Economic Torts

Question 1

What are causes of action for economic torts?

Answer 1

1) fraud
2) tort of malicious prosecution
3) prima facie tort (NY only)
4) inducing a breach of K
5) theft of trade secrets (NY only)

Question 2

What are elements of fraud (intentional misrepresentation)?

Answer 2

1) misrepresentation of fact by D (silence is never a basis for a CL fraud claim unless there is a FD relationship)
2) D must have made false statement either intentionally or recklessly (scienter)
3) D must intend to induce reliance
4) there must be actual reliance (also means that reliance must be justifiable–statement must be important or material) (no duty for P to investigate) (reliance on opinion not justified unless D had superior knowledge)
5) economic damages as a result of the fraud
6) causation
Note: no affirmative defenses here

Question 3

What are elements of tort of malicious prosecution?

Answer 3

D institutes either a criminal or civil proceeding against P without probable cause; case is terminated favorably to P and it was brought for an improper purpose. Also must prove damages

(Prosecuting attorneys have absolute privilege)

Question 4

What are elements of prima facie tort?

Answer 4

(NY only)

intentionally inflicting economic harm without justification; catch-all category for economically spiteful activity

Question 5

What are elements for inducing a breach of k (interference with business relations)?

Answer 5

1) existence of a valid K between P and third party or valid business expectancy
2) knowledge of that K by D
3) persuasion by D of that third party to abandon deal (intentional interference by D)
4) damage to P

issue here is whether someone has a privilege: if there is a special relationship between D who is doing inducing and third party to K, then cannot sue advisor for inducing breach

Question 6

What are elements of theft of trade secrets?

Answer 6

(NY only)

1) valid trade secret (ie information that provides a business advantage to its owner, propietor, or possessor; information cannot generally be known; owner must take reasonable means to keep it secret)
2) D takes that secret through improper means (satisfied by traitorous insider; industrial spy; bribery of employee)

Question 7

What are elements for negligent misrepresentation?

Answer 7

1) misrepresentation in business or professional capacity
2) breach of duty
3) causation
4) justifiable reliance by P
5) damages

In NY: before D may be liable to noncontractual parties, P must show awareness that representation was to be used for a particular purpose, reliance by a known party in furtherance of purpose, and some conduct by D that demonstrates D’s understanding of that party’s reliance