Remedies Flashcards
1
Q
Define
Rightful Position Standard
A
The Rightful Position Standard says to choose the remedy that puts the plaintiff back (or keeps the plaintiff) in the position that she would have been in but for the defendant’s wrong.
2
Q
Define
Substitutionary Relief
A
Courts often refer to the award of damages as substitutionary relief because money substitutes for the thing that has been lost or damaged. Substitutionary relief causes valuation problems for the courts that don’t exist with specific relief.
3
Q
Define
Compensatory Damages
A
Aim to put the plaintiff in the rightful position, the position the plaintiff would have been in but for the defendant’s wrong.
Baseline for a court to determine the amount of damages. Such damages should compensate: “make satisfactory payment or reparation to; recompense or reimburse.”
Compensatory damages are oriented towards plaintiff’s losses (as opposed to defendant’s gains).
4
Q
Types of Specific Relief
A
- Replevin: Legal remedy that allows for specific relief; in some circumstances, a plaintiff can use replevin to recover personal property wrongfully taken by the defendant
- Injunction
- Specific Performance
5
Q
Nominal Damages
A
In cases such as trespass, where there is no actual damage, a plaintiff might sue to obtain nominal damages, or a trivial sum of damages (such as $1) awarded by a court in lieu of actual damages.
Purpose: declaratory function, vindication of a plaintiff’s rights, might serve as a predicate to allow a jury to award punitive damages (some states require compensatory damages before a jury can award punitive damages), predicate to allow the jury to award attorney’s fees
6
Q
Punitive Damages
A
Punitive damages (also termed exemplary damages) are awarded in addition to compensatory damages that are aimed at punishing and making an example out of the defendant.
Special rules for punitive damages:
1. The conduct that merits the award of punitive damages must be quite bad (i.e., malice)
2. Many states raise the burden of proof for a plaintiff to be eligible to collect punitive damages (i.e., California’s “clear and convincing” standard)
3. A majority of states require that a jury must first find plaintiff entitled to compensatory damages before the jury may award punitive damages
4. Many courts impose limits on and strict judicial review of the aount of punitive damages
7
Q
Rightful Position: Torts
A
Means accurately measuring the plaintiff’s losses
Tort damages are usually geared toward restoring the status quo
8
Q
Rightful Position: Contracts
A
The position that the plaintiff would have been in but for the wrong (“breach”) committed by the defendant
Means accurately considering the gains that plaintiff failed to realize because of a defendant’s breach of contract
Contract damages are usually geared toward giving the plaintiff the benefit of the bargain
9
Q
Example
Valuing Compensatory Damages
A
Example: Barbara’s home has been burned down by Alex.
Subjective Measure: Value that Barbara would place on her home. This was Barbara’s childhood home, and she recently turned down a $400,000 offer for the purchase of her home.
Objective Measure: Fair market value. A competent builder would charge $50,000 to rebuild Barbara’s home.
Analysis: When there is a well-functioning market, courts use an objective measure for calculating a plaintiff’s compensatory damages. In Barbara’s case, the portion of damages for the loss of her home is going to be measured by the objective market cost to replace the damaged home, and not by Barbara’s subjective value.
10
Q
Measuring Market Value
A
Courts usually measure damages at the time of the loss. In cases involving items that fluctuate in value, however, such as stocks or crops, courts sometimes show greater flexibility.
11
Q
Define
Economic Damages
A
Damages for which there is an economic market, such as lost wages, property damage, and medical expenses.
12
Q
Define
Noneconomic Damages
A
Damages plaintiffs may claim for items with no functioning economic market, such as pain, suffering, and emotional distress.
13
Q
Define
Prejudgment Interest
A
Interest measured from the time of the wrong until the time of judgment which helps put plaintiff in the rightful position.
The availability of prejudgment interest varies by jurisdiction and type of case.
14
Q
Define
Postjudgment Interest
A
Interest for the period between the time of judgment and the time that the judgment debtor pays (or “satisfies”) the judgment in order to put plaintiff in the rightful position.
In the federal courts, postjudgment interest is awarded at the set rate of the 52-week Treasury bill, and many states set the rate by statute as well.
15
Q
Future Damages
A
Restatement (Third) Torts: Remedies section 15 provides that “For any damage that can be valued by prices in a market, and that the plaintiff will not incur until after the date of judgment, the plaintiff is entitled to recover only an amount that, if appropriately invested from the date of judgment to the date on which the damage will be incurred, would yield principal and interest that in total equals the amount of the damage. Principal categories of future damage subject to this rule are lost earnings or earning capacity, lost profits, and the cost of medical and rehabilitative services.”
Two counterveiling tendencies:
1. The cost of things like medical care and wages will go up over time, and
2. Plaintiff will have the money from the judgment before she needs it, and because she can invest the money, she will need less money now.
