed to Eers if done w/in the scope of employ 1. Purpose of int’l tort (if for Er, batter someone then ER liable) 2. If for personal motive, not in scope Employ no liability 3. Minister sexually assault parishioner a. How to sue church? Consensual/priest psycho/person b. Reasonable jury could find enough church business v. If ER held liable then he can indemnify the EE for the amt. paid. 1. Probably does not happen that often b/c more trouble than worth 2. Not great for employee relations 3. Practically not useful b. Independent Contractors i.General rule: ERs not vicariously liable for indep. Ktor. Murrell v. Goertz (OK 1979) ii.Even if not RS negligent with Indep Ktor then might still be directly negligent/liable for hiring them or not firing them in the first place iii.Rule: The test for whether employee or independent K’tor is the right to control the physical detail of the work. a. K’s to perform a service in different method and manner when all ER cares about is the result b. Indep Ktor v. ee distinction quite important for taxes, ee rights, and are determined similarly 2. If company decides the details then ee 3. If ee decides details then ee is indep. Ktor. 4. Is the Eer saying get the job done, I don’t care how you do it? 5. Very fact specific a. Where was person with connection of company (work at home or at company)? b. Paid by hour (or paid by job)? c. Company supply tools for job? iv.Exceptions to rule stating that an ER not liable for torts of Indep. K’tor 1. Non delegable duty 2. Apparent authority—represent to me that you control this person (by advertisement, etc.), could not get out of a. If hold person out as part of company (EE) then vic liab. Under App. auth. v. Non-delegable duties: Maloney v. Rath (CA 1968) No obvious criteria for determining non-delegable duty, ad hoc, simply a case-by-case basis and for some public policy reason want to make them negligent. 1. Such a duty as getting your brakes fixed is non-delegable and you are liable, even if independent K’tor is the one who is negligent. There is a big list of them in the Restatement of Torts. a. Duty imposed by a public authority as a condition of getting a franchise. b. Duty of a condemning agent to protect a severed parcel from damage. c. Duty of a gen’l k’tor to construct safely. d. Duty to exercise due care when an indep. Ktor is employed to do work which the employer should recognize as necessarily creating a condition involving an unreasonable risk of bodily harm to others unless special precautions are taken. i. Brakes on a car. e. Duty of landowners to maintain their property in a reasonably safe condition, and to comply with applicable safety ordinances, and the f. Duty of employers and suppliers to comply with the safety provisions of the labor code. vi. If K’tor is hired to perform inherently or intrinsically dangerous activities then is an exception to no liability for negligence of independent contractors. 1. Repair of windows on a tall building peculiar risk of harm to others 2. Applies to unusual risks that led you to hire the K’tor in the first place but does not apply to unspecial dangers 3. Vicarious liability applies only to the peculiar risks of harm and does not apply to ‘collateral negligence’ 4. If is just everyday negligence by the intrinsically dangerous indep. K’tor then no vic. liability c. Joint Enterprises i. Rule for joint enterprises/joint ventures Popejoy v. Steinle (WY 1991): 1. 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; 4. an equal right (really) to a voice in the direction of the enterprise, which gives an equal right of control ii. This doctrine is supposed to apply only to business or pecuniary purposes shared commercial or profit motive. 1. Shared commercial or profit motive ONLY. iii. Make sense to hold your partners liable? 1. informal corporation, work together to create a share profit a. all you do poses a risk of injuring others d. Bailments do not make a bailor vicariously liable for acts of bailee in the use of a chattel i. Example: If give gun to person and he shoots someone then bailment does not make you liable under the common law unless you were directly negligent in giving them the chattel at all) ii. Exception: Cars iii. Statute says that when motor operated with consent of owner, operator is the agent of owner and owner will be vic. liab. For operator’s negligence. Shuck v. Means iv. The driver of the car that hurt P was the subpermittee of the person who rented the vehicle (permittee). Ct. below ruled such persons have the implied consent of the owner to operate the vehicle. v. To prove lack of consent D would have to show (strongly) that permittee was using the car w/o owner’s knowledge and contrary to explicit instructions, or that subpermittee was not driving w/anyone’s permission (pretty much a theft or conversion). vi. Purpose of this vic. liab. Is to find a deep pocket to compensate 1. Note 3 677 need for the above is lessened b/c of Omnibus clause in insurance K’s a. All in a family or with perm. Of owner are covered VI. Strict Liability in Tort—liability w/o intent or acting below the standard of reasonable care a. Animals—Strict liability if: i. ‘Wild animals,’ 1. One is liable for the damages of those animals on a strict basis, varies from jurisdiction to jurisdiction on what is ‘wild.’ a. Why SL—a really dangerous activity that most folks don’t engage in b. Most people thus will not have a wild animal. ii. ‘Trespassing animals’ 1. Strictly liable for those animals (e.g. barnyard animals) that do so. a. Now have some ‘fencing in’ statutes (animals must be fenced in and if not, strictly liable) b. ‘Fencing out’ statutes (if don’t want animals on land then put up a fence) iii. ‘Domesticated’ 1. Animal has dangerous propensities abnormal to its class, 2. Strict liability if owner knows or should know of the animal’s propensity to attack or injure man b. Abnormally Dangerous Activities i. Rylands v. Fletcher (1866 England) 1. The person who brings a potentially dangerous (non-natural) instrumentality (like a lot of water) onto his land and keeps it there, must do it at his own peril, and if he does not do so then he has to pay for it if it escapes his land and hurts another. a. Rest. 2nd serious and unusual risks on community should be held strictly liable b. D’s non-natural use of the land, would give him strict liability c. Character of thing or act. In question and place and manner in which it is used (what is normal in that area) d. This is the beginning of st. liability to abnormally dangerous activities. i. Not all that different from wild animals ii. Serious and unusual risks to the community bring strict liability with them ii. Limits on strict liability: P says that D engaged in an ultradangerous activity, namely storing dynamite. Bridges v. Kentucky Stone Co., Inc. (IN 1981) 1. Look for a superseding proximate cause for the explosion, after all he stole it, drove it to the house and put it under there. iii. Now cts say ‘abnormally dangerous’ activities call for SL 1. Liability arises out of abnormal danger of the activity itself 2. Policy of the law that imposes upon anyone who for his own purposes 3. D’s enterprise in other words should pay his way b/c of special and abnormal and dangerous character iv. How to tell if abnormally dangerous (rest of torts) (judge decides this issue as to strict liability): 1. High degree/probability of risk to person, land or chattels of others? 2. Likely the harm resulting is great? 3. Inability to eliminate the risk by the exercise of reasonable care? a. Such accidents cannot be prevented by the exercise of due care (most important) (American Cyanamid v. Indiana Belt Harbor Co) i. If there was no negligence would this problem still occur, If NO, then no SL. ii. There was no reason not to have a negligence regime to deter the unreasonable storage and transportation of acrylonitrile. iii. If negligence liability is not sufficient, then go for strict liability. 4. Extent to which the activity is not a matter of common usage? 5. Inappropriateness of the activity to the place at which is carried on? 6. Extent to which activities value to community is outweighed by its dangerous attributes? 7. Example: a. 1F—Public Fireworks Displays b. what does matter of common usage mean? i. Once a week, once a year? ii. Rest. says it is common if customarily carried on by the great mass of humanity. iii. Fireworks have a high value to community. c. Limitations on strict liability (strict liability has some limits, absolute liability has no limit/defense) i. Proximate Cause: Foster v. Preston Mill Co. (1954 WA) 1. Strict liability gets limited with proximate cause arguments. D’s duty extends only to certain consequences. 