Remedies Flashcards
What are the five categories of remedies?
- Compensatory
- Punitive
- Preventative (Coercive - injunctions and non coercive - declaratory)
- Restitutionary
- Ancillary
What is the distinction between substitutionary or specific remedies?
Substitutionary remedies are remedies that give the P something other than the P expected at the start.
Example: Compensatory damages in a breach of contract case where P expected a car but gets money damages.
Specific remedies are remedies that gave the P what he expected.
Example: An injunction ordering performance of the contract (P gets what he bargained for).
What is the purpose of compensatory damages and what is it called?
The purpose of compensatory damages is to restore the injured party as nearly possible to the position they would have been in but for the defendant’s wrongful conduct. This is known as the Rightful Position Rule.
In calculating compensatory damages, courts conduct their analysis using what two factors?
Objective criteria (market value, expert testimony)
Individualized
What are some types of compensatory damages?
Medical bills
Wrongful death
Emotional distress
Lost profits
Pain and suffering
Constitutional dignitary harms
What are the two types of compensatory damages?
General damages and consequential (specific damages)
Define general damages.
General damages flow immediately and directly from the defendant’s wrongful conduct.
What is an example of general damages?
Medical expenses in a car accident.
What is the scope of liability and define it
i. Foreseeable Plaintiffs: A P cannot recover damages that are insufficient in relation to the D’s conduct.
ii. Applies to General Liability
Define consequential damages and the qualifier statement.
Consequential damages are the indirect result of the D’s wrongful conduct.
It is more difficult to obtain consequential damages due to the skepticism in which courts hold this type of relief.
What are examples of consequential damages?
Loss profits, reputation harm, clean-up costs
What are two requirements in establishing consequential damages?
- Reasonable foreseeability of harms
- Reasonable certainty of damages
What is reasonable foreseeability and what does it ask?
i. Reasonable foreseeability of harms: To recover consequential damages, the harms must be reasonably foreseeable (natural and proximate result of the breach) contemplated by both parties) (if contract case, must be at the time the contract was made (judged from an objective view) This is known as specific foreseeability. Courts require more than just general feasibility but specific foreseeability. If P wants the view to be subjective rather than objective, he must give notice and it must be stated in the contract
Example: If buyer tells you at time of contract formation they will lose profit if your company doesn’t deliver on time and seller accepts contract anyway, seller was on notice and thus seller owes consequential damages.
- NOTE: Specific foreseeability is a limit that ONLY applies to consequential damages because generals are obviously foreseeable.
What defines reasonable certainty of damages?
Consequential damages must be calculated with a reasonable degree of certainty which requires two components: (1) a qualitative component, and a (2) causation component.
What is the qualitative component in reasonable certainty?
A plaintiff must prove the amount of damage to a reasonable degree of certainty.
Example: In majority of cases denied, insufficient documentation (first prong of certainty requirement).
What is the causation component in reasonable certainty and what is required to establish this?
A plaintiff must prove to a reasonable degree of certainty that the damages were caused by the defendant (as opposed to a third party or other intervening force).
The plaintiff needs expert testimony to help establish that ABC, and not any other factor, was the cause of the injury.
Example: Outside court system, Ken Feinberg appointed to administer fund post explosion of BP oil rig in Gulf of Mexico; BP creates $20B fund to settle claims, also administered post 9-11 fund.
In many cases, the inability of the claimant to demonstrate causation; too attenuated a relationship; restaurant can’t show oil spill caused drop in restaurant’s profits (second prong).
How do you treat consequential damages in a failure to pay money case, what is the rule called, and what is the rationale for it?
When a breach of contract is the failure to pay money, the remedy owed is the money plus interest. This is known as the interest-only rule. The only consequential damages are thus interest.
Rationale:
- Too speculative as to what P would have done with the money.
- P could have mitigated consequences like gotten a bank loan to prevent the harm
- Judicial economy—the most simple contract disputes would turn into long trials.
- P could have contracted for prompt payment by liquidated damages provision (if no pay by this date, penalty)
Example: Someone shorts you your bonus, and you argue that you should get money for business ventures that you could not invest in.