Examples: future medical expenses and lost wages
16
Q
Reliance Damages: Tort
A
Formula: B - A
B = Status Quo Ante
A = Position After Wrong
17
Q
Reason’s why a plaintiff’s tort damages may be undercompensatory
A
- Use of market (objective) valuation rather than subjective valuation
- Inability of some plaintiff’s to obtain prejudgment interest
- Lack of recovery (in most cases) of plaintiff’s attorney’s fees
18
Q
California: Noneconomic Damage Limit
A
$350,000. Cal.Civ. Code 3333.2
This amount will eventually rise to $750,000 under the newly revised statute and will be indexed to rise with inflation.
19
Q
Calculating Pain and Suffering
A
“Per Diem” = Asking for a certain amount per day (i.e., $10/hr, 16 hrs/day, 7 days/week, 52 weeks/year for 40 years = ~$2.3 million); Some courts allow per diem arguments so long as the jury is told that such arguments are not evidence, but others do not, on the basis that they may overinfluence the jury
20
Q
Limits on Noneconomic Damages
A
Courts sometimes will lower the amount of such damages on a motion from the defendant on the grounds that the amount of the award is so high as to “shock the conscience.”
Sometimes, judges will compare verdicts in similar cases and adjust outlier verdicts.
The Restatement takes the position that the court should not overturn an award of damages that has gone to the jury unless the verdict is “grossly excessive” or “grossly inadequate.”
21
Q
Define
Remittitur
A
Device used by a judge to lower the amount of damages awarded by a jury which gives the plaintiff the option of either taking the lower amount or having a new trial on the issue of damages.
22
Q
Define
Additur
A
Device used by a judge which gives the defendant the option of taking a higher amount of damages chosen by the judge or a new trial on the issue of damages. In some states and on the federal level, additur has been held to violate the right to a jury trial and is therefore unavailable.
23
Q
Special Categories of Cases where Emotional Harm may be Particularly Foreseeable
A
Emotional harm that “occurs in the course of specified categories of activities, undertakings, or relationships in which negligent conduct is especially likely to cause serious emotional harm.”
Examples: mishandling human remains, presence of a “repulsive foreign object” in food such as a condom or rodent
24
Q
Do courts generally allow recovery for emotional distress damages for the negligent or intentional killing of a pet?
A
No. Recovery is often limited to the market value of the pet. However, some courts have allowed plaintiffs to recover the medical costs to care for an injured pet.
25
# Define
"Dignitary" Losses
A dignitary harm awards damages for an affront to the person.
"In a great many of the cases, the only harm is the affront to the plaintiff's dignity as a human being, the damage to his self-image, and the resulting mental distress."
26
Wrongful Death Actions
Defendants often pay more damages when they seriously injure someone than when death resuls
27
Survival of Personal Injury Actions
In some jurisdictions, personal injury actions do not die with the decedent. Consequently, surviving family members may recover damages for pain and suffering the tort victim suffered before his death.
28
# Define
Loss of Consortium Claims
Claim that may be brought in connection with the death of a close relative. Such claims compensate the surviving family member for the emotional distress that results from the death or injury of a loved one.
The rules on loss of consortium differ from state to state.
29
Can unmarried cohabitants recover damages for loss of consortium?
Overwhelmingly, no.
30
# Define
Defamation
Defamation is a tort defined as "the act of harming the reputation of another by making a false statement to a third person."
Slander = oral defamation
Libel = written defamation
Damages include: business losses (due to a damaged reputation) and emotional distress
31
General Standard of Proof for Recovery of Damages
Reasonable Certainty
32
Limits on the Tort of Defamation
Public figures can not recover damages for defamation without proof that the defendant made a false statement with "actual malice" (either with knowledge of its falsity or with reckless disregard of the truth)
33
Limits on Defamation Remedies
In Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974), the Supreme Court held that the 1st Amendment sometimes precluded the award of presumed damages, such as in cases where a private citizen sues for defamation involving a matter of public concern.
Then, in Dun & Bradstreet, Inc., v. Greenmoss Builders, Inc., 472 U.S. 749 (1985), the Court held that the 1st Amendment did not limit the award of presumed damages in defamation cases related to speech that "do not involve matters of public concern."
34
Egg-Shell Plaintiff Rule
You take the plaintiff as you find him/her. Vosburg v. Putney, 50 N.W. 403 (Wis. 1891)
When it comes to tort damages, a plaintiff can recover all of his damages, even if the extent of his harm was unforeseeable.
35
Proximate Cause
Proximate cause holds certain acts as too "remote" or not a "substantial factor" in causing plaintiff's harm to act as a rule that limits damages.
Palsgraf v. Long Island R.R., 162 N.E. 99, 103 (N.Y. 1928): "A cause, but not the proximate cause. What we do mean by the word 'proximate' is that, because of convenience, of public policy, of a rough sense of justice, the law arbitrarily declines to trace a series of events beyond a certain point. This is not logic. It is practical politics."
36
# Define
Economic Harm Rule
The economic harm rule provides that a plaintiff cannot recover for the lost wages or other financial kinds of injury caused by a defendant's tortious conduct in the absence of physical impact resulting in personal injury or property damage.