2. The injury that occurred reasonably foreseeable within range of risk that came from the abnormally dangerous activity. ii. Harm should be of the type that made the activity abnormally dangerous. 1. Negligence per se (if type of harm suffered by P of kind/type that was prohibited by legislature) iii. Example: The dog that knocked over the guy (already had an abnormal propensity to attack humans) 1. If can prove intentional tort, prox. Cause will not be cut off 2. Negligence, cts. want to cut liability off more so 3. Strict Liability, scope of consequences narrower in prox. Cause terms. iv. Unforseeable events—Force Majeure or Acts of God, Golden v. Amory (Mass 1952) 1. D engaged in abnormally dangerous activity but b/c of Force Majeure no liability even if kind/type of harm occurs. a. Acts of God are to be considered in cutting off proximate cause, a hurricane caused this dyke to overflow thus D is not liable in any way. 2. Unforeseeable acts of others can cut off prox cause for SL, too 3. 2nd rest. would allow recovery, reason for strict liability is that the activity created a great risk to the community a. If intentional act by 3rd party may not allow SL v. Contributory negligence will not work to bar in recovery to strict liability. Sandy v. Bushey (ME 1925) vi. Assumption of Risk—If P knowingly and willingly accepted risk then D has a complete defense. 1. Full knowledge of the evil propensities of an animal wantonly or voluntarily and unnecessarily 2. If P knowingly and voluntarily assumed the risk then no strict liability 3. Slight negligence or want of ordinary care on part of injured party will not relieve an owner of strict liability, if he owns a dangerous mean animal. vii. P is at fault, D is not, but D is held liable? (conundrum) 1. Place full resp. for taking the action, on that party doing that activity, this person should be prepared for negligent parties hurting themselves, it is defensible to pose the loss on those who exposed the area to danger in the first place viii. Strict liability and trespassers? 1. Wild animal injures undiscovered trespasser, undiscovered trespasser may not sue, but if invitee or licensee then strict liability ix. Comparative negligence—Cts. less sympathetic to Ps that knowingly and voluntarily expose themselves to strict liability abnormally dangerous activity. 1. Comparative negligence states use this to reduce damages paid through strict liability (implied assumption of risk not a complete defense) VII. Products Liability—liability of the manufacturer, seller or supplier to someone that he is not in privity of contract with, who suffers physical injury as a result of contact with that product. Dynamic and controversial a. Development of theories of recovery for bad products i. Negligence 1. Macpherson v. Buick Motor Co (NY) a. If the nature of a product is that it is reasonably certain to place life and limb in danger when negligently constructed, it is then a dangerous thing. i. Thereby abolishing the privity bar in products liability cases ii. P lawyers want to try to argue negligence first, (if D unreasonable more appealing to jury, easier to get damages) 2. Irrespective of privity of K, the manufacturer of this thing is under a duty to make it carefully a. Extends beyond original purchaser. b. Beyond privity of K w/manufacturer. 3. Duty extends to anyone who might be injured by the negligently made/defective product. 4. Proximity of the relation between the knowledge of the danger is to be considered in assigning liability. 5. If D is negligent, where danger is to be foreseen, liability will follow. ii. Warranty 1. Express Warranty (innocent misrepresentation) a. Baxter v. Ford Motor Co. (WA 1932) P injured due to D’s representation not being true i. No matter could not do what D said it could ii. No matter no other product could not do what D said it could iii. P relied on D’s misrep and D is liable b. When the absence of those qualities is not readily discoverable, even though no privity, there will be liability (based on an express warranty), as the goods failed to comply with manu’s representations as to the contrary. c. Express warranty or innocent misrepresentation, P only has to prove that D made a specific representation that P relied on and breach thereof was causally related to P’s injury. i. Does not matter if no product could have done what D said his did. ii. Trend is for courts to be lenient on reliance (D made warranties that a reasonable person would rely on) and on less specific statements (this glass is sturdy, this is safe, instead of ‘this is shatterproof’) 2. Implied Warranty (not on exam)—There is an implied warranty that a new product is reasonably suitable (implied warranty of merchantability) for the use of the ultimate purchaser. Henningson v. Bloomfield Motors, Inc. (NJ 1960) a. Thing sold is reasonably fit for gen’l purpose of which it is manufactured and sold b. If have dangerous products when not made correctly then must get rid of privity of K as a limit. c. Not limited to privity of K, and no limit by disclaimers on this warranty. d. Don’t use this on the exam, b/c is a K law concept. iii. Strict Liability in Tort (super important)--Liability is imposed not by agreement (K’s) but by the law of torts. Greenman v. Yuba Power Products (CA 1963) 1. The express or implied warranty stuff has become a tort cause of action a. No need for privity, no express agreement, and people unable to disclaim to get a limited express warranty for the product 2. Tort is to ensure that the cost of injuries caused by bad products is borne by manufacturer 3. Be able to have a cause of action w/o reading express warranties 4. An injured person’s ability to recover should not be determined by the law of sales iv. ***Strict products liability is not absolute liability*** 1. Key question: when is a product defective? 2. To recover from a manufacturer on these P must prove: a. D made and sold product b. In a defective cond. when left D c. Expected to and did reach ultimate consumer w/o substantial change d. Proximately caused injury to P v. The three kinds of product defects (what does defective mean?) 1. Manufacturing defects— a. Those mistakes by the maker, a flaw in a product that is not in the general product line b. A failure of quality control—bottle of coke with mouse in it 2. Design defect— a. Failure of design, entire product line is being challenged, the way D designed the product was defective b. Ford Pinto is great example—gas tank would blow up really easy and doors would jam shut in an accident 3. Defect due to failure to warn— a. Tell people not to mix bleach and ammonia vi. P needs to show D made product, that it was defective, P injured as a result of defect, defect existed in product (or incipient) when sold by D to P b. Product Defects i. Manufacturing defects come from mishap in manufacturing, improper workmanship, or defective mat’l or something else. a. Compared to the other products this one was made wrong. i. Product was different from what manu. Intended b. A defectively manu’d product is flawed b/c it is not constructed right w/o regard to whether the intended design was safe. c. P need not prove what went wrong in manufacturing product. d. D does not need to say his QC program is the best in the world (irrelevant) e. Don’t care how careful a manu. Was, i. 100% no defects is the only remedy for this f. A manu is strictly liable for his defects 2. P can also sue for design defect so as to make sure D’s argument that the brake tube messed up after left factory a. Thus P argued should have had dual system (design defect) b. P adds both arguments together so he has 2 op’s to get around defense product altered 3. Three essential elements for strict liability for manu’s defect: a. Manufacturer made and sold a product at which time it was defective (unreasonably dangerous to the consumer) b. Product reached the ultimate consumer w/o substantial change in the condition it was in at the time it was sold; c. The defective condition in the product proximately caused injury to P; 4. Policy reasons for Strict liability on defective products: a. Have strict liability instead of negligence b/c is very hard to prove how D deviated from standard of care; SL relieves P of this difficult burden. b. SL may not lead to much more care than negligence, but where there are problems of proof P need not hold that burden solely, will lead to as much care as possible c. Manu defects are a fluke, they are not so taxing on D to pay for them d. Manu’s don’t really complain b/c is a small number of cases ii. Design Defect— 1. Finding a design defect can be done in 3 ways: a. 1) Negligent design (minority) b. 2) Consumer Expectations (minority) c. 3) Risk Utility