Equity & Remedies

PUNITIVE DAMAGES Common Law

#1: *Purpose* of legal remedy is not to compensate ∏ but to *punish* ∆ and discourage or *deter* ∆ from acting in a similar way in the future; deterrence includes protecting other potential victims. #2: Limited to cases where ∆ displays *outrageous misconduct* like deplorable behavior, gross negligence, or willful/wanton/reckless indifference for the safety/health/rights of others. #3: *Vicarious liability* is often a *threshold issue* as it was in Exxon (RII § 909: punitive damages can be awarded against a master or other principal bc of an agent's act but only if *(1) the principal or managerial agent authorized the doing and the manner of the act; (2) the agent was unfit and the principal or a managerial agent was reckless in employing or retaining him; (3) the agent was employed in a managerial capacity and was acting in the scope of employment; or (4) the principal or a managerial agent of the principal ratified or approved the act)*. #4: *State Tort reform*: - affects cap recoveries - require clear and convincing evidence as burden of proof - challengers argue that punitive damage awards shouldn't be a *routine cost of doing business* that an industry can simply pass on to its customers through price increases while continuing the conduct (see e.g. Brown RR case where the RR determined it was cheaper to defend the lawsuits than to construct gates at RR crossings). #5: In some states: - *underlying compensatory damages* are a prerequisite for punitive damages - ∆'s *wealth* is a legitimate underlying consideration - share of punitive damages to be *paid to the ST* (punitive damages award isn't personal to ∏ bc society is the de facto party and society punishes ∆) although some ST have struck down as an unCON taking of property BUT cts then often award attorneys' fees paid out of the full punitive amt awarded so ∏s continue to have adequate incentive to litigate. Efforts to litigate punitive damages in *class actions* like asbestos have mostly failed bc lacked commonality.

PUNITIVE DAMAGES Constitutional Considerations SCOTUS Case Law

(1) *Pacific Mutual* (1991 - approved punitives 200x comp damages): "No bright mathematical line" (Kennedy); typically need to show *vicarious liability*; principal vicariously liable for the acts of his agent even without knowledge of agent's actions - so principle liable for punitives, not just damages award; *PDP* means defendant entitled to *exacting jury instructions* on punitive damages and *de novo review*. (2) TXO (1993): SCt upheld ratio of 526:1 bc punitives were not disproportionate to damage ∆ might have caused had wrongdoer not been caught (TXO acted with malice when it tried to swindle Alliance out of valuable mineral rights) (Kennedy: "the CON doesn't concern itself with dollar amounts or ratios" -- but see State Farm authored by Kennedy) (Scalia & Thomas concurred bc no SDP limit on punitive damages; only PDP guarantees judicial review of verdicts but no federal right to a correct result -- but see Exxon) (3) Honda (1994): power of judges to set aside excessive verdicts is an essential component of PDP; SCt held that ∆s' PDP rights were violated because ST cts didn't apply PDP requirements from Pacific Mutual (1st case remanded for PDP reasons, not d/t excessive amt) (4) *Gore* BMW case (fraud, 1996): First time SCt applied a CON SDP test to the award amt and found it excessive and unCON (500-fold multiplier); SDP requires fair notice of conduct that may be subject to punishment and the severity of the penalty. This was the 1st case where SCt reversed an award of punitive damages as excessive bc inappropriate to use out-of-ST cars as a multiplier--ST couldn't punish out-of-ST conduct); SCt created The Guideposts: whether amount satisfies SDP and invalidated a large verdict. (5) *State Farm* (2003): SCt expanded Gore Guideposts, invalidating a large punitive damages award, specifically Reprehensibility and limitations on admissibility of out-of-state conduct, and 3 bright-line Ratios despite (see TXO). In suits against insurers like State Farm for bad-faith refusal to settle, the insured has no claim merely for failure to pay or delay in payment. But if the insurer refuses or delays in bad faith, knowing that it is liable, ∏ can sue not only for interest but also for punitive & consequential damages including emotional distress. (6) *Williams* Marlboro lung cancer case (2007) (fraud, $79.5M punitives): harm to others within the ST is admissible on Reprehensibility but not on punishment; PDP requires that the jury ask the proper question--SCt remanded for correct jury instruction but not for damages amount. Stevens' dissent: whole purpose of punitive damages is for retribution and deterrence; justification for large punitive award is even more palatable when, in a case like this, the award is payable to a ST fund rather than to the plaintiff. (7) Exxon (2008): Federal CL - set a 1: ratio limit in maritime cases - SCt, not Congress, is setting punitive damages caps. Ginsburg dissent: does ct's opinion mean that 1:1 = maritime-law ceiling or any ratio higher than 1:1 will exceed the constitutional outer limit?

PREVENTIVE DAMAGES

A ct order directing a party to do or refrain from specified conduct. There are 3 types: preliminary, permanent, structural (difference between preliminary & permanent is timing). A preventive remedy bc it seeks to prevent harm rather than let it happen and compensate for it. A coercive remedy bc it seeks to accomplish its preventive goals by coercing ∆'s behavior through contempt power. By nature, an injunction results in greater intrusion to ∆'s liberty so a VERY dramatic remedy. Also imposes a *greater burden on the ct* bc it must be enforced over time (e.g. Missouri v Jenkins: ct oversight since 1977 -- SCt decision in 1995) (greater intrusion on ∆'s liberty d/t inj ordering him to do or refrain from specified conduct vs a damage remedy that leaves him free to proceed if he is willing to pay the cost; and injunctions can be enforced by coercive/ punitive measures like jail time vs damage remedy enforced by seizing ∆'s property (ct won't punish ∆s who fail to pay). *Timing* is probably the most important practical reason why plaintiffs seek damages more often than injunctions -- many harms happen irreversibly before any ct can prevent them, and victims can often get on with their lives more quickly by repairing any damage themselves and suing for reimbursement Preventive Damages -- Preliminary Injunction -- Permanent Injunction -- Ripeness + Prophylactic Relief + Uniqueness/Inability to Calculate Damages/Scarcity -- Mootness (if applicable) -- Scope -- Structural -- TRO -- Bonding -- DJ

PREVENTIVE DAMAGES Injunctive Relief: Equity Structural

Broadest type of injunction and use of ct's equitable powers; designed to correct institutional structures in systemic violation of applicable law -- when a system or institution becomes dysfunctional, fed ct can exercise its powers of equity in any fashion it chooses to attempt to repair this longstanding dysfunction and systemic breakdown (e.g. school desegregation - Jenkins case; prison reform - Brown case; public housing - Mt. Laurel cases; labor disputes - Bagwell case). Although note that in many cases, the ∆s propose the remedies and they are incapable or unwilling to carry it out so judges called upon to implement the remedy suggested after a period of time if the ∆ fails to implement. BUT structural injunctions invade restrains on the use of the equity power - *federalism issues* (per Thomas' concurrence, a structural reform decree eviscerates a ST's discretionary authority over its own program and forces resource spending) and *separation of powers issues* (per Thomas, untenable requirement for continuing judicial supervision like in Jenkins case where same judge was involved for 18 yrs; Fed cts not the right branch to fix these systemic problems - "there simply are certain things that cts cannot and should not do"). *Kansas school district segregation case* (Missouri v Jenkins): extreme structural injunctions imposed by ct on Kansas City school system when racial segregation found; remedies should be designed to restore discrimination victims to the position they would have occupied in the absence of such conduct; SCt found there were no limits to the duration and extent of the DCt's involvement and DCt failed to target its equitable remedy to cure harm suffered by victims; over $2 billion spent but students remained racially isolated and test scores had declined.