37
Exception to the Economic Harm Rule
Does not apply when the only kind of harm a defendant can inflict upon the plaintiff is *economic* harm
38
# Define
Contract: Expectancy Damages
The difference between what was promised and what was received
Standard measure for contract damages as it places plaintiff in their rightful position
Formula: C - A
C = Promised position
B = 0 = status quo ante
A = Position after wrong
39
# Define
Contract: Reliance Damages
Damages measured in reliance on the contract
Formula: B - A
B = 0 = status quo ante
A = Position after wrong
40
# Define
Consequential Damages
Damages which are recoverable only if they were foreseeable (if you know or reasonably should have known) at the time of contracting
41
*Hadley v. Baxendale* [1854] 9 Exch. 341
Rule: "Where two parties have made a conract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it."
The "rule" of *Hadley* thus divides the world of contract damages into those that are "nautrla," for which the plaintiff may recover, and those that are "consequential," for which plaintiff may recover only if the damages are sufficiently "foreseeable."
42
If "no consequential damages" is the default rule for contracts claims, why is it not also the default rule for torts claims?
Most torts do not involve a voluntary transaction entered into by two willing parties.
43
Exception to Consequential Damages Rule in Contracts
When the only breach if contract is the nonpayment of money, the non-breaching party may not be able to recover for consequential damages. Instead, the non-breaching party may recover only the general damages (the unpaid money) plus interest at the prevailing legal rate of interest.
Exception to the Exception: Bad faith insurance cases, breach of a loan agreement (provided the damages are sufficiently foreseeable)
44
When are emotional distress damages available in contract?
When the law treats the breach of contract like a tort, such as:
* Insurance bad-faith cases
* In cases where emotional distress damage is particularly foreseeable
45
Procedural Unconscionability v. Substantive Unconscionability
Procedural Unconscionability: Claims look at how the clause was presented to the party. A one-sided remedies provision buried in the fine print of an adhesion contract could be struck down on procedural unconscionability grounds.
Substantive Unconscionability: Claims based on the fairness of the bargain. For example, the California Supreme Court struck down, on substantive unconscionability grounds, a provision in an employment agreement that required employees to arbitrate their wrongful termination claims against the employer, but did not require the employer to arbitrate claims it may have had against the employees.
46
# Define
Liquidated Damages Provisions
Provisions that, in the event of a breach by one of the parties, actually set the amount (or provide some formula or benchmark for setting the amount) of damages to the exclusion of jury-determined damages under the usual rules.
Restatement (2d) of Contracts section 356(1): "Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty."
47
# Buyers' Remedies
**Two** damage remedies when the seller has failed to make delivery, repudiated the contract, or delivered goods that the buyer had rightfully rejected because they did not conform to the contract
## Footnote
Article 2 of the UCC
1. Section 2-712. **Cover** A buyer can "cover" by making a good faith purchase of substitute goods without unreasonable delay. If the buyer makes such a good faith purchase, the buyer is entitled to the difference between the cover price and the contract price, together with incidental and consequential damages, less expenses saved as a consequence of seller's breach. [*Formula*: Amounts toward the purchase price paid to seller + (cover price - contract price) + incidental and consequential damages - expenses saved]
2. Section 2-713. **Market Damages** The buyer can recover the difference between the market price at the time when the buyer learned of the breach and the contract price, together with incidental and consequential damages less expenses saved. Market price is determined at the place of tender or, in the case of rejection after arrival or revocation of acceptance, at the place of arrival. [*Formula*: Amounts toward the purchase price paid to seller + (market price at the place of tender - contract price) + incidental and consequential damages - expenses saved]
48
# Buyers' Remedies
Remedy for Accepted Goods
## Footnote
Article 2 of the UCC
Section 2-714. When a buyer has accepted goods that don't conform to the contract and the buyer has given notice of the non-conformity, the buyer can obtain damages resulting from the non-conformity "as determined in any manner that is reasonable," in addition to incidental and consequential damages. Moreover, when the buyer can prove a breach of warranty, the buyer can obtain from the seller "the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted."
49
# Buyers' Remedies
Incidental Damages
## Footnote
Article 2 of the UCC
"expense reasonably incurred as inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expenses incident to the delay or other breach"
50
# Buyers' Remedies
Consequential Damages
## Footnote
Article 2 of the UCC
Includes "any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise." Also include personal injury or property damage that results from any breach of warranty.
The UCC allows consequential damages to be excluded by contract, in which case they are not recoverable unless the exclusion is unconscionable.
51
# Sellers' Remedies
Resale
## Footnote
Article 2 of the UCC
Section 2-706. The first option a non-breaching seller has is to resell the goods to another buyer. When the seller makes a resale "in good faith and in a commercially reasonable manner," "the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed"
Formula: (contract price - resale price) + incidental damages - expenses saved
52
# Sellers' Remedies
Damages for Non-Acceptance
## Footnote
Article 2 of the UCC
The seller need not make the immediate resale of the goods. Instead, the seller can recover under Section 2-708(1) "the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Article, but less expenses saved in consequence of the buyer's breach."