analysis 2. (1) Negligent Design---A manufacturer has a duty to use reasonable care in designing his product and guard it against a foreseeable and unreasonable risk of injury, this could even include a misuse which might reasonably be anticipated a. The model uniform product liability act b. BUT NEGLIGENCE c. Prentis v. Yale (MI 1984)— pro manufacturer d. A minority 3. Reasons for Negligent design test: a. P should have to prove more, b/c when for P in design defect cases, condemn entire product line i. Need to find fault to condemn whole line (and possibly whole company) b. P will be able to prove neg. more easily i. Design defects result from deliberate decisions so can get those through discovery c. Reward careful designers, pay cheaper insurance premiums d. Greater intrinsic fairness, careful manufacturer will not bear burden of paying for losses b/c of negligent product sellers or users. i. Pay less for products 4. (2) Consumer expectations test (minority) a. Product is defective if considering its reasonable forseeable use if left sellers hands in an unreasonably dangerous conditions not contemplated by ultimate consumer. b. Failed to perform as safely as the reasonable consumer would expect? c. Failed to conform to reason: i. More favorable to consumer ii. But pretty vague and ambiguous iii. Any unusual injury, may incur liability thus bad iv. Sometimes too narrow, cigarette lighter can be made child resistant, and a cigarette lighter w/o that may not unreas. Dangerous to an average consumer 5. (3) Risk utility test (majority rule from Dean Wade) determines when there is a ‘defect’ and to do that look at: balance risk v. cost of safety 7 factors— a. Usefulness and desirability of the product—its utility to the user and to the public as a whole i. Social Utility of the product b. The safety aspects of the product—the likelihood it will cause injury, and probable seriousness of the injury i. Probability and magnitude of potential injury (negligence) 2 c. Availability of a substitute product that would meet the same need and not be as unsafe i. Avail substitute of safer product 3 d. Manu’s ability to eliminate the unsafe charac. Of the product w/o getting rid of useful characs or making it too expensive i. Manu’s ability to eliminate the unsafe character 4 e. User’s ability to avoid danger by exercise of care in the use of the product i. User’s ability to avoid danger 5 f. User’s anticipated awareness of the dangers inherent in the product and their avoidability b/c of gen’l public knowledge of the obvious cond. of the product, or of the existence of suitable warnings or instructions i. User’s probable awareness of the danger 6 g. The feasibility, on the part of the manufacture, of spreading the loss by setting the price of the product or carrying liability insurance. i. Manu’s ability to spread the loss 7 6. Patent (open and obvious) danger is an absolute defense in design defect cases (minority) a. Most jurisdictions reject (but GA endorses) saying, b. Obviousness of danger goes into Risk Util. Balancing test and not an absolute bar 7. P must show there could be a reasonable alternative usable design that would render the product reasonably safe (new rest). a. All states say that if there is no alternative feasible design then no liability b. The omission of the use of alt reas design renders product unreas safe c. Ct. reasons in O’Brien v. Mushkin still could find D negligent (no alternative and state of the art demonstrated) and if did so would say that the product should never have been marketed b/c of the unavailability of alternative design. i. Pro-plaintiff (and overruled by State legis) 8. State of the art – Such evidence can go a long way to showing the product was not defective a. D may avoid liability by arguing such i. Not custom or what all others have done b. Evaluate the product in light of the knowledge and technology that was available at the time the product was manufactured i. Technologically available at time made (minority) 1. Possible w/sci knowledge to make product safer at time made ii. Economically feasible (majority uses both) 1. More like negligence, most cts. go with this iii. Some cts. don’t worry about state of art (minority) 9. If are to rule consistent with O’Brien v. Mushkin a product should be found to have NO SOCIAL UTILITY a. ALI had a big debate, about whether any product could be defective w/no alternative, and said maybe i. One example, no alt. but still defective (no social utility) ii. Lawn darts (no social utility) only product one could think of b. Alcohol not in this category 10. US cities sued gun manufacturers, negligently marketed and distributed guns, some claims defectively designed (no safety lock, no smart gun technology) a. Go to jury? Yes. b. Texas statute says guns no defect design cause of action, need to show gun did something it was not supposed to do iii. Warnings Defect 1. Knowledge or knowability is a component of strict liability for failure to warn (majority rule) a. Cannot warn of something that is unknowable. b. Strict liability is part of negligence (developed b/c evidence of negligence problem) c. The difference between failure to warn under SL and under neg. i. Negligence req’s whether failure to warn was reasonable ii. SL don’t care whether conduct reas. instead ask: did D fail to warn of a risk that was known or knowable? d. Post sale warnings need to be made if find out later that there are dangers from a product. 2. Good warnings do three things a. Get attention of user 1 b. What hazard is 2 c. Show user how to avoid risk 3 3. If a warning will not induce sufficient safety, then it is defective (in design despite the warning) a. Warning’s ability to protect will be relevant to risk utility test for product defects b. If could, put something safe on the market to reduce liability? 4. No duty to warn of obvious dangers iv. Analysis: What is connection between failure to warn and failure of design—warnings are no substitute for an unsafe design 1. Some products are unavoidably dangerous and warnings permit consumer to make informed choice of whether to use the product 2. If product dangerous but warning of proper use given, not negligence 3. If put too many warnings then will dilute the effectiveness of them 4. If warn about too many things then will open self up to defective design problems v. Analysis: If no duty to warn of obvious danger then, How did P in McD Coffee case win? 1. Legal analysis: a. Utility of coffee at real high temp. is really low b. Probability and magnitude of injury is high as is c. Could avoid the danger by selling a cooler product i. Design defect 1. Finish risk utility test (as started to do above) 2. Consumer expectations test (avg. consumer would not expect the coffee to be that hot) 3. Can still argue negligence ii. Argue failure to warn defect 1. The warning did not let know of seriousness of danger vi. Learned intermediary rule—medical manus need to provide warning to doctors not patients, b/c he knows what to do to recommend to patient and that the physician will pass them on to the consumer 1. When they advertise for a prescription drug, though, the learned intermediary rule will not work vii. Defense to failure to warn: D can try to rebut presumption that warning insufficient by saying P was a careless person or that he did not read it First question to ask in a product liability case Was there a defect? --for a manufacturer’s defect -go out and find another 20 products made by same manufacturer and see if the one that hurt D was different from the others in a bad way (defective) --As a D argue in defense -comparative negligence -unforeseeable misuse -argue the chattel defective b/c of the accident, not b/c of manu’s defect Design defect Chattel designed in such a way as to cause injury Engineering meetings, expert to examine and compare with other chattels to prove problems Defend design defect Utility outweighs the risk Cheap one Conformed to ordinary reasonable consumer’s expectations Argue P injured in unforeseeable misuse More like negligence than manu defects Defect in chattel actually caused P injury Cannot bring in evidence that D tried to improve a product (to make sure manus keep trying to improve their products) Also sue for lack of warning --get expert testimony on what sort of warnings you should give for this type of product Depends on --obvious defect --he ignored warnings all the time, he was illiterate Friedman, must prove defect existed at time product left factory. c. Proof—Friedman v. General Motors Corp. P need not prove no other possibilities of cause of accident only that D’s product was (by a preponderance of the evidence) the cause of the accident i. From testimony of dealer and P, jury could have found linkages and adjustments were like they were when created by factory. (existed when left factory) 1. So could go to jury as defect in car when left factory ii. Res Ipsa Loquiter – really for negligence but for products liability cases that aren’t negligence can also use RIL 1. If expert testimony or common exp. Shows that the accident would not have occurred if product properly made, then RIL 2. Usually cannot use this inference b/c other things may have caused the accident (oftentimes) d. DEFENSES i. Plaintiff’s conduct (Daly v. Gen’l Motors CA 1978) 1. Assump. Of risk a. Majority courts treat assumption of risk as part of comparative negligence. b. Minority says no comparative negligence and hold a P’s voluntary and knowing assumption of risk is a complete bar to recovery in products’ liability actions. 