What is the rule on consequential damages for emotional distress?
It is difficult to measure emotional distress damages.
Specifically, a court would look at comparable awards dealing with the same objective circumstances leading up to the P’s distress (i.e., damage awards in other cases involving X) as opposed to focusing on the P’s subjective reaction to this event.
What is the rule on sentimental or spiritual loss (e.g., losing a photo)?
Rule: Where sentimental value is the principal or only value at issue (e.g., loss of a picture), some courts allow recovery of reasonable sentimental value.
What are the three ways to calculate compensatory damages?
(1) Value
(2) Expectancy
(3) Reliance
NOTE: Value is about remedying the situation in the cheapest way; expectancy is NOT about remedying the situation in the cheapest way
For injured property in tort, how are compensatory damages awarded and what is the exception
P entitled to be made whole in the least expensive way: decrease in market value or replacement cost, whichever is less. This is known as the lesser of two rule.
NOTE: Even unique asset can have a market value
Exception - Special purpose property
i. Property that has little value to anyone other than the owner is entitled to the cost of replacement, even if it exceeds the market value
ii. Example: For specialty church, use depreciated cost of reconstruction. 9-11 buildings do not work here because a contract had just been entered into
- Special purpose property - Use reasonable method to assess value for replacement cost – what is reasonably necessary in light of the damage (church)
What are expectancy damages?
- Value of what was represented to you – market value of what you received
Not necessarily the contract price
In Chatlos where man received more expensive computer than the one he contracted for because he expected to receive a computer that did everything
Use in contract cases such as a breach of contract in failing to make rental payments.
What is the aim of expectancy damages?
Expectancy damages aim to put the plaintiff in the position in which they would have been in if the plaintiff got what he expected from the contract.
What is the aim of reliance damages?
Reliance damages aim to put the plaintiff in the position they would have been in had the harm never occurred.
When buyer repudiates the contract or refuses to accept the goods that conform to the contract, what can the seller recover in reliance damages?
Difference between the unpaid contract price and the market price at time of delivery plus incidental damage – expenses avoided ((2-708(1)); or
If reliance damages do not put the P in the rightful position, what is the seller’s other option in a case of buyer repudiation? What is the exception?
ii. Expectancy Damages
Starting Point Rule: Profit seller would have received from full performance by the buyer + incidental damages and due credit for payments or proceeds of resale (is this different from lost volume sellers)
Exception: Unlimited supply -Lost Volume Sellers?
b. D gets profits from two boats
Exception: Even if unlimited supply, if custom good, you cannot get two sales.
iii. NOTE: In either case, seller can also recover incidental damages (2-710) such as the cost of reselling
Buyer can recover:
i. Deposit less any expenses owed to seller
How are expectancy damages held in a breach of warranty case?
P receives the value of goods as contracted minus the value of the goods they accepted.
What is the rule on pets?
General rule: Owner of pet that is killed can recover only the market value of the pet.
What are reliance damages?
Reliance damages are used in torts and are out-of-pocket expenses.
What are three situations where value cannot be measured in dollars?
Pain and suffering
Wrongful death
Constitutional harm
What is the rule for pain and suffering?
(if facts say, “P is likely to continue to suffer severe discomfort for several more years”)
P may collect compensatory damages for pain and suffering. The court will likely use a per diem method to calculate pain and suffering where the plaintiff’s attorney determines a daily amount and multiplies that out over the expected life of the plaintiff. Safeguards in place for per diem approach
Jury instructions,
Opposing counsel rebuttal, AND
Remittitur
A concern with the per diem method is that the figure can be highly subjective (e.g., some of the future pains have yet to be suffered).
What is the alternative to the per diem approach in calculating pain and suffering and define it.
Golden rule argument is where the lawyer asks the jurors to put themselves in the place of the victim or the injured person and deliver the verdict that they would wish to receive if they were in that person’s position.
Define a wrongful death claim.
Wrongful death claims are brought on behalf of the survivors, with the goal of putting survivors (as opposed to the decedent) in their rightful position.
In a wrongful death case, what do all jurisdictions allow in recoveries?