PREVENTIVE DAMAGES Injunctive Relief: Equity Inability to Calculate Damages

Ct can't determine a principled way to calculate actual damages (the injury defies calculation), e.g. intangible rights/harms like environmental harm or civil rights violation. This doesn't mean that a party wasn't harmed. But where the threat of injury is imminent and the measure of that injury defies calculation, damages won't provide a remedy at law. *discount coupons case* (Continental Airlines v Intra): ct granted injunction against Intra in favor of Continental; the difficulty and probable expense of establishing the amount of economic harm supports the proposition that damages would be an inadequate remedy, and so cuts in favor of equitable relief. The economic analysis of the effect of brokering discount coupons might be difficult and uncertain; expensive accounting and economic analysis might be necessary. The harm to Continental was to its power, not its purse, and to its control of its own business, even though the harm to its profitability is unproven or perhaps immeasurable . . . Continental is entitled to make its own decisions about discount coupons and shouldn't have to spend money on accountants and economists to prove the amount of economic harm in order to preserve its control over its own business.

COMPENSATORY DAMAGES Problems in Evaluation Emotional Distress

(1) *Direct claim* = personal injury + emotional distress + physical manifestation of the emotional distress ~ I am the victim (2) *Bystander claim* = some ST recognize but very difficult to evaluate ~ watch child be hit by a car. *Thing test*: (a) bystander must be present and contemporaneously aware of the happening of the negligence causing the harm; (b) must be a close familial tie between the victim and the bystander; and (c) bystander must suffer severe emotional distress and some physical manifestation. ∏s *exposed to toxic substances* with long latency periods can recover for the *fear of eventually contracting* a disease but must prove that fear is genuine and serious*. Emotional distress generally not compensable inK BUT most cts treat *bad-faith breach of an ins K* as a tort, opening the door to emotional distress and punitive damages (e.g. lawsuit against insurers for bad-faith refusal to settle where insurer refuses or delays in bad faith knowing that it is liable - see State Farm)

PREVENTIVE DAMAGES Injunctive Relief: Equity Ripeness

(1) Before a preliminary or permanent injunction will issue, the moving party must show the ct that the issue is RIPE for equitable treatment: - *Imminent threat of irreparable harm/injury*: real and present danger that activity is about to occur . . . fear cannot be speculative, hypothetical or just a mere possibility; and - *Inadequate legal remedy* (most common justification is the inability to calculate damages but others include uniqueness, scarcity, & specific perf) (2) Much *easier to show* RIPENESS at permanent stage bc at preliminary stage, don't know much yet and at permanent stage, there is an established track record of conduct. (3) ∏ has burden of proving that ∆ has a *propensity* to engage in the activity or wrongdoing seeking to be enjoined - what ∏ fears ∆ will do. No requirement that ∆ committed, explicitly threatened, or admitted intent to commit a violation of law -- it's enough that there is a substantial or realistic threat of a violation. But an admission, a threat, or a past violation greatly simplifies the proof. Recurring theme in Almurbati, Humble Oil, and other cases was that ∏ couldn't prove ∆'s propensity. Even if ∆ tells ct he won't engage in activity requested to be enjoined, ∆ should still resist an injunction bc it imposes the threat of (criminal) contempt and labels ∆ as someone who won't comply with the law without an injunction - a label ∆ doesn't want. (4) There are *holes in the CL, statutory law, administrative rules, etc. where equity fills in the gaps or supplies the omissions to effect justice*. So judges are both arbiters of the law and chancellors of equity, empowered to do what is right and just. But a legal remedy is adequate only if it is as complete, practical, and efficient as the equitable remedy. Inadequate remedy at law and imminent threat of irreparable harm are 2 sides of the same coin. Equity won't act if there is an adequate remedy at law; it will act only to prevent injury that is irreparable at law. "The very thing which makes an injury 'irreparable' is the fact that no remedy exists to repair it." If money damages are adequate, then the injury is not irreparable and won't be prevented. *Guantanamo Bay detainees case* (Almurbati v Bush): detainees asked to not be deported to a dangerous country where they could be tortured or killed; request for injunction based on news reports and other hearsay; ct denied prelim inj bc not satisfied there was an imminent threat of irreparable harm; ∏ couldn't demonstrate the request was based on ∆'s propensity to engage in the activity seeking to be enjoined (compare to propensity in State Farm case where in-house counsel specifically directed the destruction of documents--injunction to prevent document destruction more likely to be granted if litigating in the future against State Farm). *document destruction case* (Humble Oil): ∏ asked for an injunction to prevent document destruction; request for injunction based on ∏'s belief that ∆s weren't nice people; ct denied prelim inj bc not satisfied there was an imminent threat of irreparable harm; ∏ couldn't demonstrate the request was based on ∆'s propensity to engage in the activity seeking to be enjoined; even though if harm occurs (documents destroyed).

COMPENSATORY DAMAGES Limitations on Damages UCC Provisions

*2-316: Warranties* To exclude or limit the implied warranty of merchantability or implied warranty of fitness for a particular purpose, the seller must be *unambiguous* by mentioning the word "merchantability" in the disclaimer. If in writing, the disclaimer must be *conspicuous* (font, color, placement, size). *2-719(3): Contractual Limitation of Remedy* "Consequential damages may be limited or excluded UNLESS the limitation or exclusion is unconscionable." (Ct will consider if disparity in bargaining power, sophisticated parties, etc. - more likely to find if a consumer.) *"Limitation of consequential damages for (personal) injury to the person in the case of consumer goods is prima facie unconscionable* but limitation of damages where the loss is commercial (property) is not." *2-725: SOL* SOL for K breach = 4 years after COA has accrued (COA accrues when the breach occurs regardless of the aggrieved party's lack of knowledge of the breach). By K, parties may reduce this period to not less than 1 year but cannot extend it beyond 4 years. *No discovery rule.* *2-607: Perfect Tender Rule: Acceptance* If buyer accepts goods, *buyer must notify seller of breach* because goods don't conform to the K. Buyer must notify seller in a reasonable time after buyer discovers or should have discovered a breach or non-conformity. If buyer doesn't notify seller in a reasonable time, buyer is barred from any remedy.