2. Comparative Negligence--P’s recovery reduced by comparative negligence only to the extent his own lack of reasonable care contributed to his injury. a. P wont have to prove negligence b. Reasons why: i. Incentive to produce safe stuff will not go down (no under-deterrence) as their liability will go down only to the extent that P was negligent. c. P’s negligence in failing to discover a defect, rather than other kinds of negligence (that are contributory) is not a defense at all, no reduction of P’s recovery 3. Analysis: If eat fifth avenue w/bugs in it and get sick, (no inspection, comparative negligence?) a. You would argue unreasonable to require this inspection, thus no comparative negligence b. You could then say okay, I am a little negligent 1%, compare that with the manufacturer’s fault 99% 4. Misuse: Ford Motor Company v. Matthews (MS 1974) a. If the misuse is not reasonably foreseeable then D not liable. i. No duty b. B/c P’s negligence reasonably foreseeable in Matthews then no bar to recovery for his alleged misuse. 5. Only unforeseeable misuse will bar recovery. a. This use foreseeable b/c designed to have a safety switch that was supposed to keep this from happening. b. If foreseeable misuse, then relevant for comparative negligence purposes c. Ford warned in the owner’s manual not to do what P did so was foreseeable that he would do it. 6. If misuse foreseeable then reduce under comparative fault 7. Analysis: 11 year old lost penis on vacuum a. argue foreseeability i. is it likely there will be vacuums where kids will be? ii. Since yes, they will play with them and foreseeable child would stick hand or other body part into vacuum and get hurt iii. Could have put shield or interlock switch to stop engine when open to keep people from getting hurt (reasonable alternative design) 1. Vacuum a booby trap (P would argue) ii. Preemption and other Gov’t actions—supremacy clause, the const. and laws of US will be supreme law of the land and judges in all states bound thereby, other state laws notwithstanding (cong can pre-empt state tort law on products’ liability with this) 1. Three ways of pre-emption a. 1) Express pre-emption (in statute) b. 2) If state law is inconsistent w/federal law then will be pre-empted (conflict) c. 3) (field) Fed’l statutes or regs that occupy the field comprehensively pre-empt state law i. Scheme so pervasive that cong would not have wanted states to control law in this area 2. Example of field preemption: May 2000 common law pre-empted b/c fed regs said that car manus only 10% had to have airbags and P’s attempt to argue this car defective b/c no airbag would conflict 3. Medtronic v. Lohr Sup. Ct. 1996—involving express pre-emption (amendment said states may not impose any req’ment for a medical device different from federal req’ment) 4. Majority here held FL common law did not impose a req’ment that conflicted w/US law 5. Pre-emption lightly presumed, but the possibility exists e. Defendants other than principal manufacturer’s/Harm other than personal injury i. Other suppliers of Chattels Peterson v. Lou Bachrodt Chevy Co. Retailers and wholesalers/distributors are held strictly liable for products defects in new products. 1. If you sell a new product, in the original producing and marketing chain, then you can be held strictly liable for those product defects. a. Do this so can put pressure on manu to make safer products b. Also do this b/c Consumer may not know who made the product 2. Retailer who is found strictly liable for a product defect then can seek indemnity (full reimbursement) from manufacturer unless retailer was also negligent then he would have to pay some under comparative negligence. 3. Cannot disclaim implied warranties w/regard to personal injury under UCC ii. People who are not engaged in the business of selling or distributing used item then not subject to strict liability 1. Also used product sellers not liable for defects in those products a. Do this b/c less likely if there is a defect then that defect probably did not come from the manu or dealer b. After all you can sue for negligence in any of these cases iii. Services Hector v. Ceders – Sinai Medical Ctr. CA 1986—If sell a product incidental to a service then no strict liability for product defects (only incidental transfer of goods) 1. Look for abnormally dangerous activities if want to sue services under product defects (bug exterminator) iv. Harm other than personal injury 1. Can get lost wages and diminished earning capacity from PI as well as loss of consortium 2. If a product does not physically injure someone then no recovery as the whole point of products liability was to make sure physically injured people can recover 3. But could sue for breach of warranty perhaps VIII. Defamation protects a person’s reputation a. Nature of Defamatory Communication (2 kinds: Slander or Libel) i. A communication is defamatory when it harms someone’s reputation 1. Theory is persons should not interfere w/others’ ability to engage in normal social relationships ii. P must prove: 1. A defamatory imputation, which is: a. A communication that tends so to damage the P’s reputation i. Diminishes confidence or esteem in which he is held in the community ii. A communication is defamatory if it tends to so harm the rep of another in the community or keeps others from associating with him iii. If the words not reasonably capable of a defamatory meaning then MSJ for D iv. Analysis: The following statements 1. P is of mixed race “defamatory”? 2. P blue eyes ‘defamatory’? 3. P is homosexual ‘defamatory’? 4. A decent person’s view no matter, just if some people would think it negative, then is a defamatory imputation 2. Publication—must be communicated to at least one other person a. If the publication itself w/o reference to extrinsic facts, is capable of carrying a defamatory meeting. b. It is for a jury to determine whether it was so understood by the ‘common mind.’ iii. Truth an affirmative defense at common law (falsity assumed)—this may or may not still be good iv. Standard of defamatory communication (at common law) is not would ‘rightthinnking people think the statement is bad, but is defamatory if some people would find it to be defamatory, even if that is the (wrong-thinking) minority of society v. Standard of defamatory communication—3rd Rest. of torts a statement is defamatory when: 1. Any substantial and respectable group in the community 2. Not enough if any indiv. Or class of individuals w/views sufficiently peculiar to regard as derogatory what the vast public would regard as innocent 3. Depends on time, place and culture, if a P is surrounded by wrong thinking people, then maybe recovery where normal people, perhaps not. vi. Where group or class libeled is large no defamation action for individuals 1. Damages for defamation really up to the jury vii. Truth as a defense--Killian v. Doubleday (sup. ct. PA 1951) 1. Specific charges cannot be proven as truth merely based on general evidence of such a. but this might be used to reduce damages b. Specific charges cannot be justified by showing P’s general bad character viii. Limitations on Liability – Neiman Markus 1. When group or class libeled is large, no individual defamation action (even if say “all”) 2. Group defamation—the “intensity of the suspicion” must be sufficient to sustain action of the members of the group a. ix. Need a defamatory imputatation that in some way identifies the plaintiff (Bindrim v. Mitchell) 1. How to identify the P in fictional libel cases: a. The test is whether a reasonable person reading the book would understand the fiction character therein pictured was in actual fact the plaintiff acting as described. i. Surrounding circumstances could have ID’d P b. Even if very few will know, enough for even one reasonable person to ID the fictional book being about the plaintiff to maintain a cause of action c. The amount of people knowing referred to P will be relevant for damages 2. The disclaimers on books do not work for getting rid of defamation suits. b. Slander (oral) requires special damages—pecuniary loss Schor. V. Billingsley i. Slander per se 1. No requirement of special damages ii. 4 categories of slander actionable just as if they were libel (no requirement of pecuniary loss/special damages 1. Imputations of major crime 2. Loathsome disease 3. Slander likely to affect business, trade, or office 4. Sexual misconduct iii. Gestures are defamatory, they are slander if: 1. Communicate a defamatory imputation 2. Prove other saw and understood the gesture (publication) iv. Pecuniary loss/Special damages (Terwilliger v. Wands) 1. Special damages must be the natural immediate and legal consequence of the words. 