Funeral expenses
Compensation for decedent’s lost wages
In a wrongful death case, what do the majority of jurisdictions allow in recoveries?
Monetary value of services decedent would have provided to spouse and children (e.g., household chores, childcare, education)
Recovery for loss of love/attention/companionship
NOTE: Awards in this area are all over the map; evidence of huge influence that race or gender might have in the outcome due to subjective calculation jury makes so room for biases
g. NOTE: If wrongful death for child, go through factors
i. Do basic rules on wrongful death
ii. Apply each one to hypo
1. E.g., Funeral expenses yes
2. No lost wages for this decedent
3. No compensable services
4. So most of damages flow from loss of love
5. Framework is like a hoax – amounts all over the place
What is the rule on Constitutional harms and what are Constitutional harms?
Constitutional harms are dignitary harms that are intangible in nature.
Compensatory damages should not be presumed in a procedural due process violation, but nominal damages should be awarded. Injury must be shown – P must show that the violation of due process resulted in a concrete injury.
Levka tries to propose subjective reaction to strip search and 7th Circuit said we don’t care, we look at objective criteria of your search compared to objective criteria as to others
Concerns: Huge variations in damages awards even in comparable cases.
When damages are spread over time, what are three factors courts will assess?
(1) Wage inflation
(2) Appropriate discount rate
(3) Price inflation
ii. Wage and price inflation favor P
iii. Discount rate favors D
Define wage inflation.
Wage inflation is the general increase in wages people earn over time (due to cost of living adjustments and other factors). The court will apply a wage inflation rate to determine one’s future salary.
Example
1. If no wage inflation, salary after 40 years= $26K.
2. If wage inflation of 3.5%/yr, salary after 40 yrs = $103K.
Define the three sentences regarding the appropriate discount rate.
Future damages (income) must be discounted to the present value of the cumulative future damages. The discount is determined using the highest interest rate that could be earned on a safe investment.
context: where P can put big chunk of money in high yield savings account and get more money than you gave them so have to apply discount factor to award
Plaintiff is awarded an amount of damages that, if allowed to accrue interest at that rate over the relevant time period, would equal the total amount of cumulative future damages.
This is done so that the plaintiff is not unjustly awarded.
Thus here, because the plaintiff will receive damages for all her medical expenses including future expenses, the court will discount the damages expenses to present value.
d. Rationale: If P gets total sum of money now, we’re overcompensating him, b/c instead of him earning those wages bit by bit over 40 years, he gets them all right now and can invest it all now and start earning interest on it in stock market
e. If we assume 10% rate of return (D will argue this that you’re aggressive investor) P gets $38K today
f. If we assume 5% rate of return P gets $61K today
g. If we assume 3% rate of return (P will argue this, conservative lawyer) P gets $74K today
What is price inflation?
Price inflation is the increase in prices over a given period of time.
Because one of her surgeries will not take place for three years, the court will have to account for price inflation in determining this part of the award.
Example:
A $1 today is worth less than a $1 tomorrow. If need surgery due to wrongful conduct in 5 years, and that surgery costs $5K today, it will cost more than that in 5 years due to price inflation.
What are the five limits in returning a plaintiff to their rightful position?
- Limitation of remedies
- Liquidated damages
- Avoidable consequences
- Offsetting benefits
- Collateral sources
NOTE: Limitation of remedies and liquidated damages only apply in contract.
Define a limitation of remedies.
A limitation of remedies clause seeks to prevent the non-breaching party from recovering what the law would otherwise allow the party to recover upon a breach.
Remedy example: You get a refund and no actual damages.
But if remedy took four years to go out, then it fails of its essential purpose.
Example
the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts; and
(b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.
(2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act.
o (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable.
What is the rationale for limitation of remedies and what is the competing theme?
A buyer might accept lesser remedies options in return for a lower price or due to their brand loyalty.
There is a competing theme between the freedom to contract and the availability of a minimally adequate remedy in the event of a breach.
What are the two exceptions of a limitation on remedies?
(1) If a remedy fails of its essential purpose by not providing minimally adequate relief, the court will default to the UCC.