PUNITIVE DAMAGES Constitutional Considerations SDP and the Gore Guideposts

(a) *Reprehensibility* of ∆'s outrageous conduct: - harm caused was physical/personal injury, not economic harm (e.g. physical = asbestos; economic harm = BMW paint job) - isolated incident or repetitive pattern of conduct conduct demonstrating an indifference to or a reckless disregard of the health & safety of others (single impact v. mass tort where ct may more carefully scrutinize verdicts bc early claimants can't get all the money available from ∆, leaving nothing for future claimaints; out-of-ST conduct v. in-ST) - tortious conduct was profitable to ∆ *Out-of-state or in-state conduct* may be used to bolster reprehensibility *if substantially similar* to what ∆ did in the ST of litigation - evidence of actual harm to nonparties can help prove reprehensibility by showing that the conduct that harmed ∏ also posed a substantial risk of harm to the general public. But a jury cannot go further than this and use punitives to punish ∆ directly for alleged harms to nonparties bc DP prohibits use of a punitives to punish ∆ for injury/harm to others who are strangers to the litigation. (State Farm: "∆ should be punished for the conduct that harmed the plaintiff, not for being an unsavory individual or business . . . DP doesn't permit the cts to adjudicate the merits of other parties' hypothetical claims against ∆...") (b) *Ratio* between punitive and compensatory damages: -- up to 9:1 ratio if compensatory damages award is reasonable -- double-digit ratio if underlying conduct is egregious but resulting injury/compensatory damages are small (see bedbug case) -- 1:1 ratio if compensatory damage award is substantial - 1:1 ratio if maritime [*discuss all possibilities on exam*] *bedbug case* (Mathias v Economy Lodging): $186,000 in punitives and $5,000 in compensatories - small damages award justified a larger punitives multiplier bc ∆'s conduct was outrageous while compensable harm was slight and emotional, so difficult to quantify (c) *Other civil/criminal penalties* (least important factor) that could be imposed for comparable misconduct -- see ST law for guidance

ANCILLARY DAMAGES Remedial Defenses Waiver

(overlaps with Equitable Estoppel and Laches) *Relinquishment of a right* either intentionally, inadvertently, or unintentionally; often applies to a right about which the holder was unaware. When one party to a K is aware of conduct by the other party that constitutes a breach but fails to protest the breach & continues to perform the K, the party may have waived its right to rely on the breach in subsequent litigation. - doesn't require actual reliance (compared to estoppel where defendant must show actual reliance) - critical in procedural matters (appellate court: "plaintiff failed to raise X so waived") as in Harm v Sprague - plaintiff can waive a COA or defendant can waive a defense by not filing timely or properly *grocery/liquor store case* (CG v Wasilla): non-waiver agreement clause didn't preclude the defense of waiver and long acquiescence constituted a waiver of right to claim default for late rent payments . . . course of conduct constituted implied waiver of right to enforce

ANCILLARY DAMAGES Remedial Defenses Laches

(overlaps with Waiver and Estoppel) An affirmative defense (primarily used with injunctions) that applies to an equitable COA when ∏ substantially delayed in filing a lawsuit when a known right has been violated and ∆ detrimentally relied on ∏'s failure to pursue a COA and is prejudiced as a result of the delay ("equity aids the vigilant and not those who slumber on their rights") -- either trial prejudice (can't try the case effectively because too much time lapsed) or economic prejudice (∆will suffer financial harm because of time lapse) - originally SOL applied to actions at law & laches applied to actions in equity but now most equitable claims are subject to SOL and laches -- most SOL apply at law and equity, although laches still in effect for equitable COA that isn't subject to SOL. *Concurrency Doctrine*: - if there is both a legal remedy and an equitable remedy for the same underlying wrong, then the SOL applies to both remedies (e.g. a suit for damages & suit for SP are alternative remedies but underlying wrong = K breach) - when an equitable claim is subject to a SOL, laches is irrelevant unless it bars the claim before the limitations period expires - when an underlying right is subject to a legal remedy only, the SOL applies & laches doesn't - laches is the sole time limit only when there is no SOL *Redskins case* (Pro Football v Harjo): laches runs from age of majority; ct found trial and economic prejudice sufficient to support a defense of laches.

ANCILLARY DAMAGES Remedial Defenses Equitable Estoppel

(overlaps with Waiver and Laches) A party is estopped/prevented from asserting a claim or defense because her own past statement, act, or decision is held to be determinative (estopped from denying an earlier representation, meaning you are stuck with what you said). Party claiming estoppel must demonstrate by clear and unequivocal evidence that *(1) actor who knows true facts communicates something to another in a misleading way* (may arise from silence as well as words - it is the duty of a person having a right and seeing another about to commit an act infringing on it to assert his right - he cannot by silence induce or encourage the commission of the act and then be heard to complain); *(2) other person justifiably relies on the communication; (3) other person materially harmed if actor is allowed to disaffirm earlier statement*. - Also applies to actions in law - Also promissory estoppel (∏ allowed to recover bc he relied on defendant's promise), judicial estoppel (litigant takes a position in ct inconsistent with a position he successfully asserted earlier in the same or a related matter) *golf course case* (Geddes v Mill Creek Country Club): ∆ pled affirmative defense of equitable estoppel in response to ∏'s COA for trespass and nuisance w/ injunctive relief; ∏ in part claimed no knowledge that golf balls would land on their property ("but I didn't know!"); ∏ equitably estopped from bringing COA ("an injunction will be refused where the complainant has actively encouraged ∆ to undertake the work and then has silently, without protest, permitted ∆ to go ahead with the work in disregard of the right of complainant"). Different if ∏ acted based on ∆'s misrepresentation/misconduct - then estoppel fails - but NO knowledge isn't a valid response.

ANCILLARY DAMAGES Attorney Fees

*American Rule* = in most circumstances, each party pays his own legal fees. *EXCEPTIONS* (fee shifting = shifting the payment of atty fees to the other party who wasn't supposed to pay your fees . . . when ct orders fee shifting, atty fees become an ancillary remedy): (1) *Statutory* = Other party or prevailing party recovers atty fees from other side (statutory fee award not limited by the fee agreement) (2) Court rules (e.g. MI case evaluation) (3) *Contempt of Court* = a ct may assess fees in its discretion for willful disobedience of a ct order -- successful ∏s aren't entitled to fees as of right (4) *Family Law* = common in divorce (Edelman v. Edelman: "to enable the petitioning party to participate adequately in the litigation" if 1 spouse can pay and the other can't) (5) Common Fund = money is recovered for an entire class, the defendant generally must pay attorney fees for the class 1-way fee shifting for ∏s: recognizes the fact that most ∏s are one-shot participants in the legal system but many ∆s are repeat players who can absorb fees as a cost of doing business; epitomizes the American policy of encouraging litigation if ∏s can finance litigation that would be meritorious but uneconomical if they had to pay their own lawyers; truly accomplishes the goal of restoring ∏to his rightful position. *Lodestar* = # hrs reasonably expended x reasonable rate *Factors* (prove by showing evidence of each factor): (1) time & labor required, novelty & difficulty of the questions involved, & skill required to perform the legal service properly; (2) preclusion of employment by the attorney due to acceptance of the case (the likelihood that representing the C will reduce or eliminate other opportunities for the L if this is apparent to the C); (3) time limitations imposed by C or the circumstances; (4) fee customarily charged locally for similar legal services; (5) whether the fee is fixed or contingent; (6) amt of $$ involved & results obtained (economic efficiency); (7) ERA - experience, reputation, & ability of L performing services; (8) the nature & length of the professional relationship with C; (9) undesirability of the case. *civil rights violation case* (City of Riverside v Rivera): §1988 was a fee-shifting provision authorizing ct to award atty fees when suit brought for civil rights violation under §1983; atty fee awards in civil rights cases don't have to be proportionate to the amt of damages but some cts say that the amt of damages is a reason for awarding less than the full lodestar

COMPENSATORY DAMAGES Proving damages

*Damages must be proved*. There is no right to jury trial in torts suits against US (like Navajo horses case - claims brought under Federal Tort Claims Act); judge hears case & must give reasons for his decisions whereas juries don't have to give reasons; judges typically uphold jury damage awards but may be required to explain how the jury verdict was calculated.