2. Special damages must flow from harmed reputation caused by the slander 3. Whenever slander prevents someone from getting something would have normally gotten (w/o slander) then a proper cause of action 4. If prove those pecuniary damages then later can recover add’l damages for mental distress, wounded feelings and humiliation. c. Libel (written or printed word) requires no special damages—presumed damages 1. Libel concerns the written or printed word (general rule) 2. Since defamation by radio (or TV) could be reproduced (durable) broadcast to a lot of people it is libel 3. More reasonable to presume damages with Libel b/c of communication to a wider number of people and durability 4. If something has the characteristics of something written then libel 5. Most of the time reg’d by statute these days 6. Any other form of commu that has the potential characs of written or printed words d. Publication i. “Published” can be spoken (slander) or written (libel) communication of a defamatory imputation to someone other than the person defamed 1. They had to hear it, see it, read it and understand it 2. Example: If escort a person off premises (in a store) under watch from security guards a. Then argue by the guards being there that the imputation was that their presence communicated to others that the person was untrustworthy ii. Don’t care about P’s feelings, but the damage to his reputation (what others feel about P) 1. Common law defamation was pretty much strict liability iii. Standard of culpability for communication to a 3d party to be a publication, it must have been done intentionally or by a negligent act 1. If no one else hears a communication meant only for P then no defamation 2. If in a semi-public place and screaming it no matter if only meant it for P to hear then negligent and defamation iv. Single publication rule—SOL begins to toll once publication goes out first time Ogden v. Asso of US army 1. When book published that edition of the book is the defamation cause and no other 2. Under old common law, any and every time a new book was sold or given out then the new publication was another cause of action for SOL e. ACTUAL MALICE: The effect of the US Constitution (1st Amendment as imposed on the states by the 14th amendment) on the law of Defamation (NY times v. Sullivan): i. A public official or public figure cannot recover damages for defamatory communications made about him unless he can show the defendant had 1. Actual malice ii. Actual malice – D made the statement knowing it was false, or reckless as to its truth or falsity 1. Supreme court stepped in here b/c of first amendment protections 2. This is implicated in defamation cases. 3. First amendment only applies to the government, only restricts what the state can do to you, thus private parties can shut you up if they want (i.e. baseball suspending john rocker for his comments). 4. Common law of defamation allows a person to sue another for damages thus the government affects a right to free speech. iii. Supreme Court reasoned: 1. A law criminalizing negative speech about a public official is unconst. (leads to self-censorship, limits freedom of press) 2. Authorizing civil action for damages in the same way leads to similar self-censorship (limit on freedom of press) 3. NY times said insofar as dealing w/pub. official then more protection of the speaker a. Private speaker of defamation gets less protection b. Public speaker of defamation gets more protection 4. Assumption of risk theory, the public figure puts himself in public view thus should understand that when he does that people will say things about him that may not be true. 5. Further, public figures have access to means (the press) of protecting themselves. f. Recklessness as to truth in ACTUAL MALICE STANDARD of culpability--St. amant v. Thompson i. Public official (P) must prove that D in fact entertained serious doubts (almost knowledge) as to the truth of the publication (or knowledge)) 1. Subjective standard, what was actually in the mind of the D a. To prove defamation beyond an admission, can do it w/circumstantial evidence from which the jury can infer knowledge or reckless as to serious doubts as to truth or falsity b. Like if some statement was completely implausible “came to me in a dream” 2. Negligence as to the statement’s truth cannot get past MSJ ii. The Supreme court reasoned: 1. False statements of fact here are defensible in this decision because do not want to chill robust public debate 2. ‘To insure the ascertainment and publication of the truth about public affairs, it is essential that the first amendment protect some erroneous publications as well as true ones. “ g. Falsity must be proved by P h. When intentionally misquoting a public figure/official (thus either reckless or knowingly publishing falsity), author must have materially changed the meaning of the statement as originally made (for proof of actual malice) Masson v. NYer Magazine (1991) i. Then jury decides whether the change of the words was significant enough for defamation ii. Supreme court does not want the jury deciding much on protecting speech, b/c is less likely to do so iii. Juries don’t often wish to protect free speech (not very popular) iv. Reporter’s Privilege (common law): 1. Unless some privilege applies, you are liable for repeating a defamatory statement even if it did not originate w/you 2. Reporter privileged to report on public proceedings pub docs and report on info of public concern uttered at public meetings 3. Lose priv if report not verbatim (fair and acc. Summary) 4. Under NY times v. Sullivan no liability unless actual malice i. Private Plaintiffs (and speech of public concern) do not have to prove actual malice to maintain a defamation suit--Gertz v. Robert Welch, Inc. Sup. Ct. 1974 i. At a minimum the 1st amend requires (private figure) P prove some level of fault, 1. At least negligence (GA follows this rule) no liability w/o fault 2. A private figure P can only recover actual damages for negligent ii. Proof of actual malice for punitives is required and actual damages (you were really upset) required for recovery based on negligence iii. The Supreme court reasoned: 1. Courts are really trying to balance private reputation protection with free speech 2. Private individuals do not have access to self-help, like public figures do 3. Private individuals do not ‘assume the risk’ something published may be defamatory, thus the state’s interest in protecting them is greater. j. Speech of Private Concern—In libel for private citizens and private concern the state interest supports awards of presumed and punitive damages even absent a showing of ‘actual malice.’ Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc. (sup. ct. 1985) i. The balance (between private right of reputation and free speech) with regard to private figures and private concern swings toward the allowance of presumed and punitive damages. ii. Public/private concern is indicated by the expression’s content, form, and context as revealed by the whole record. iii. The credit report solely in interest of speaker and its business audience 1. This commercial speech is quite resilient as is motivated by a desire for profit 2. D will just charge more for credit reporting k. Falsity and fault must be proved by the Private Plaintiff before recovering damages for defamation from a media defendant on an issue of public concern Falsity Philadelphia newspapers, Inc. v. Hepps (Sup. Ct., 1986) i. Where media D published speech of public concern the private figure P cannot recover damages w/o also showing that the statements it issued were false. 