(2) Regardless of any provisions, the court will not bar consequential damages for personal injury from consumer goods (unconscionable)
Define liquidated damages.
Liquidated damages provisions are a reasonable estimate of actual damages that will be recovered by one party if other breaches. The estimate takes the form of either a fixed amount or formula.
Example: Set amount of damages at $300/day if filming could not take place due to D’s antics.
What are the two requirements for a valid liquidated damages provision and how does that tie into a penalty?
A court will invalidate a liquidated damages provision that functions as a penalty. A clause functions as a penalty unless the two following requirements are satisfied.
(1) Provision must be a good approximation of actual damages (must have a basis in fact); AND
(2) Actual damages must be difficult to ascertain at the outset of the contract.
Hypo: In hotel opening contract, to set good approximation, look at forecast on potential lost revenue, room reservations, labor costs, etc.
Quimbee Note: If the actual damages suffered by the plaintiff are little or none at the time of the lawsuit, a court will not enforce the clause because it then constitutes a mere penalty.
Define the avoidable consequences doctrine.
Under the avoidable consequences doctrine, the plaintiff will be denied recovery for the amount of damages that he or she could have reasonable avoided or minimized. The defendant bears the burden of proof.
Rationale: Promotes underlying fairness by not awarding the plaintiff damages which he or she could have reasonably avoided.
Avoidable consequences (a defense to damages (not to liability)
Only in contract
Examples
- P could have seen doc to avoid minor turning into major injury
- Bad construction, P could have rented place out
- P could have made reasonable effort to find job after
- On exam, argue both sides. Personal injury example:
i. Risks associated with surgery; costs associated with surgery; whether P had insurance; whether single parent with other responsibilities; fear of hospital
Who has the burden to prove P failed to avoid consequences and in an employment situation, what is the SC guidance?
D has burden of showing P failed to avoid consequences
- P does NOT have to pick the best option, just a reasonable one
- Per SC (on wrongful term and avoidable consequences), P does not to take demotion or demeaning position. But P forfeits right to back pay/lost wages if does not take a job substantially equivalent to the one lost
What is the offsetting benefits rule?
When D’s conduct not only causes harm to the plaintiff but also creates a benefit for the plaintiff, the value of that benefit can offset the damages owed to P. Only applicable to like for like.
- Context: Sometimes P derives benefit from D’s wrongful conduct
- Example: Wrongful term, new job wage will offset the lost wages recovery that the P would otherwise be entitled to receive
What is the collateral source rule?
Under the collateral source rule, P can recover damages that include amounts for which he or she has already received compensation from sources independent of and collateral (separate) to the defendant. This does not allow for double recovery due to subrogation clauses.
On Exam, if the facts do not state P has health insurance, mention the collateral source rule does not apply.
What are three arguments in favor of the collateral source rule?
a. Deters D misconduct
b. D should not get benefit of P’s prudence in getting insurance
c. Do not penalize for people getting insurance
What are three arguments against the collateral source rule?
a. Notion of double recovery
b. Note on exam that due to subrogation clauses in insurance policies, notion of double recovery is illusive because P has to pay back insurance company if wins
Define punitive damages.
Punitive damages are a civil remedy intended to deter and punish a defendant for his reprehensible conduct.
NOTE: Punitive damages should NOT be considered under compensatory damages.
What is defined under common law and statutes regarding punitive damages?
Rule: Under the common law and statutes, most jurisdictions require the P to show malice in order to receive punitive damages.
How is malice defined?
- Intent for something to happen; OR
- Conscious disregard for the probability of harm
- NOTE: Malice can be express or implied
- NOTE: No punitives for mere or gross negligent conduct.
- NOTE: Even if no compensatory damages (e.g., in trespass of neighbor, court can award punitives if malice).
What is the context on the constitutional limits on punitive damages?
Due process requires defendants to have notice of the bounds of personal liability; punishment should be fair and not arbitrary.
What did the Supreme Court provide regarding punitive damages? What are the three guideposts? Why the need for these guideposts? Which two cases to cite in parens?