COMPENSATORY DAMAGES Contract

*Direct (General)* Damages: - direct losses from K breach - benefit of the bargain/expectancy/reliance damages (compensation for losses sustained by reason of actions taken or withheld by the innocent party, including the expenditure of funds in anticipation of the performance of a K) - flow directly from/natural result of the wrong *Indirect (Special/Consequential)* Damages (e.g. loss of profits): - must be foreseeable or proximate cause of the breach; shouldn't be too remote or speculative; cts are legitimately hostile to/suspect of, especially when parties have equal bargaining power, bc less certain, more remote, and could have been avoided if ∏ was more diligent *Boat case* (Neri v. Retail Marine): alleged lost-volume seller; buyer breached k; damages = lost profit/expectancy + special/ conseq damages for storage & ins (foreseeable & proximate) - must be included in liquidated damages K clause (cts want parties to contemplate damages) *Cattle pasture case* (Buck v. Morro): lessor should compensate lessee for any/all losses that were naturally foreseeable & proximately caused by the sale of land BUT lessee had duty to mitigate - "Whatever special damage naturally & proximately resulted to lessee from sale of the land & termination of the lease - whatever may reasonably be supposed to have entered into the contemplation of the parties - he should recover; if the extra expense & losses were the proximate result of the land sale & termination, he should be entitled to recover the amt of loss sustained as special damages." *Belgian entrepreneur case* (Meinrath v Singer): no conseq damages award bc ∏'s injury too speculative, too remote from main injury & not foreseeable at time of K. If ∏ wanted to impose liability on ∆ for the failure of his business empire, ∏ could have included liquidated damages for breach in the K. *Insureds* can sue for conseq damages (includes emotional distress & punitive damages) when insurer refuses to pay or delays in bad faith (State Farm).

ANCILLARY DAMAGES Contempt Perpetual Coercive Civil

*How long can coercion last?* - no coercion allowed if compliance impossible so often an issue of credibility (does judge think party is credible?) - ends when no reasonable likelihood of successful coercion (majority) - Fed trial witnesses = 18 mos max for refusal to testify *Nigeria kids case* (Anyanwu v Anyanwu): dad failed to comply w/ court order to return 2 kids living in Nigeria; ct held a party cannot be held in civil contempt when they are unable to comply w/ the court order or when the commitment for that purpose has lost its coercive power

COMPENSATORY DAMAGES Problems in Evaluation Property Lesser-of-Two Rule & Exception

*Lesser-of-Two Rule* = ∏ whose property was injured may recover the lesser of: (1) the diminution in the property's FMV (value of property before & after the damage); or (2) the property's full replacement/repair cost (even if completely destroyed) (replacement cost doesn't include consequential damages or passing off K obligations to ∆ bc these aren't a natural or proximate result of the tortfeasor's actions) *Property is valued*: - at the time & place of the *loss* in tort cases; or - at the time & place for *delivery* in K cases; or - at the time of harvest for crops. But if *property value fluctuates* over time, cts can value property: - at the time of the *tort/breach* of K; - highest value between time of tort/K breach & time of trial or time of filing; or - highest value between time ∏ learned of loss & a reasonable time thereafter in which he could have replaced the property (*Decator case*) *Special-Purpose Property EXCEPTION* to Lesser-of-Two Rule: ANALYZE if property meets *Special Purpose Property Test* for valuing property where FMV can't be measured (churches, hospitals, clubhouses, community centers) -- if so, can recover replacement cost: (1) improvement must be unique & specially built for the specific purpose for which it was designed; (2) must be a specific use for which the improvement is designed & the improvement must be so specially used; *(3) must be no market for the type of property & no sales of property for such use*; AND (4) improvement must be an appropriate improvement at the time of the taking & its use must be economically feasible and reasonably expected to be replaced. *9-11 case* (In Re Sept 11th Litigation) - failed Special Purpose Property Test (#3) bc FMV established when lessor closed on new lease 2 mos. prior. *Trinity Church case*: met Special Purpose Property Test bc no FMV; damages assessed based on takedown theory; creative lawyering bc no black-letter law on damage calculations; ct analogized other Torts concepts like eggshell ∏ (if church not compensated now, a future project may cause further damage resulting in greater liability to the one completing the project and loss of depreciation to Trinity Church) Note: Eminent Domain = just compensation (FMV)

RESTITUTION Restitution from "Innocent" Defendants Mistaken payment of money

*Mistake* is a large source of restitution litigation. A payor (∏) who pays $$ to a payee (∆) due to a mistake of fact is entitled to restitution from the payee or other beneficiary of the payment, even if the mistake is due to the payor's inattention, carelessness, or a shared mistake with the payee. Strongest argument is when *payor has no idea she's making a mistake* bc if a payor knew the $$ wasn't owed, then payor didn't make a mistake but knowingly took a risk or settled a dispute (key isn't if payor pd voluntarily but what payor knew when she pd). Payee's knowledge isn't an element--payee has notice when he has knowledge of facts that make it reasonable to conduct a further inquiry that would have revealed the truth. (In Sauer case, ∆ had knowledge/notice to inquire further.) Payee must pay back the undeserved benefit EXCEPT (1) there is some comparative fault/negligence by the payor (not a typo or other case of genuine mistake); or (2) payee suffers detrimental reliance + substantial change of position as a result of receiving the $$. *health insurance payment case* (Blue Cross v Sauer): ∆s were unjustly enriched when BC pd them by mistake; BC's carelessness was irrelevant; remedy = ∆s returned the money bc liable regardless of their state of mind/knowledge.

RESTITUTION Restitution from "Innocent" ∆s or Conscious Wrongdoers Quasi K

A restitutionary device -- A K IIL (vs. IIF) or a legal fiction created by the ct (treat as if there was a K) where the ct imposes an agreement and duty to pay on ∆ who knowingly accepted goods/service intending to benefit from them but didn't pay. An equitable form of restitution (disgorge unjust enrichment and achieve restitutionary result) so ct may require a showing of irreparable harm and inadequacy of a legal remedy. - Other *options for performance for an unenforceable K/ways to get around the SOF* = *part performance* or *promissory estoppel* (enforces an otherwise unenforceable promise if there was detrimental reliance -- typically financial). - *Quantum Meruit* = "as much as he has deserved"; both a K & restitutionary remedy; a measure of restitution for the reasonable value of services provided (usually FMV) when there is no enforceable K or an enforceable K with no price term. *"Innocent" Defendants*: - Recovery = actual amt of enrichment that it would be unjust for 1 party to retain (not amt of enrichment) (e.g. not value of the vintage car but value of the mechanic's services). *vintage car repair case* (Anderson [car owner] v Schwegel [mechanic]): parties didn't have a meeting of the minds re the meaning of the material term "restore," so no K existed; ct found car owner liable to mechanic under quasi-K; owner unjustly retained a benefit, i.e. reasonable value of services conferred by the mechanic *Conscious Wrongdoer* = ∆ who engages in misconduct (tortious or wrongful interference with ∏'s legally protected interests like conversion, fraud, duress, undue influence, opportunistic breach of K, trespass, misappropriation of financial assets, infringement of IP, breach of fiduciary duty) and is unjustly enriched by his unauthorized use so liable in restitution for the net profit attributable to the underlying wrong--profit includes value of the property taken. Restitution is measured by the largest measure of restitution rather than the smallest, recovering all profits ∆ earned. Has a punitive flavor bc it's a punitive remedy intended to remove all profit from ∆'s misconduct. ∏ can pursue quasi-K as a remedy for the enforcement of the underlying tort and argue for full disgorgement. *egg-washing machine case* (Olwell): *classic restitution case* where ∏ recovered more than he lost. Ct found that ∏'s implicitly promised to pay for the egg-washer & ordered full disgorgement. *Compensation for ∏'s damages & disgorgement of ∆'s profits are alternative remedies for the underlying tort (no tort, no unjust enrichment). So ∏ used the restitutionary device of quasi-K to enforce and collect on the underlying tort of conversion.* Cts want parties to enter into voluntary transactions--∆ should have negotiated an agreement and when he didn't, ct deterred him from converting property and proceeding independently without an agreement/forcing his will on ∏.