1. If tie as to whether true or false the will err on side of admission and not allow recovery for defamation 2. Chlamydia case THE RULES FOR DEFAMATION AS AFFECTED BY THE CONSTITUTION (from the supreme court) • PUBLIC OFFICIAL PUBLIC CONCERN (for judge to determine) a. Fault--Actual malice ny times b. Falsity – Public P has to prove the falsity of the defamatory communication i. If cannot prove either truth or falsity then P loses ii. A jury question unless so clear judge can rule as a matter of law c. Presumed or punitive damages – yes, if can actually prove actual malice • PRIVATE PERSON PUBLIC CONCERN (for judge to determine) a. Fault (at least negligence) GERtz b. Falsity—P proves falsity of the defamatory communication for media defendants only (Hepps) i. If cannot prove either truth or falsity then P loses ii. A jury question unless so clear judge can rule as a matter of law c. Presumed or punitive damages – yes if can prove actual malice (Gertz) • PRIVATE PERSON PRIVATE CONCERN (for judge to determine) a. Fault No one knows (maybe negligence, maybe Strict liability (D & B) b. Falsity—also not known i. A jury question unless so clear judge can rule as a matter of law c. Presumed or punitive damages – yes (even w/o actual malice) (D & B) • Remember, it is all about balancing private rights to reputation and our much cherished freedom of the press l. Determining Public figures and Public Officials—no clear rule i. Public officials are those who have or appear to the public to have substantial responsibility for or control over conduct of government affairs 1. Elected officials (state national local) 2. Some apptd. officials are public officials ii. Public figures can be 2 types: 1. Limited (vortex) figures a. Pre-exiting public controversy b. P jumped into it by voluntary action c. Unclear if involuntary public figures exist but… d. An involuntary public figure pursues a course of conduct from which it was reasonably foreseeable that public interest would arise. e. Not a limited public figure if are just newsworthy 2. Or Universal (few) (unlimited)— a. Pervasive power and influence b. Pervasive fame and notoriety in public affairs iii. Public controversy if is publicly debated w/foreseeable and substantial ramifications for nonparticipants 1. Accreditation of a law school –yes 2. Bank’s expenditures subject to public interest—no 3. Finding requires a public division of opinion iv. Analysis--Jewell (wrongly accused Olympic park bomber) was found to be a limited public figure because: 1. He repeatedly talked to the media about the safety of the park and urged folks to go a. Thus attempted to influence public’s view of the outcome of the public controversy 2. He wanted to improve security of Olympic park, which was a public controversy 3. Thus he had to prove actual malice (knowingly printed a falsehood or reckless) as he is a public figure involved in a public concern (the bombing) m. Opinion—Does the first amendment prohibit state law defamation action against opinion? Milkovich v. Lorain Journal Co. Sup. Ct. 1990. i. No absolute const. protection for defamation actions for speech characterized as opinion. ii. This rule notwithstanding, only statements that reasonably apply assertions of fact can be basis of a defamation action. 1. Judge decides 2. For example: “in my opinion john jones is a liar” a. This implies a false assertion of fact b. Just b/c preface it w/‘in my opinion’ does not negate this implication 3. Analysis: A statement ‘in my opinion she is a slut’ implies fact (she sleeps around) a. easily provable as false (does not have sex w/numerous persons) b. not unreasonable assertion 4. “In my opinion, he is a poor lawyer” does not reasonably imply an assertion of fact. (from some federal court) iii. Statements that no reasonable person would believe are true even if it’s a false assertion of fact, no liability iv. Hepps applies here too, statement must be provable as false, if statement unlikely to be proven as false then P loses. n. Privileges i. Still may not repeat a defamatory statement ii. Absolute Privileges 1. Judicial proceedings’ statements all privileged a. Only limit is that the statement must have some reasonable bearing or relation upon the subject of the proceeding b. Even if a witnesses gives false testimony c. This does not extend outside of the courtroom so if talk about what you said in court to the press not privileged if is defamatory 2. Members of Cong and legistators have absolute privilege a. Witnesses at legislative hearings too 3. Federal officials made in course of duties 4. High State officials too (Gov’ner) a. Lower state officials have a qualified immunity iii. Conditional or qualified Privilege – Sindorf v. Jacron Sales Co., 1. Can invoke qualified privilege to defame another if act in furtherance of some interest of social importance between the communicator and listener a. This interest is so important, that P should not get compensated for harm to his rep. i. Like judges or legislators (very important) 2. Can invoke conditional (qualified) privilege when the communication is “fairly made by a person in the discharge of some public or private duty, whether legal or moral, or in the conduct of his own affairs, in matters where his interest is concerned.” Example: a. Interests of the publisher b. Interests of others c. Common interest of publisher and recipient i. Property, business, or professional interest d. Communications made to one who might act in public interest e. Fair comment on matters of public concern 3. Example of privilege: Where a former Eer communicates with a new or prospective Eer about a former Eee a conditional privilege arises from a discharge of duty owed to the new or prospective Eer == Qualified privilege. 4. To determine whether a qualified privilege is lost jury looks at: a. Excessive nature of the language used b. If D acted with malice, (knew statement false or acts w/reckless disregard) c. Improper purpose i. A purpose other than reason have privilege d. Excessive publication iv. Privilege to protect self or third party 1. Publish info under legal duty or in accord w/gen’l standards of decent conduct 2. D lose if above is shown o. Remedies i. Primarily damages ii. Presumed damages for libel and slander per se 1. No available to private persons (public concern) unless can prove actual malice 2. Private fig suing on priv concern can have presumed damages iii. Declaratory relief—many commentators believe this is most important as could just legally declare statement untrue (less of a worry about chilling public speech) iv. Right of response statutes IX. Invasion of Privacy – 4 Kinds: a. (1) The appropriation of a P’s name, likeness, or ID for commercial advantage--The Right of Publicity i. He has the right to force consent before his likeness is used if no consent then can sue for violation of right of publicity. 1. Dignitary protection at first 2. Now more a property right protection 3. Most cases have involved the use of P’s name likeness or ID in ads or in articles on a product ii. Less clear whether right of publicity authorizes protection of self in expression (art as protected by the first amendment). iii. If newspaper publishes image related to public interest it may not be sued, no liability for the appropriation of the person iv. Analysis: D publisher of ltd. art prints ‘masters of augusta’ and tiger woods (famous sports painter did them) 1. Tiger sued D for commercial appropriation of his likeness 2. Tiger’s suit maintained? a. Not in connection w/advertisement of product (easy for P) b. Easy for D cases are those magazines on public concern matters 3. The difficult claims are the artistic situations like this a. More like advertising? b. More like news? 4. District Ct. said 1st amendment prohibits cause of action because not actual image but art v. Analysis: Rosa Parks sued Outcast for using ‘everybody move to the back of the bus’ – entitled ‘rosa parks’ 1. Ct. decided the action would not lie b/c art protected by 1st amendment. b. (2) Intrusion upon seclusion or Intrusion into private affairs (two elements) Pearson v. Dodd (DC 1969) i. 1) If obtain info by improperly intrusive means then liable 1. Intrude into a private place, conversation, or matter 2. Into a matter in which P has a reasonable expectation of privacy ii. 2) Highly offensive to a reasonable person 1. Really should expect privacy on this matter iii. Matters where P has no reasonable expectation of privacy: 1. Date of birth, other public record 2. Activities taking place in public a. If doing it in public then no expectation of privacy b. KY case person took picture of butt shorts, b/c in public no cause of action iv. Analysis: AT work reasonable expectation of privacy? 