Formula: (contract price - market price) + incidental damages - expenses saved
53
# Sellers' Remedies
Action on the Price
## Footnote
Article 2 of the UCC
Section 2-709. When the buyer fails to pay for goods as they are due, and either the buyer keeps the goods or the goods are lost or damaged after the risk of loss has passed to the buyer, the seller can bring an action to recover the contract price plus incidental damages. The seller can also recover such damages for goods still in the seller's possession if the seller "is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing."
Formula: contract price + incidental damages
54
# Sellers' Remedies
Incidental Damages
## Footnote
Article 2 of the UCC
Sellers are entitled to incidental damages, but not to consequential damages as buyers are.
Section 2-710. Include "any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care, and custody of goods after the buyer's breach, in connection with return or resale of the goods or otherwise resulting from the breach."
55
# Sellers' Remedies
The Lost Volume Seller
## Footnote
Article 2 of the UCC
Section 2-708(2). If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the selller would have made from full performance from the buyer, together with any incidental damages provided in this Article, due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.
Test: A lost volume seller must establish the following factors: (1) that it possessed the capacity to make an additional sale, (2) that it would have been profitable for it to make an additional sale, and (3) that it probably would have made an additional sale absent the buyer's breach.
Formula: profit + incidental damages - credit for junk value
56
Remedy: Fraudulent Misrepresentation
Expectancy damages.
The recipient of a fraudulent misrepresentation is entitled to recover as damages in an action of deceit against htem aker the pecuniary loss to him of which the misrepresentation is a legal cause, including: (a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and (b) pecuniary loss suffered otherwise as a consequence of the recipient's reliance upon the misrepresentation.
57
Why might someone plead a cause of action in tort rather than contract?
* The tort cause of action might allow for **punitive damages**, which are generally not allowed in contract.
* The tort cause of action might make it **easier to recover** for certain **consequential damages **even if not foreseeable by the breaching party at the time of the contracting/misrepresentation.
* The contract cause of action might prove problematic (for example, if there was not a valid contract because the **contract was not in writing as required by the statute of frauds**)
* The tort cause of action might be subject to a **longer statute of limitations** than the contract cause of action (though in practice it is often the other way around)
58
Three situations in which courts may award reliance damages rather than expectanc damages in contract
1. The non-breaching party has a problem with the substantive contract claim, such as a lack of consideration or lack of a writing as required by the statute of frauds
2. There are compelling public policy reasons to limit damages to a lesser amount
3. the non-breaching party has trouble proving expectancy damages with reasonable certainty
59
How certain does the jury have to be about the amount of damages suffered by plaintiff?
* **(a) Fact of Damage (Preponderance of the Evidence)**. The plaintiff must prove by a preponderance of the evidence that defendant's tort was a cause of the harm or harms for which the plaintiff seeks compensation.
* **(b) Amount of Damages (Reasonable Certainty)**. (1) Except as provided in Subsection (b)(3), a plaintiff must offer sufficient evidence to establish the amount of damages with reasonable certainty. (2) The reasonable-certainty standard requires the plaintiff to offer evidence sufficient to satisfy the court that the factfinder has a reasonable evidentiary basis from which to estimate an approximate amount of damages. (3) "Noneconomic" damages that cannot be measured by any value in a market, such as pain and suffering, emotional distress, dignitary harms, and the like, are so inherently imprecise that the reasonable-certainty standard cannot meaningfully be applied.
60
What steps must the plaintiff take to minimize loss?
Torts: Plaintiff has a "duty to mitigate;" "avoidable consequences" rule
Contracts: When a seller breaches and a buyer does not cover, the buyer is entitled to market damages. Similarly, when the buyer breaches and the seller does not resell immediately, the seller is entitled to damages for non-acceptance.
61
How should we treat expenses and losses that plaintiff avoids because of the defendant's wrong?
The issue of offsetting benefits arises when a plaintiff actually takes steps to avoid loss. In such a case, those steps taken to avoid loss must be taken into account in computing plaintiff's damages so as to prevent the plaintiff from obtaining a double recovery.
Offsetting benefits arise not only when resources are freed up on account of defendant's wrong. They also occur when there are expenses saved on account of the breach.
62
How should we treat collateral sources--that is, insurance and government payments that plaintiff receives on account of injuries caused by the defendant?
Under the **collateral source rule**, insurance and certain government benefit payments that are wholly independent of the tortfeasor do not get deducted from the plaintiff's award of tort damages.
Keep in mind certain contracts may contain a *subrogation clause*, requiring that any payments received by plaintiff must first go to pay back the insurer for its costs.
63
"New Business Rule"
| New Jersey
Per se rule that new businesses cannot recover damages for lost profits. These minority jurisdictions view such damages as too speculative, violating the certainty requirement.
64
# Define
Injunction
Court orders to defendants (or others) to do or not do something.