COMPENSATORY DAMAGES Tort

*Non-Economic (General)* Damages ~ subjective: - pain & suffering - emotional distress - hedonic damages (loss of quality of life) - capped in tort-reform states (see Tort Reform) - see Per Diem Argument *Economic (Special)* Damages ~ objective: - medical & hospital bills - lost wages - mostly immune from tort reform - see Offsetting Benefits/Collateral Source Rule NOT available in a wrongful death claim but AVAILABLE to injured party or in a survivorship claim (doesn't die from injuries immediately) brought by decedent's estate following injury by another's negligence.

COMPENSATORY DAMAGES One-satisfaction Rule

*One-satisfaction Rule = ∏ can't recover the same item of damage more than once*. *Pro rata* (majority): non-settling ∆ gets a credit against the judgment equal to the settling ∆'s share of the damages. (Two drivers were in a drag race. Driver #1 struck a pedestrian who suffered serious personal injury. Driver #1 settled the case before trial for $100,000. Driver #2 took the case to trial, resulting in a $500,000 verdict that apportioned 50% fault to each driver. In a jurisdiction that follows the pro rata approach to set-offs, Driver #2 will pay plaintiff $250,000). *Pro tanto*: non-settling ∆ gets a credit against the judgment equal to the amount of the settlement.

EQUITY & REMEDIES

*Remedies* = The manner in which the ct enforces a right when an individual is harmed/injured (remedy of damages; remedy of restitution; coercive remedy); choices to solve problems *Damage* = injury or harm *Damages* = compensation for loss Designed to: *Compensatory Damages* = compensate ∏ for harm suffered *Punitive Damages* = punish wrongdoers *Preventive Remedy* = prevent harm before it occurs so the issue of compensation never arises (declaratory or coercive = SP or inj) *Restitutionary Remedy* = restore to ∏ what ∆ gained at ∏ expense *Ancillary Remedies* = aid other remedies (atty fees)

EQUITY & REMEDIES Substitutionary & Specific / Legal & Equitable

*Substitutionary or legal remedies* are designed to restore ∏ to his rightful position/restore the injured party as nearly as possible to the position he would have been in had it not been for the other party's wrong (but-for-the-wrong rule) or use $$ as a substitute for what ∏ lost. Includes compensatory (most common) & punitive damages. *BUT doesn't really restore & $$ is a poor substitute* for loss because $$ can't replace the decedent -- what is lost is utterly irreplaceable. *Specific or equitable remedies* are designed to prevent harm to ∏ & restore the specific thing that was lost. Includes injunctions (most common) & specific performance.

COMPENSATORY DAMAGES Limitations on Damages Avoidable Consequences (Tort) & Duty to Mitigate (K)

*Tort = Avoidable Consequences* - affirmative defense - post-accident (contrast to comparative fault - plaintiff's pre-accident conduct that contributed to the injury) - ∆ bears BOP to show what a reasonable person in the ∏'s shoes would do (what would a reasonable Jehovah's Witness do? or a reasonable manic depressive do?) under the same/similar circumstances - considering risks, side effects, experimental vs. established treatment, etc. - ∏'s recovery limited if find consequences were avoidable; eliminates future recovery - don't be hypercritical of the injured party's conduct bc but-for ∆'s negligence, ∏ wouldn't be here - don't exalt ∆ to ∏'s detriment (Monday-morning quarterbacking) - *personal injury cases* -- How much must ∏ do to avoid consequences? *manic-depressive knee surgery case* (Small v. Combustion Engineering): ct found refusal of surgery objectively unreasonable but objectively reasonable for manic-depressive ∆. *Contract = Duty to Mitigate/Cover* - affirmative defense - UCC 2-712: whether at the time and place the buyer acted in good faith and in a reasonable manner, and it is immaterial that hindsight may later prove that the method of cover used was not the cheapest or most effective - where ∏ & ∆ had equal opportunity to reduce damages by the same act, ∆ is in no position to contend that ∏ failed to mitigate - don't hypercritically examine the injured party's conduct - *employment discrimination/termination cases* -- How much must ∏ do to mitigate? There's a spectrum of suitable employment . . . *professor case* (Ford v. Nicks): suitable employment for college prof wasn't selling real estate or high-school teaching job (although qualified to do both) but was college job 70 miles away *bridge concrete case* (Groves v. Warner): ct didn't limit damages because it found that Groves met its duty to mitigate damages and wouldn't permit a hypercritical examination of Grove's conduct; Warner could have contracted with TrapRock just as easily as Groves but chose not to, then was critical of Groves' decision to continue with Warner instead of switching to TrapRock; "where a choice has been required between 2 reasonable courses, the person whose wrong forced the choice cannot complain that one rather than the other was chosen. The rule of mitigation of damages may not be invoked by a K breaker as a basis for hypercritical examination of the conduct of the injured party."

COMPENSATORY DAMAGES Limitations on Damages Tort Reform (The Blind Men and the Elephant)

*Tort reform agenda* = common proposals include: #1 - limit recovery for noneconomic damages/caps on pain & suffering #2 - limit contingency-fee rates #3 - limit or abolish the collateral source rule (∆ gets setoff and credits that ∏ got from collateral sources) #4 - limit or abolish punitive damages #5 - limit or abolish joint & several liability #6 - judgments are paid over victim's life unless victim dies #7 - ∆s can recover atty fees/costs from plaintiffs who file frivolous or unsuccessful (no COA) claims #8 - shorten SOL or accelerate when the statute begins to run *(e.g. "The ∆ will argue ... If collateral source rule is in effect . . . This Rule is a hot topic of tort reform so need to ascertain whether our jurisdiction has abolished this Rule.")* States have adopted *tort-reform acts*. ST cts review these acts to determine if constitutional. UnCON arguments include *separation of powers, equal protection, due process or right to jury trial* bc don't get a jury trial if result is preordained, meaning regardless of jury award, the damages amt is reduced per the cap (*Arbino v. Johnson & Johnson - OH tort reform* CON).