1. Email 2. Phones 3. Questionnaires v. Analysis: If National Enquirer publishes info EE stole from star’s bathroom 1. Improper intrusion into place would reasonable expect privacy? a. YES, in bathroom b. 4th amendment applies in crim law search and seizure 2. Highly offensive to a reasonable person? vi. You will not be punished for listening to the information improperly obtained. c. (3) Public disclosure of private facts common law tort—Cox Broadcasting Corp. v. Cohn (sup. Ct. 1975) i. 1Public disclosure 1. Many persons, a large group of people or public at large 2. Just to coworkers might suffice ii. 2Private facts iii. 3Are highly offensive to the reasonable person iv. 4Not newsworthy, not a matter of public concern 1. So no 1st amendment clash v. Truthful publications of facts on public record (avail at ct house for example) cannot be the basis for a claim of public disclosure of private facts vi. How does this tort affect first amendment limitations? 1. Publication about a matter of public interest no tort 2. State interest so high the tort will lie 3. National security 4. Witness protection program 5. Florida Star Case vii. Out of Public Disclosure: Breach of Confidence tort (promissory estoppel theory) Ruzicka v. Conde Nast 1. Relationship between P and D such that there is a duty of confidentiality a. Often contractual, duty i. Maybe not ‘best friends’ b. Law does not say no one can publish this info 2. Exposure of secret to many people 3. Highly offensive to a reasonable person 4. Not a matter of public concern, not newsworthy d. (4) False Light invasion of privacy Cantrell v. Forest City Publishing Co. (Sup. Ct. 1974) i. 1 D publicized a matter about P to a substantial group of persons or to the public. ii. 2 Matter put the Plaintiff in a false light. iii. 3 False light highly offensive to a reasonable person. iv. First amend limits from defamation also apply: 1. For presumed damages on portrayal in a false light tort must have ‘NY Times Malice’ v. Knowledge of publishing falsity or reckless regard for the truth vi. How is this different from Defamation? 1. Defamation needs harm to reputation 2. Here no worry about what others think, but what P thinks 3. Often can bring both, the false light would often tend to harm reputation and be offensive to the reasonable person e. Public figures and public officials may not sue for IISED in publications Hustler Magazine v. Falwell (Sup. Ct. 1988) unless can show: i. False statement of fact ii. Made with NY Times actual malice 1. That the statement was false or with reckless regard of its truth or falsity iii. Courts reasoning: If we get rid of this kind of parody, then we will have to get rid of them all like political cartoons and then the government starts to influence the marketplace of ideas. 1. Outrage standard not protective enough of first amendment supreme court says X. Misrepresentation a. Elements of Misrepresentation i. Misrepresentation of fact 1. Fraud is a false representation made with scienter (purposely, w/o believing it was true) a. Knowingly or b. W/o belief in its truth c. Recklessly, careless as to its truth or falsity 2. Liability is limited for negligent and innocent misrep a. See below ii. Material iii. Intended to induce reliance on the part of the plaintiff iv. That actually does induce reasonable reliance by the plaintiff v. Must proximately have caused pecuniary harm to the plaintiff b. Concealment and Nondisclosure Swinton v. Whitinsville Savings Bank i. There is no tort of nondisclosure, not enough for misrepresentation ii. Exceptions: 1. If there is a duty to disclose then can sue 2. Fiduciary relationship, reliance on nondisclosure justifiable 3. Active concealment may be good for tort of misrepresentation a. If a design to inhibit the ability of the buyer to discover the defect by reasonable inspection, then cause of action for misrepresentation. iii. Active misstatement of fact is required generally 1. Partial or fragmentary stuff that is stated is made false by what is not stated will work too c. Duty to disclose (2 rules) Griffith v. Byers Construction Co of Kansas i. Jenkins rule on tort liability for nondisclosure 1. Vendor has a. Knowledge of a defect in property which is b. Not w/in the fair and reasonable reach of the vendee which could not discover by the exercise of reasonable diligence, c. Matter not disclosed must be material i. Material if a reasonable man would have attached importance to the fact not disclosed d. Must have reasonable reliance on this misstatement of fact e. Damages, too. ii. Rest of torts 2d rule: 1. One who fails to disclose to another something that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of the matter that he has failed to disclose if he is under a duty to disclose to the other to exercise reasonable care a. Must disclose facts basic to transaction 2. One party to a business transaction is under a duty to disclose to the other before the transaction is consummated. a. Before execution of transaction 3. Facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs in the trade or other objective circumstances, would reasonably expect a disclosure of those facts. a. Trade would expect disclosure 4. If defect readily observable no need for disclosure (some courts say) d. Basis of Liability for a misrepresentation (3 kinds) i. Fraudulent (intentional misrepresentation) 1. Fraud is a false representation made Derry v. Peek a. scienter—intent to deceive: b. Knowingly OR c. W/o belief in its truth d. Recklessly, careless as to its truth or falsity 2. D’s here thought they spoke the truth in their advertisement a. D’s honestly believed they had the right to use steam as advertised in their prospectus b. NO liability if one honestly believed c. Few times liable for misrep if negligently misrep d. Almost no liability for innocent (non-negligent) misrepresentations 3. Damages: a. Expectation damages (B o’ B) b. Minority only allow in fraud cases out of pocket losses (price paid minus value actually got) c. Most of the time P will get to choose, provided that can establish loss w/reasonable specificity d. Also get consequential damages, provided w/certainty and are not duplicated under expectations or out of pocket e. Punitive damages are recoverable in fraud cases if D’s conduct sufficiently willful or wanton depend on punitive dam laws in the jurisdiction i. One case D acted in disregard of known or obvious risk that harm highly probable ii. Negligent misrepresentation to recover for such P must show Int’l Products Co v. Erie RR Co a. Serious business relationship b. Knowledge the information will be used for a serious business purpose c. D knew the precise business purpose for which the information was sought d. And the party one communicates the information to intends to rely on the representation e. It may be important that the one giving the information has an advantage over the other in access to the information f. Must be a relationship such that a duty arises i. Privity of K/Fiduciary 2. If physically injured based on neg misrep can sue as normal negligence 3. Restatement of torts 552 on negligent misrepresentation a. One who in the course of his business profession or employment, or in any other transaction in which he has a pecuniary interest (D that is) i. D states his misrep for his business b. Supplies false information for the guidance of other in their business transactions i. P uses the misrep for his business c. D is subject to liability for P’s pecuniary loss only d. Caused to the other for their justifiable reliance on the information e. If he fails to exercise rea. Care or competence in obtaining or communicating the information 4. Damages generally: a. Negligent or innocent misrep i. no expectation damages here ii. Only out of pocket expenses iii. some cts say no consequentials either b. No damages for emotional distress, under fraud or neg misrep c. Physical injury based on misrepresentation is liable under regular negligence rules iii. Innocent misrepresentation—Richard v. A. Waldman and Sons, Inc. (1967) 1. Ct. rejected this argument b/c D as developer of real estate had special means of knowledge and was a matter peculiarly relating to its business and one on which the P’s were entitled to rely 2. Actual knowledge of falsity need not be shown nor must alleged fraud or bad faith 3. This case is the minority on innocent misrepresentation a. Most jurisdictions do not allow recovery for innocent misrepresentation (majority) 4. Restatement limits recovery for innocent misrepresentation to situations in: a. Sale, rental, or exchange and b. Amount can receive no expectation damages (no benefit of bargain) ONLY restitution recoverable == what paid and what actually received iv. Strict liability for misrepresentation? Winter v. G.P. Putnam’s Sons (mushroom book case) Ct. says no. 1. Use this case for analysis purposes. P argues for strict liability using Products liability argument (Timmons