Injunctions can *keep* plaintiff in the rightful position rather than having to *restore* plaintiff to that position.
65
# Define
Specific Performance
An injunction ordering a breaching party to a contract to perform as promised. Specific performance is a type of *specific relief* that gives the plaintiff the very thing he or she lost (or stands to lose).
Contrast with damages which is a kind of *substitutionary* relief: money substitutes for the thing that plaintiff has lost.
66
What must a plaintiff show to obtain an injunction?
In order to obtain an injunction, a plaintiff is typically going to have to prove two things:
1. *Propensity*: The defendant is likely to engage in the conduct that plaintiff seeks to enjoin; and
2. *Irreparable injury*: A "legal" remedy, such as damages, is not as good a remedy for plaintiff as an injunction (when the loss is something not easily replaceable).
Even when plaintiff makes such a finding, however, a court may decline to grant an injunction where:
3. Other strong policy reasons exist for denying the injunction.
67
What factors should courts consider in choosing between specific relief, such as an injunction, and substitutionary relief, such as damages?
Courts should prefer injunctions when transaction costs (the costs of bargaining) are low and damages when transaction costs are high. When transaction costs are low, the parties will be expected to bargain to an efficient allocation of resources. Injunctions let the market, rather than the courts, set the price for violation of a legal right, and the parties are more likely than the court to set an accurate price. In contrast, when there are high transaction costs, the parties may not bargain to an efficient result.
68
Can injunctions be used to restructure government institutions such as prisons and school systems?
Yes, also known as "structural injunction," connoting the series of injunctions necessary to restructure government institutions in civil rights litigation.
**School Systems**: Desegregation of Southern schools via injunctive relief. *Brown v. Board of Education (Brown II)*, 349 U.S. 294 (1955)
**Prisons**: California prison litigation to release CA prisoners to alleviate prison overcrowding. Constitutional violations stemmed from serious deficiencies in the prison health care system. *Brown v. Plata*, 563 U.S. 493 (2011).
69
How and under what circumstances may injunctions be modified?
FRCP 60(b).
Courts may modify an injunction or consent decree:
* When changed factual conditions make compliance with the decree substantially more onerous;
* When a decree proves to be unworkable because of unforeseen obstacles;
* When enforcement of the decree without modification would be detrimental to the public interest;
* When the statutory or decisional law has changed to make legal what the decree was designed to prevent;
* If the parties had based their agreement on a misunderstanding of the governing law.
70
To what extent may injunctions bind or burden third parties?
In private law adjudication, an injunction does not have much effect on third parties.
In public interest litigation, thousands of non-parties may be affected. In *Hills v. Gautreaux*, 425 U.S. 284 (1976), the Supreme Court held that third parties could be *substantially burdened* in the pursuit of federal remedies. The extent to which third parties may be burdened in structural injunction litigation is somewhat unclear, but the Court today is more concerned about protecting values of federalism than it has been in the past.
*Direct orders* to third parties must be "minor and ancillary."
Additionally, consider the issue of *nationwide injunctions*, discussed at length at the end of Chapter 8.
71
Under what circumstances may a plaintiff obtain preliminary relief, such as a preliminary injunction, to prevent harm from occurring before a case goes to final judgment?
The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held.
A plaintiff seeking a preliminary injunction must establish that:
1. He is likely to succeed on the merits;
2. He is likely to suffer irreparable harm in the absence of preliminary relief;
2. The balance of equities tips in his favor (*balancing of the hardships*); and
3. That an injunction is in the public interest
72
What kinds of contempt power to courts have, and under what circumstances may parties ignore injunctions without facing a court finding of contempt?
1. *Civil coercive contempt.* This is the power of the court to impose fines payable to the state, or jail time, to coerce the defendant's compliance with the court's order.
2. *Criminal contempt.* This is the power of the court to *punish a defendant's willful failure to comply* with the court's order.
3. *Civil compensatory contempt.* This is the power of the court to *award damages to the plaintiff* for defendant's failure to comply with the court's order.
73
In order to get equitable relief, a plaint must demonstrate that-
-she has no adequate remedy at law (otherwise known as the "irreparable injury" rule).
74
How does one know what qualifies as a legal or equitable remedy?
Whether the remedy would have been granted by the *law courts* (i.e., compensatory damages) or the *equity courts* (i.e., injunction, rescission, constructive trusts).
Jury trials are available when a plaintiff seeks a legal remedy, but not available when a plaintiff seeks equitable relief.
75
Could you ask the court to give you *both* compensatory damages *and* and injunction?
Courts ordinarily will make you *elect a remedy* at some point to *preclude double recovery*.
76
# Define
Delay Damages
Damages for the temporary loss of use in the property to compensate for the delay in promised performance. This is not double recovery.
77
Propensity Rule
| in Injunctions
Requires that plaintiffs demonstrate there is a *realistic threat from the defendant of future harm (or future injury from past harm)* before a court will issue an injunction.