The Supreme Court Established Three Guideposts to Determine Whether Punitive Damages Comport with Constitutional Protections (BMW, State Farm)
(1) Degree of reprehensibility of D’s conduct;
a. The more reprehensible one’s actions, the more one is on notice of potential liability and thus is no violation of due process
b. Only punish for D’s conduct to this party, not to non-parties
i. However, take harm to non-parties to account for reprehensibility of D’s conduct. Prof says confusing.
(2) Ratio of punitive to compensatory damages;
a. There should be some reasonable relationship between compensatory and punitive damages so that D’s are more on notice of potential liability
b. General Rule: Single digit ratio (between compensatory and punitives (cannot be more than 9 times)
(3) Applicable civil and criminal penalties for this kind of misconduct
a. Civil and criminal penalties give D notice on potential seriousness of certain harms and thus comport to due process considerations.
b. Example: Here, there was a $10K civil sanction for fraud
ON EXAM: Argue both sides.
What are preventative remedies?
Preventative remedies are designed to prevent harm before the harm occurs.
What are the two types of preventative remedies?
i. Coercive (injunction)
ii. Declarative (declaration)
Define an injunction. Also what is the special phrase to use.
An injunction is a court order enforceable by sanctions for contempt of court that directs the defendant to do something or stop doing something. Injunctions are seen as extraordinary forms of relief.
What are two policy reasons why courts favor damages over injunctions?
Policy on Damages over Injunctions
i. Injunction is an extreme interference with liberty
ii. Judicial economy in that court must stay involved to ensure D doesn’t continue activity
NOTE: Efficient breach doctrine allowing certain breaches to occur; courts do NOT largely adhere to this perspective
What are the five high level requirements a plaintiff must show to receive a permanent injunction?
- Ripe, imminent harm
- Irreparable injury
- Whether the injunction would impose an undue burden on the D
- Whether the injunction would impose an excessive burden on the court
- Whether the injunction is a prior restraint on free speech
Under ripe, imminent harm, what are four things to mention?
- Ripeness requires an actual controversy as opposed to hypothetical or speculative fears. Example, in Humble, the court denied P’s request for an injunction because no evidence D would actually shred litigation documents.
- P has the propensity to harm
- No moot cases where the case is already resolved
- The scope of the injunction must equal the scope of the harm. Example: In Goodyear, the court found that Goodyear’s age discrimination impacted one office (and one employee) so a nationwide injunction was too broad.
What is the question to ask in irreparable injury?
Is there as an adequate remedy at law?
Injunctions are an extraordinary relief that interferes with one’s liberty and impede judicial economy by often requiring courts to be involved with monitoring a defendant’s continued actions.
What is the statement to make about when there is irreparable injury?
Damages are not adequate when they cannot make P whole. Damages are adequate when they are complete and as practical and as efficient as an injunction.
What are the five factors to analyze whether irreparable injury?
- Uniqueness
- Difficulty in calculating damages
- Whether market shortage
- Potential for multiple lawsuit absent an injunction
- Whether D insolvent
Under uniqueness under irreparable injury, what can you raise?
- Real property including trees (Pardee) (land and that growing out of land cannot be replaced through damages since each piece of land is unique)
a. General rule: if a lease, money damages, no injunction. - Some courts use uniqueness but others say even if unique, if economically interchangeable b/c a market value exists, no injunction
- Prize-winning horse
a. Argue Hadley where market value can be used for unique animal; damages given
b. Argue Pardee where uniqueness (though not real land). A unique item that cannot be obtained from a different seller is sufficient for specific performance.
c. She put compare Sampson and Mazzacone [xxx]
Under difficulty in determining damages under irreparable injury, what can you raise?
- Example: Hard to calculate reputational harm (Continental where court issues injunction to stop travel broker from reselling Continental’s coupons; no monetary damage but reputational damage)
Under market shortage, under irreparable injury, what can you raise?
- Look both objectively and subjectively
- In Campbell, special carrots were personally valuable to the company, court grants injunction b/c special carrots not available on market
- Even if objective test on uniqueness does not pass, if this particular P subjectively believes the product that makes it unique, this may be enough to obtain an injunction
- NOTE: If P can cover breach by buying goods at a much higher price on open market, P should sue for damages (difference between the replacement grain’s price and the contract price).