ANCILLARY DAMAGES Remedial Defenses Unconscionability

- Procedural Unconscionability = absence of a meaningful choice or unfairness in the bargaining process (TOC) - Substantive Unconscionability = harsh or unfair one-sided terms In determining whether to enforce the terms of a contract of adhesion (standard form K drafted by 1 stronger party and signed by a weaker party who must adhere to the K and doesn't have the power to negotiate or modify the terms), courts have not looked only to the take-it-or-leave-it nature or the standardized form of the document but also to (1) the subject matter of the K; (2) the parties' relative bargaining positions; (3) the degree of economic compulsion motivating the adhering party; and (4) the public interests affected by the K. Note that class actions usually brought for violation of CON or civil rights or consumer cases, not mass tort cases (see below) *cell phone and FAA case* (Muhammad): agreement barred class claims; FAA says arbitration agreements covered by the Act shall be valid, irrevocable, and enforceable save grounds for revocation of any K such as fraud, duress, unconscionability, etc. Ct found the agreement signed by plaintiff was a contract of adhesion & unconscionable for ∆s to deprive plaintiff of the mechanism of a class-wide action because the public interest overrides the defendants' right to seek enforcement of the class-arbitration bar in the agreement. Factor #4 the most important factor in this case because, without class arbitration, these cases are too small and none would be filed individually ("if each victim were remitted to an individual suit, the remedy could be illusory, for the individual loss may be too small to warrant a suit - thus the wrongs would go without redress and there would be no deterrence to further aggressions . . . . the difficulty lies in the fact that her individual consumer-fraud case involves a small amount of damages, rendering individual enforcement of her rights, and the rights of her fellow consumers, difficult if not impossible").

COMPENSATORY DAMAGES Tort v. Contract

- Tort principles are better suited for resolving claims involving unanticipated physical injury. ∏s or consumers want Tort COA to avoid K UCC requirements like notification. In Tort, a party experiences unplanned & unanticipated loss so doesn't control his own destiny - K principles are better suited for resolving claims for consequential damage that the parties (could) have addressed in the K (Spring Motors). In K, parties voluntarily bargained for the terms & have control over their own destiny. - Litigation often *straddles* Tort (property damage, personal injury, negligence, strict liability) and Contract (economic loss, commercial parties, breach of warranties, UCC) -- may have a case that involves both (defective windows hypo) - SOL varies (typically 2 yrs for Tort, 4 yrs for K)

ANCILLARY DAMAGES Contempt Compensatory Civil

- civil contempt sanction (no jury trial) aimed at compensating ∏ for harm suffered as a result of ∆ violating the injunction - brought by ∏ who seeks damages or restitution - moving party's BOP = *clear & convincing evidence* - some ST don't recognize bc no right to jury trial

COMPENSATORY DAMAGES Problems in Evaluation Defamation

- public figure/public issue (actual malice = knowing falsity or reckless disregard for the truth + clear and convincing evidence = punitive damages presumed - private figure/public issue = negligence; must prove actual malice for presumed punitive damages - private/private = no 1st A issue - only CL

ANCILLARY DAMAGES Remedial Defenses Statute of Limitations

A period of time within which a lawsuit must be filed after the COA is said to have accrued; the period of time varies depending on the jurisdiction and the type of claim; a *threshold defense* bc if the SOL is violated, the claim is dismissed regardless of its merits. The *equitable discovery rule* preserves what would otherwise be time-barred claims, tolling the SOL from running until such time as ∏ knew or reasonably should have known that he was injured and that his injury/condition was caused by another party's tortious conduct (primarily in medical malpractice or toxic tort cases). This is an objective standard based on subjective knowledge (objective = what would the reasonable person with ∏'s knowledge have done?; subjective test = what did ∏ actually know?). The EDR is an essential mechanism for the preservation of toxic tort claims, where the manifestation of injury follows a period of significant latency. Discovery rule arguments are especially fact sensitive, and it is impossible to predict how these arguments will play out, as cts focus on the reasonable inferences to be drawn from the facts, not the facts themselves. If ∏ had actual or constructive knowledge, his claim will be time barred. The burden is on the party claiming the benefit of the equitable discovery rule to prove that she falls within it. If failure to file a lawsuit is bc you were defrauded out of the information, then the SOL is tolled. *beryllium plant deaths* (Debiec v Cabot Corp); see also *birth defects case* (O'Brien v Eli Lilly case (668 F.2d 704, 3d Cir 1981))

PREVENTIVE DAMAGES Injunctive Relief: Equity Permanent Injunction

A permanent injunction seeks to prevent additional harm where *harm is ongoing/already begun/already occurred* (e.g. permanent injunction to shut down an ongoing nuisance because harm is already occurring and trying to prevent ongoing harm). ∆ is an adjudicated wrongdoer; ∏ is his victim. ∏ wins unless the hardship to defendant is substantially disproportionate to the benefit, and sometimes even then. *Damages or restitution* may be needed bc some measure of harm already occurred - injunction addresses future while damages address the past to restore ∏s to their rightful position and remedy the harm that already occurred. eBay Test (∏ has BOP except for #3) -- irreparable harm & balancing have a different feel at this stage; more onerous for ∏ at prelim. stage: (1) Remedies available at law are inadequate (SEE RIPENESS + UNIQUENESS, SP, SCARCITY, & INABILITY TO CALCULATE DAMAGES). (2) ∏ suffered and continues to suffer an irreparable injury/harm. Although stated in the past tense, must show injury is ongoing; less difficult to prove at permanent stage when additional info has been gathered (vs at preliminary stage when much remains unknown). (3) Considering the balance of the equities/hardships between ∏ and ∆, a remedy in equity is warranted. Note the oddity of placing the burden on ∏ to show defendant's undue hardship. But despite the ct's insistence on ∏ demonstrating this, common sense and logic dictate that the ct's language notwithstanding, ∆ still bears the burden of proving undue hardship that will befall him. (4) That the public interest wouldn't be disserved by a permanent injunction/how public interest would be impacted by injunction. *boat dock case* (Forster): ct doesn't allow double recovery; if litigated correctly, ∏ should have injunction + consequential damages (3-year delay with no water enjoyment) + punitive damages (fraud). But instead got comp damages x2 so ct remanded for ∏ to choose between remedies awarded by trial ct. (ct states that if MS law requires some compensatory damages to award punitives, then compensatory damages = $1 and punitives = $10,000). *patent case* (eBay 2006): not just for patent cases; patent troll case where Mercexchange is seeking an injunction to gain leverage in negotiations for licensing fees with eBay (per Kennedy)

PREVENTIVE DAMAGES Injunctive Relief: Equity Preliminary Injunction

A preliminary injunction is an extraordinary remedy never awarded as of right -- asking the judge to (1) make a leap of faith based on a preliminary assessment of the law and facts to preserve the status quo or prevent harm from occurring because the harm is so severe that it cannot be allowed/so bad that $$ won't compensate for it and ∏ will be irreparably injured; and (2) deny the other party's PDP and SDP rights including 7th A right to jury trial (in most jurisdictions there is a right to jury trial at law but not in equity). But bc (1) the ct is more likely to err when it acts on partial information after a preliminary hearing; (2) no wrongdoer has been identified, cts at the preliminary inj stage routinely find no irreparable injury in injuries they would consider irreparable after a full trial. To override the risk of error, the ∏'s risk of injury must be greater & more irreparable than the ∆'s risk of injury and intrusion on DP rights. - Can't ask for equitable remedy to thwart the other parties' right to a jury trial (see BC v Sauer mistaken payment case--∏ asked for equitable remedy of constructive trust to thwart ∆'s right to jury trial but case only needed a legal remedy). - The nature of the remedy drives the right to jury trial. Test to reconcile right to jury trial when ct of law and equity merge: (1) Look to historical analog: what does this COA most closely resemble in the period before law and equity merged? would this COA result in a jury trial before the merger? *(2) What is the nature of the remedy being sought?* *union case* (Chauffeurs Local v Terry): ct applied 2-part test. Re #1, union said COA most closely resembled a trustee/beneficiary relationship not entitled to a jury trial pre-merger . . . workers said COA most closely resembled an atty/client relationship & legal malpractice entitled to a jury trial pre-merger; SCt liked equitable trustee analogy (no jury trial) BUT ∏ also brought legal breach of K action (jury trial) so #1 = equipoise: 1/2 equitable COA and 1/2 legal COA. Re #2, nature of remedy sought = comp damages for back pay, a legal remedy. So ∏ entitled to a jury trial.