felt he should have prevailed): a. Would argue the book on mushrooms did not meet consumer expectations test (relied on book to eat mushrooms that would be good and got sick instead—design defect) b. Risk utility test—balance the factors between harm will fail, can put out a book that is accurate on edible mushrooms (design defect) c. Manufacturer’s defect—all have to prove there was a defect and that it proximately caused the injury, i. Argue: this was not what the manufacturer intended, book intended to show edible mushrooms but didn’t ii. This argument is weak because the book is one of a product line and short a misprint in this particular book, no cause of action for manufacturer’s defect 2. Ct. says ideas and expressions of ideas are not a product, ct. did not want to inhibit the expression of ideas so no cause of action so no strict liability claim 3. Negligent misrepresentation claim, a. Defendant publisher has no duty to investigate the accuracy of their books 4. Sue the writer? a. Not in this court because that would restrict the flow of ideas so no misrepresentation b. There is simply greater value in the expression of ideas c. Timmons does not buy the courts reasoning as we would want to deter the publishing of bad books 5. Note 3, no duty to ensure accuracy of instruction manuals a. Because of first amendment v. Hanberry v. Hearst CA 1959--Timmons thinks there is little difference between this case and the mushrooms misrepresentation above, yet still different outcomes thus she does not like either case 1. D said this was simply a statement of opinion and thus no liability (no liability for statements of opinion) 2. Ct. rejected this argument b/c D represented themselves as a 3rd party that had special knowledge and special information on the product it endorsed. 3. How can this case be distinguished by encyclopedia of mushrooms? a. Why not concerned when imposing duty on good housekeeping for its representation (but not on publishers of encyclopedia of mushrooms)? e. Third Persons (Scope of liability for a misrepresentation, i.e. how many people can sue you)—Credit alliance v. Arthur Anderson & Co. This sort of thing often involves accountants and their negligent misrepresentations of financial statements most often. i. Narrowest approach—Ultramares (or NY rule)--For negligent misrepresentation liability to extend to a third party there must be a relationship so close as to approach privity (Cardozo) 1. Basis of liability to third parties, elements under Ultramares: a. Accts awareness infor will be used for a particular purpose b. Acct’s awareness that 3rd party would rely c. Conduct by acct indicating understanding of known 3rd party’s reliance i. Need actual contact between D and P ii. Broadest approach Citizens State Bank v. Timm, Schmidt & Co. 1983 (WI rule): Standard for liability on negligent misrepresentation is simply a foreseeability test 1. Liability will be imposed for negligence unless under the facts of the particular case there is a public policy reason for restricting liability iii. Majority of courts split the difference between NY (near-privity) and WI (negligence) for 3rd party liability that is Restatement 1. Only a person or limited group of people to those for whose benefit and guidance the D intends to supply the info 2. To whom D knows the recipient intends to supply it through reliance upon it to others 3. In a transaction the D intended the info to influence iv. Analysis under majority: D need not know 3rd party P, but D also not liable to everyone in public at large, instead only to a limited group of persons whose reliance on the representation D is actually aware of 1. Example: client tells accountant that he will use audit to get a loan 2. Accountant liable to lender even if client did not give name of lender v. Innocent representations do not allow 3rd party liability often only the person D knew intended to rely on the representation f. Reliance (a required element in all misrepresentation cases), i. Actual reliance ii. Reasonably or justifiable reliance 1. Why reasonable reliance? a. Duty, want to control the scope of liability b. Much cheaper for society for a potential victim of misrep to open their eyes (require reas reliance) then shut their eyes to the obvious and sue iii. Reasonable Reliance in Action: Williams v. Rank & Son Buick 1. P wanted an air conditioned car. D told him the car was air conditioned it was not. 2. For a misrepresentation claim to be successful, P had to reasonably (duty) rely (causation) on misstatements made by D a. P had ample opportunity in the 1 and ½ hour test drive to figure out no AC. b. Thus P could not have reasonably relied on D’s statement as a matter of law. 3. P has no duty to make inquiry or investigation as to truth of an apparently reliable statement made to him a. The cases involved difficult ways to check the truth b. Most involved false statements about permits c. No one is required to check and see if people are lying g. Materiality--Is a separate element but connected to reasonable reliance, P not justified in relying on reps that are not material to the transaction i. Material if a reasonable person would what to consider the fact repped in determining whether the enter the transaction in question ii. Material even if a reas person would not care about fact but P attaches idiosyncratic importance to the fact and D aware of import P holds iii. Note 7 Brown v perch—on send daughter to college where high school classmates when D told P her classmates would be there 1. Ct. said liable for misrep b/c D knew P wanted this classmate presence 2. D aware of risk h. Opinion Saxby v. Southern Land Co. (VA 1909) i. General Rule: The mere expression of an opinion is not actionable for misrepresentation. 1. We do this because statements of opinion cannot be reasonably relied on (generally) ii. Restatement on Opinion 1. If great disparity in bargaining power may be actionable for rel on opinion 2. or fidu (rela trust or confidence) may be actionable for reliance on opinion 3. Belief of maker w/o certainty as to the existence of a fact, OR 4. Judgment as to quality, value, or authenticity or other matter so judgment. iii. Analysis: Is this something P could have reasonably relied upon, if is then ct more likely to say the rep was a statement of fact provable as false 1. If not reas reliable then is opinion, and not actionable 2. Opinion responsibility for: a. Great disparity in bargaining power due to special knowledge on part of D or a special relationship of trust between the parties. 3. A statement of an opinion is an statement of one fact that D actual holds this opinion 4. There is potential for liability if D did not actually hold this opinion iv. The representation of opinion implying justifying facts 1. When you state someone is a perfect EE you imply they are good and do nothing bad 2. Then if can prove they are late all the time, don’t do what they are supposed to do 3. The EE opinion rep given is then bad and the facts implied by the ‘perfect’ statement are wrong thus maybe basis for misrep v. Puffery in advertising contexts is not to be reasonably relied upon. Vulcan Metals Co. v. Simmons Mfg. Co. (Ct. App 2d 1918 1. General statements like these are not to be taken literally. 2. Examine if the parties were so situated that the buyer could have reasonably relied on the seller’s opinion. a. If so situated then actionable for fraud i. As more reasonable to rely b. But if buyer had full opportunity to test product (and opinion of the salesman) then the two were on a more equal footing, thus reliance would not be reasonable i. Law—Opinions about potential legal conseqs are not bases for intentional misrep claim Sorenson v. Gardner OR i. If more about interpretation, then no basis for misrep 1. When rep as to matter of law in a legal dispute, then ct say may not reasonably rely on such a representation a. Lying is an accepted game of society in this context ii. When a rep of law applies assertions of fact not know to recipient (difficult) 1. When this happens recipient can then be found to have reasonably relied on implied assertions of fact 2. Example: I have good title to land a. Form is legal opinion b. but understood that ‘I am aware of all the conveyances’ c. Thus is an implied representation of fact j. Prediction and Intention i. A rep must be about present or past facts not about future events 1. Misrep claim cannot be based on promises or statements as to future acts or events 2. Promise can include a false current fact, if do not intend to follow up with promise 3. Even if D breaks promise does not mean misrep 4. P able to prove D no intend to carry out 5. K law is where go for promise enforcement ii. Remedies