Under potential for multiple lawsuits absent an injunction, what can you raise?
- Example: D might not care about paying multiple damage awards so might continue behavior without an injunction.
Under whether the D is insolvent under irreparable injury, what can you raise?
Minority Jx will not consider whether D can pay
Under whether the injunction would impose an undue burden on D, what should be raised?
a. Whether harm of an injunction would significantly burden the D as opposed to the benefit to P (D has to scrap entire project just for P to lease advertising billboard)(Wagner)
b. Rationale: Extraordinary remedy
c. Consider this a balancing test
d. NOTE: If encroachment unintentional, court will conduct Wagner balancing test; however, if intentional encroachment, court will NOT conduct balancing instead (will not look at burdens on the D).
i. Intentional defined: Knew, should have known, or failed to take reasonable care.
1. D must have affirmatively investigated and not have ignored warnings.
e. Example of balancing test (this gets to merits):
f. Burden on D if injunction issued: move multimillion $ construction project. If cement plant with dust spewing, no injunction, D should not have to move plant to make P happy (Boomer)
g. Burden on P if injunction issued: gain back a few feet of land
Under whether issuing injunction would impose excessive burden on court what considerations will the court look at in evaluating the burden? Also, what happened in the Agyll case?
a. Types of Considerations a Court Will Take Into Account in Evaluating the Burden on the Court
i. An order to do a one-time activity (e.g., take down a banner) will not seem to impose a significant burden on court.
ii. An order to refrain from making any future statements would be burdensome, requiring repeated intervention every time D purportedly repeated the problematic behavior.
b. Example: In Agyll (Safeway case), where Safeway breaks lease, too difficult for court to monitor Safeway hours, for 35 year lease. Damages adequate. No injunction for P.
Under whether the injunction is a restraint on free speech under permanent injunctions, define a prior restraint.
A prior restraint is a government action that prohibits speech or other expression before the speech happens.
What is the important note on prior restraints?
Courts are very reluctant to grant injunctions that will serve as prior restraints on First Amendment freedoms
- Example: Defamation case; no injunction to stop D from speaking
- Example: Even a court asking D to remove banner can be seen as a prior restraint
- NOTE: On exam, talk about deliberate versus non deliberate framework
- On EXAM, mention judicial economy as rationale.
If a D volunteers to stop the harmful conduct, when will the court declare the court moot?
D voluntarily stopping the harmful conduct is only enough to dismiss the request for an injunction if there is no reasonable likelihood of the D reengaging in the behavior. The court will look at the totality of the circumstances (three factors).
What is the three factor totality of circumstances consideration for deciding whether a case is moot when the D voluntarily stops the harmful conduct?
(1) Expressed intent to comply
(2) Effectiveness of the discontinuance (how easy for D to reengage in the conduct)
(3) Character of the past violations (were past violations inadvertent or intentional)?
In cases where the harm is moot (harm has gone away), the standard to decide whether the harm is still live
- the standard to decide whether the harm is still live is to ask ‘whether a cognizable danger of continued violation’
a. Example: In Grant, where the D resigned from the boards and ended the improper interlocks, the SC found there is not the slightest threat that the Ds will attempt any future activity in violation of the Clayton Act.
What is the rule on injunctions and nuisances?
Anticipated nuisances do not warrant an injunction given injunctions are an extraordinary remedy.
Speculative fears of an increase in crime or decrease in property value is not evidence of a ripe, cognizable harm.
If known quantity measures (e.g., a dump or funeral home), injunction more likely.
Example: In CT Halfway House, before halfway house built, P seeks injunction barring house from operating alleging will be nuisance. P cites increase in crime and decrease in property value. Court finds both P’s arguments are speculative. No evidence so no ripe, cognizable harm.
Define a prophylactic injunction.
One that bars conduct that is otherwise legal out of fear what will happen from legal conduct.
Courts are skeptical of these types of injunctions.
What is the rule on inevitable disclosure?
An employee may be enjoined from working for a competitor even if the employee signed an NDA if the court believes there is inevitable disclosure, where the employee cannot help but to use the information in his new role (Pepsi)