PREVENTIVE DAMAGES Injunctive Relief: Equity Specific Performance (SP)

A special form of injunctive relief -- an order to ∆ to perform his K. Money value of a right to SP is expectancy damages. Real estate are entitled to SP. When SP is unavailable (inadequate remedy), full disgorgement becomes the substitute. As in Campbell Soup, cts frequently grant specific performance of Ks for the sale of ordinary goods if scarcity, time constraints, or the sheer size of the K make it difficult or impossible to cover. Other examples include unique, perishable *grapes* that P couldn't get a substitute for on the open market; *gravel pit* bc P had no other source for gravel; *jet fuel* availability enforcing a K to supply an airline's fuel; *tomatoes* enforcing a K to sell tomato crop bc a reliable supply wasn't available on the open market. *Manhattan billboard case* (VanWagner): not entitled to specific performance bc data exists that can be used to determine damages (no inability to calculate damages) BUT judge wrong here in that ALL property interests are unique.

COMPENSATORY DAMAGES Problems in Evaluation Wrongful Death Claim

A wrongful death claim is a ST statutorily-based, derivative COA brought by a qualifying beneficiary to recover for pecuniary loss suffered as a result of their loved one's death from a tort (negligence) that was the *proximate cause of the death* (∆ will argue he wasn't the proximate cause). Typically filed when the victim dies immediately from another party's act of negligence that results in a fatal injury (in contrast to a survivorship claim). *Principal measure of recovery = "pecuniary loss"* which encompasses actual financial contribution/support to dependents: - compensation for loss of service like value of household chores, homemaking, nurture/education/guidance to children - funeral expenses - MOST ST allow for loss of society or consortium like love, affection, care, attention, companionship, comfort, protection - MOST ST don't allow for grief, sorrow, mental anguish, emotional distress, or other negative experiences resulting from the death. Some deaths cause *minimal recoverable damage* so wrongful death claim difficult. Some ST expanded recoverable damages beyond financial loss to loss of consortium/society & intangible services: (1) Retired persons (2) Children (in most cases, don't admit evidence re projected income but can claim if currently earning income ) (3) Adults without dependents (some tort-reform ST require a showing of *financial dependence* on the deceased child as a prerequisite for parents to recover BUT if tort reform isn't in play, then parents entitled to full pecuniary loss recovery. Jury awards can be based on the perceived *quality of the relationship (argue both ways on exam)*: (1) parent & child ~ some ST allow evidence of parent-child relationships but challenging (more than #2 H/W) (2) husband & wife ~ some ST allow evidence of damaged marital relationship (less challenging than #1 P/C) (3) remarriage - most ST conceal from jury or instruct jury to ignore

PREVENTIVE DAMAGES Injunctive Relief: Equity Declaratory Judgment

An equitable remedy sought when there is some underlying legal ambiguity or uncertainty. The matter must be ripe (requires a current justiciable case or controversy) and cannot be sought for the resolution of hypotheticals. - DON'T need to show irreparable injury - Insurance disputes are among the most common claims resolved by DJ ("case within a case" -- insurer disclaims coverage, the insured often asks for a DJ re whether the policy or a clause applies; based on that declaration, the carrier will/will not have a duty to defend and indemnify the insured for the claim brought; - Pleadings are important (need to adequately explain to the ct why ripeness is in play, etc.) - Can seek supplemental or injunctive relief (i.e. shows propensity) to enforce the DJ if the other party fails to comply, which can be prima facie evidence of irreparable harm (Ripeness) - No contempt if DJ isn't followed *state gasoline tax case* (Nashville, Chattanooga, & St. Louis Railway v Wallace): A federal court may issue a declaratory judgment when an actual controversy exists. A declaratory judgment is not a mere advisory opinion because an adjudication of actual rights is made.

PREVENTIVE DAMAGES Injunctive Relief: Equity Scope of Injunction

Because it is an extraordinary remedy, the scope of any injunction granted should be *narrowly tailored* to address the actual harm or the issue in the case. ∏ should get only the bare minimum -- only what is needed. ∏ is entitled to a remedy based on the offense, meaning the scope of relief can't exceed the underlying scope of the wrongdoing. More *pressing/acute* at preliminary stage bc evidence is unknown compared to permanent stage where ct knows more. *age discrimination case* (Marshall v. Goodyear Tire): manager discriminating based on age at one facility; lower ct grants nationwide injunction against age discrim; appellate ct says injunction too broad and overinclusive -- no evidence of widespread age discrim at all facilities (other remedy is back pay or compensatory remedy to employee, restoring him to the position he would have occupied but for the wrongful discharge).

RESTITUTION Ejectment

COA for restoration of real property wrongfully taken; now Action to Quiet Title

RESTITUTION Trover

COA for restoration of the value of the thing wrongfully taken bc it's now gone; now Conversion *jewel case* (Armory): no replevin because defendant took the jewel - it was gone - ct awarded damages as if jewel was worth substantial amount even though no evidence to support that - gave ∏ benefit of the doubt

RESTITUTION Replevin

COA for restoration or recovery of the actual personal property IF the property still exists; narrower scope than injunctions. An EXCEPTION to statement that damages & restitution don't co-exist: may need replevin and damages if the property value decreased *Brook case* and *O'Keefe case (Property I)*

PUNITIVE DAMAGES

Common Law -- CON SDP and Gore Guideposts -- CON PDP

RESTITUTION Contribution and Indemnity

Contribution = partial payback (but if no J&S liability in the state, then contribution is a moot point). Indemnity -- if the one without fault pays, they can seek full indemnification for the full amt (e.g. store can seek indemnification or full/complete payback from upstream manufacturer if store is the only one named in products liability case)

ANCILLARY DAMAGES Contempt Criminal

Criminal charge/offense for willfully violating an injunction; sanction is aimed at punishment or vindicating tribunal's integrity (usually is a fixed fine or fixed jail sentence, e.g. 30 days); BOP = *beyond a reasonable doubt* (1) may be imposed only after a full jury trial - must prove beyond a reasonable doubt (2) seeks to punish ∆ for a past offense (3) prosecuted by ST (∆ charged with criminal contempt; case heard by jury like any other crime; judge sentences) (4) fixed fines or jail time for past misconduct - don't get out for good behavior *mine worker union case* (United Mine Workers v Bagwell): fee-shifting case; contempt fines for widespread, ongoing, out-of-court violations of a complex injunction constitute criminal sanctions entitling the penalized party to a jury trial. The $642,000 that was imposed for the union's disobedience is for a punishment, a civil contempt - punishing them for what they have ALREADY done. ISSUE = were these criminal sanctions? YES because requirements (see above) met - contempt fines for widespread, out-of-ct violations of an injunction are criminal sanctions entitling penalized party to a jury trial. BUT, what happened here is similar to being punished for a criminal violation, except here the judge give the union workers as much Due Process they should've and would've gotten (in criminal trial) criminal contempt proceeding. If coercive civil - then, the union workers complying w/ the order would've purged the contempt. SCALIA dissent: "the use of the civil process for contempt sanctions makes no sense except as a consequence of historical practice; we will have to decide at some point if this extraordinary means of enforcement is still warranted" ... meaning the judge issues the sanction when the judge was the one affronted -- bc judge has unfettered power, if appealed and a close call, appellate ct should empanel a jury