78
*eBay Inc., v. MercExchange, L.L.C.*, 547 U.S. 388 (2006) 4-factor test
According to well-established principles of equity, a plaintiff seeking permanent injunction must satisfy a four-factor test before a court may grant such relief.
A plaintiff must demonstrate:
(1) that it has suffered an irreparable injury;
(2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury;
(3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
(4) that the public interest would not be disserved by a permanent injunction.
79
Courts sometimes deny injunctions to plaintiffs who can prove irreparable injury and propensity for the following *policy reasons*:
* Undue hardship to the defendant
* Preserving the defendant's right to a jury trial
* First Amendment concerns
* Concerns about restraining labor/involuntary servitude
* Burden on the court
80
# Define
*Preventive* Injunction
Preventing future harm
81
# Define
*Reparative* Injunction
Preventing the future bad effects of past harm
82
# Define
Consent Decrees
Court orders crafted by the parties that, like regular injunctions, are backed up by the power of contempt. Entry of a consent decree keeps the federal court's involvement in the case and ensures that the court monitors the progress of the parties.
The Supreme Court has recently said that there must be a connection between the consent decree and the "federal interests" plaintiffs sought to protect by bringing suit in the first place. Moreover, the consent decree must "further the objectives of the law upon which the complaint was based." *Frew v. Hawkins*, 540 U.S. 431, 437 (2004).
83
Posner Formula
| Preliminary Injunction: balancing the hardships
Grant the preliminary injunction, but only if:
*P(Hp) > (1 - P)Hd*
*P* = probability that the plaintiff will prevail
*1 - P* = probability that the defendant will prevail
*Hp*= irreparable harm that the plaintiff will suffer unless a preliminary injunction is granted to maintain the status quo pending the trial
*Hd*= irreparable harm the defendant will suffer is the preliminary injunction is granted
84
# Define
Stay
A stay is an order by an appellate court suspending the implementation of a lower court order or judgment; standards for granting a stay are similar to those governing the issuance of a preliminary injunction
85
# Define
Mandatory Injunction v. Prohibitory Injunction
Ordering a defendant to do something and thereby changing the status quo, as opposed to a prohibitory injunction, or ordering a defendant to refrain from doing something.
86
Injunction Bond
## Footnote
FRCP 65(c)
"The court may issue a preliminary injunction or a temporary restraining order only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained. The United States, its officers, and its agencies are not required to give security."
The injunction bond requires the plaintiff to pay the defendant for damages that accrue during the period between the granting of the preliminary inuunction and final judgment *if* the court determines at final judgment that injunctive relief is not warranted.
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# Define
*ne exeat*
Latin for "let him not go out"
Preliminary injunction *barring a person from leaving a jurisdiction* pending some further action
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If a court fails to require an injunction bond, can a defendant obtain damages caused by a delay, if the federal court on final judgment determines plaintiff failed to prove their claim?
No. If no bond was required as a condition of issuance of the preliminary injunction, or if the amount of the bond was insufficient to compensate the enjoined party, the party may recover his damages only if he can prevail in an independent action for malicious prosecution.
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# Define
Temporary Restraining Order
"TRO"; issued prior to a Preliminary Injunction, generally not appealable, not to exceed 14 days *without notice*
A court cannot issue a TRO without notice unless
(a) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and
(b) he movant's attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.
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# Define
Collateral Bar Rule
Prevents defendants from defending themselves against a *criminal* contempt charge on grounds that the court's injunction was unlawful or incorrect.
Exceptions:
* "delay or frustration" in getting a ruling on the merits dissolving the injunction
* Court lacks jurisdiction over controversy
* Injunction is transparently invalid or has only a "frivolous pretense to validity"
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Is restitution a legal or an equitable remedy?
Restitution functions as both a *substantive area* of the law (much like torts and contract) in cases in which a plaintiff would have no other remedy, and as an alternate *remedy* for certain tort and contract breaches.
"The awkwardness of using the word 'restitution to identify both a claim based on **unjust enrichment** and the corresponding remedy means that this simple division of the overall subject matter is not always apparent from its terminology."
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Restitution
* Restitution is about *unjust enrichment*. Generally speaking, there will be no recovery in restitution absent proof that a defendant has been unjustly enriched.
* As a matter of remedy, restitution gives plaintiff an award based on *defendant's gains* rather than plaintiff's losses. When defendant has no gains, restitution is an inappropriate remedy.
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Major types of cases in which courts will find *unjust enrichment* allowing the plaintiffs to recover in restitution
* **Benefits conferred by mistake**. Mistaken payment or benefit conferred by the plaintiff to the defendant. The Restatement takes the position that the person transferring the property must make a *mistake of fact or law* that caused the transfer to take place, and that the transferor *does not bear the risk of the mistake*.
* **Benefits conferred by transferor with defective consent or authority**. In certain cases of mistakes involving *contracts*, a mistake may provide the basis for the contract's rescission (or cancellation). Kinds of defective consent or authority that may provide grounds for rescission: fraud, innocent material misrepresentation, duress, undue influence, and incapacity.
* **Benefits conferred intentionally in emergency and by officious intermeddlers**. "Officious intermeddlers": people who try to throw benefits at you in exchange for compensation. A professional who confers benefits in an emergency is eligible for compensation through restitution. However, the law presumes that benefits conferred by Good Samaritans are conferred gratuitously and therefore there is no expectation or requirement of restitution.
* **Benefits conferred in contractual settings, including the case of "Opportunistic Breach"**.
1. **Restitution for unenforceable contracts**. Restitution may be available when the contract is unenforceeable.
2. **Restitution as an alternative measure of recovery, including in cases of Opportunistic Breach**. Restitution maybe an alternative measure of recovery by a non-breaching party for breach of an enforceable contract.
3. **Restitution for Breaching Parties**. Restitution may be available to a breaching party of an enforceable contract to obtain benefits provided to the non-breaching party.
* **Benefits obtained through tortious or otherwise wrongful conduct**. The Restatement lists the most common types of tort cases in which plaintiffs may seek a restitutionary remedy: (1) cases involving trespass, conversion, and comparable wrongs, (2) misappropriation of financial assets, (3) interference with intellectual property and similar rights, and (4) breach of fiduciary duties or confidential relations. If the tortfeasor acted as a "conscious wrongdoer," the tortfeasor "will be required to disgorge all gains (including consequential gains) derived from the wrongful transaction."
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2 basic principles for measuring defendants' gains
| in Restitution
1. Restitution is not available when a defendant has no gains; and
2. The measurement issue is easy when the transfer from plaintiff to defendant invovles cash or another easily valued item
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How to account for--and apportion--profits in cases of misappropriated items:
1. Identify revenues from misappropriated/mixed item; *then*
2. Deduct variable costs, *but (in some courts) not costs associated with the infringer's own labor; then*
3. Deduct appropriate portion of fixed costs if allowed by court (evidentiary burden and method of allocation may depend upon culpability of infringer); and *finally*
4. Apportion profits attritutable to misappropriated item in mixed item cases using some reasonable method of apportionment, except that some courts will refuse to apportion and will award *all* profits to the plaintiff; *some courts that will allocate do not give the infringer any credit for profits attritutable to the infringer's reputation*.
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# Define
Constructive Trust
Equitable restitutionary remedy that in some circumstances:
(1) gives plaintiff seeking restitution a preference in bankruptcy,
(2) allows plaintiffs to "trace" defendant's gains from plaintiff's misappropriated item into an item purchased by defendant that has appreciated in value, or
(3) allows plaintiffs to "trace" plaintiff's item from defendant to a third person.
Useful in at least 3 situations:
1. Defendant is bankrupt, and plaintiff can trace his or her property to an identifiable asset.
2. Defendant has purchased an identifiable asset with plaintiff's property, and this asset has appreciated in value.
3. Defendant has transferred plaintiff's money to a third person, and plaintiff wants the third person to return the item.
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# Define
Equitable Remedies
An equitable remedy is one that was traditionally available in England in the courts of equity, and it requires the plaintiff to show that a traditional legal remedy--such as damages--is "inadequate" (the "irreparable injury rule"). equitable remedies are backed by the court's contempt power, meaning that the court can coerce a reluctant defendant to comply and can punish willful disobedience of the court's order.
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# Define
Equitable Lien
Equitable restitutionary remedy
Money judgment secured by a lien on a specific property. It creates a real lien on property that (in most circumstances) can be subject to foreclosure. The lien is not created through any agreement by the parties; instead, it is created by the court to prevent unjust enrichment.
Typically used in real property disputes, and when it is, the dispute must be *connected to the real property*.
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# Define
Replevin
Legal restitutionary remedy (there is no requirement to prove irreparable injury)
Specific restitution for the return of plaintiff's personal property
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# Define
Ejectment
Legal restitutionary remedy
Specific restitution for *real property*, paralleling replevin's remedy for personal property
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# Define
Subrogation
Restitutionary remedy
Prevents a defendant from being unjustly enriched when the plaintiff pays a sum to a third party to settle a liability or debt owed to that third party by the defendant. Can arise through a contractual agreement, in which case it is termed *conventional subrogation*, or it can arise in the absence of agreement through court creation, termed *equitable (or legal) subrogation*.
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# Define
Contribution and Equitable Indemnity
Tort doctrines involving joint tortfeasors.
Here, there are 2 defendants, D1 and D2, who jointly caused injury to plaintiff, P. Under principles of joint and several liability, either defendant could be required to pay the total amount of P's loss. If D1 pays the entire amount of P's loss, D2 could be unjustly enriched if he too caused injury to P but did not have to pay. Once D1 satisfie the judgment to P, contribution or indemnity work to require D2 to partially or completely reimburse (depending on the state's applicable tort law doctrine) D1 for D1's payment to P.
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# Define
Rescission
Remedy that arises out of contract disputes, sometimes termed "avoidance" or "termination"
A remedy giving plaintiff the right to cancel a contract, and it is often followed by restitution, whereby each side returns the consideration it has received under the contract.
Five major points:
1. There must be a contract
2. Rescission is available when contract law provides that a contract is void or voidable (mutual mistake of fact, unilateral mistake of fact, fraud, duress, undue influence, lack of capacity, statute of frauds)
3. Rescission is sometimes available for breach of an enforceable contract when there has been a substantial breach of contract
4. Undoing of contracts can be complicated
5. Plaintiffs sometimes have the choice between (a) voiding a contract and suing for rescission and (B) standing on the contract and suing for compensatory damages
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# Define
Reformation
Equitable remedy that arises out of contract disputes.
A judicial rewriting of the parties' contract. "When parties come to an agreement, but by fraud or mistake write it down in some fashion that does not truly reflect their contract, equity will reform the writing to make it reflect the parties' true intention."
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3 categories of contract breaches for which tort damages (including punitive damages) should be awarded:
1. Breach accompanied by a traditional common law tort, such as fraud or conversion;
2. Tortious means used by one contracting party to coerce or deceive another party into forgoing its contractual rights; and
3. the case where one party breaches the contract intending or knowing that such a breach will cause severe, unmitigable harm in the form of mental anguish, personal hardship, or substantial consequential damages
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*BMW v. Gore*, 517 U.S. 559 (1996)
3 "guideposts" for courts to consider in determining whether the amount of punitive damages was constitutionally excessive:
1. *The degree of reprehensibility of the conduct*. The more reprehensible the conduct, the higher the punitive award should be.
2. *The ratio of punitive damages to actual damages*. The higher the ratio, the more constitutionally suspect the punitive award.
3. *Sanctions for comparable misconduct*. If civil or criminal penalties for similar conduct are low, then a punitive award should be low as well, because those penalties signal that the state does not consider the conduct to be highly blameworthy.
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# Define
Declaratory Judgment
Declaratory judgments are *implicitly coercive*. When a court declares the parties' respective rights, a violation of those rights is not the same as violating a court injunction and cannot be held in contempt of court. However, a court may be quite receptive to the option of later issuing an injunction should it be necessary.
Plaintiffs usually seek the remedy *before* there has been an injury, but do not need to satisfy the "irreparable injury" requirement necessary in injunctions. Plaintiffs seeking a declaratory judgment need only present a *ripe* claim.
Can be used to eliminate frivolous threats of litigation and vindicate important constitutional rights.
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Ancillary Remedies
"*Helping Remedies*"--Help other remedies work properly.
* Contempt
* Judgment lien
* Execution
* Garnishment
Prejudgment
* Freeze orders
* Attachments
* Receiverships
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Remedial Defenses
* Unconscionability
* Unclean hands
* *In pari delicto*
* Estoppel
* Waiver
* Laches
* Statutes of Limitations
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# Define
Unconscionability
| Remedial Defenses
Defense for both equitable relief *and* legal relief.
Contract: Contract may be so one-sided as to be unconscionable based on the *substantive unfairness* of the contract.
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# Define
Unclean Hands
| Remedial Defenses
Equitable defense in which the defendant claims that plaintiff's bad conduct should bar plaintiff from obtaining equitable relief such as an injunction. Many courts require that defendant demonstrate not only that the plaintiff's conduct is inequitable, but also that "the conduct relates to the subject matter of its claims."
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# Define
*In Pari Delicto*
| Remedial Defenses
"In equal fault"--rooted in the common-law notion that a plaintiff's recovery may be barred by his own wrongful conduct
2 distinctions from Unclean Hands:
1. *In pari delicto* can apply to bar suits in equity *or* law, while unclean hands (at least traditionaly) applies only to suits in equity.
2. *In pari delicto* requires balancing. A defendant *must* prove that plaintiff's conduct was *at least as bad as defendant's conduct* for the defense to apply.
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# Define
Equitable Estoppel
| Remedial Defenses
3 requirements for estoppel:
1. A misstatement or action by the plaintiff,
2. Reliance by the defendant, and
3. Injury to the defendant
Although estoppel is an equitable doctrine, it can be used to defeat a claim for either equitable or legal relief.
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# Define
Waiver
| Remedial Defenses
Intentional relinquishment of a known right; may be express or implied (if implied, courts may require proof by *clear and convincing evidence*)
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# Define
Laches
| Remedial Defenses
Affirmative defense that applies only when the plaintiff seeks an equitable remedy. The defendant must show that *the plaintiff unreasonably delayed bringing suits against the defendant and that the defendant suffered prejudice because of the unreasonable delay*. A defendant asserting laches must also show reliance.
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# Define
Statutes of Limitations
| Remedial Defenses
Bar suits brought for either legal relief or equitable relief, set by statute and are usually inflexible.
Some jurisdictions have a *discovery rule*, which either delays accrual or tolls the statute of limitation until plaintiff discovers, or reasonably could have discovered, both her injury and that the defendant is a cause of the injury.