ANCILLARY DAMAGES Contempt Coercive Civil

Ct imposes sanctions or conditional penalties (fines or imprisonment) to coerce ∆ into compliance/obedience; penalties must be conditional meaning ∆ must be able to avoid them & ct must specify how -- ∆ "holds the keys" to the jailhouse door or is in a position to purge the contempt by complying with the ct's order. When determining the size of the fine, the ct can consider ∆'s wealth. Can have coercive contempt, then charge party with criminal contempt. *3 step process* (City of Yonkers segregated housing case): (1) ct issues an injunction (2) ct adjudicates a violation and threatens specific fines for further violations (3) party continues violating order so found in contempt and sent to jail or fined *2 step process* (Middletown teachers' union strike case - rare to jail the "rank and file" - simplest form of coercive contempt is to imprison the contemptor until he complies) (1) ct issues an injunction (2) party violates order and found in contempt so sent to jail or fined

COMPENSATORY DAMAGES Limitations on Damages Per Diem Argument

If allowed by ST, the per diem argument is a *suggestion or guidance* by ∏'s lawyer to the jury for a concrete, tangible method to *define or quantify ∏'s pain and suffering (daily value)* to calculate general damages bc value hard to measure. If no suggestions or guidance given, jury awards can be random and incalculable. Judge may give a careful, cautionary jury instruction that the argument can't be used as evidence. *grocery store injury case* (Debus v. Grand Union Stores): plaintiff's lawyer suggested to the jury, in a per diem argument, a method for quantifying ∏'s pain and suffering. Ct upheld on appeal - didn't invade province of the jury; jury given cautionary instructions; defense attorney had opportunity to rebut in closing argument.

RESTITUTION Restitutionary Devices Constructive Trust

Equitable form of restitution & legal fiction created to compel someone to convey a property interest that he unfairly holds or can't in equity & good conscience retain. ∏ becomes equitable owner (beneficiary); ∆ (legal owner) becomes a trustee for the ∏, holding the ill-gotten gains as an asset for the equitable benefit of ∏. ∏ can trace assets through a series of exchanges. After the constructive trust is established, ∆ must account for profits earned with the trust property (SEE ACCTG FOR PROFITS). ∏ gains priority over other potential creditors in a potential bankruptcy proceeding against ∆ who can't levy on the property bc it no longer solely belongs to ∆. An equitable form of restitution so ct may require a showing of irreparable harm and inadequacy of a legal remedy. *condo case* (Paoloni): ∆ defrauded ∏ & used $$ to buy a condo; ∏ given a choice (available with conscious wrongdoers): damages or disgorgement of profits from the fraud; ∏ also gets profits from condo. Compare/contrast to equitable lien & Robinson case. *CIA book case* (Snepp): ct imposed a constructive trust for the govt's benefit on all profits that ∆ may have earned from publishing the book in violation of his fiduciary obligations to the CIA (per his employment agreement, he agreed to not divulge classified information or publish without pre-publication CIA clearance); CIA could then collect directly from the publishers

RESTITUTION Restitutionary Devices Equitable Lien

Equitable form of restitution and remedy for a debt created by the ct -- A money judgment secured by a lien on specific property that ∏ had an interest in but was deprived of; protects against the risk of ∆'s insolvency; a right to have property subjected to the payment of a claim; treats ∆ as owner but gives plaintiff a lien (vs. constructive trust which treats ∏ as [equitable] owner). Strongest remedy a court can give ∏ (victim of a conscious wrongdoer or misappropriating fiduciary) is a choice between a constructive trust & equitable lien: - If values increase or property worth more than was lost, ∏ wants constructive trust. - If values decrease or property worth less than was lost, ∏ wants a $$ judgment for the full amt of the loss & an equitable lien on the property to secure the $$ judgment. - Secures the pro rata share of any improvements made. *Robinson case*

RESTITUTION Restitution from Conscious Wrongdoers Accounting for Profits

Equitable form of restitution to recover profits acquired through wrongdoing. Some cts don't want to decide what % should be disgorged & order party to give it all up (Maier) while other cts are willing to slog through evidence and experts and math to figure out the disgorgement amount (MGM); the more culpable the actor, the less likely that the ct will spend time figuring out the dollar amt to disgorge and more likely that the ct will throw up its hands and disgorge everything. Bc the nature of the remedy drives the right to jury trial, ∏ may attempt to label the relief as acct for profits to evade ∆'s 7th A right. *scotch whiskey case* (Maier): full disgorgement and restitution *movie case* (MGM): 20% profit disgorgement (compared to less in Maier)

COMPENSATORY DAMAGES Problems in Evaluation Individual v. Aggregate Litigation

Evaluate each ∏'s damages individually (e.g. 1 ∏'s pain & suffering) OR apply a categorical approach by determining what pain & suffering is worth for all ∏s (e.g. apply same amt to each ∏ regardless of individual pain and suffering) *Navajo horses case* (Hatahley): ct awarded consequential damages & used FMV to determine pain & suffering amt, then applied to all ∏s; HENKE disagrees with this consequential damages award bc no proximate cause proved yet ct awarded relief, but he agrees with aggregate approach bc it's easier to handle mass torts in the aggregate vs. individually (specific remedy for each ∏)

COMPENSATORY DAMAGES Limitations on Damages Proximate Cause (Scope of Liability)

For ∏'s prima facie claim of proximate cause, ∏ must prove both cause-in-fact and proximate cause in a negligence case. The scope of liability is limited to those harms whose risk made the actor's conduct tortious--the harm must match the foul. *Proximate cause* isn't about causation but logic, fairness, common sense, & the public's interest in the proposed solution; a policy-laden, judicially created mechanism where cts draw lines beyond which liability will not extend even though ∆ undoubtedly caused the harm (bc defendant isn't the proximate cause/not liable for random injuries with incurred costs passed on to the consumer - see Palsgraff and mink cases - what result is expected from blasting? not killing mink cubs but barn collapsing and killing the minks) *Should limits of liability depend on whether the suit is in contract or tort?* There is no strict liability for breach of K bc K liability is based on mutual agreement, so must have foreseeable damages in breach-of-contract COA. In tort, liability is similarly limited to foreseeable consequences of ∆'s carelessness. The amount of care that a person must take = probability and magnitude of the harm that may occur if he doesn't take care. In Swiss Bank, Posner said it was unreasonable for the bank to estimate its probable liability, particularly bc ∏ had no contract with bank and paid nothing for the bank's services and so was unaware of ∏'s particular needs or foreseeable consequences if transactions weren't handled correctly . . . circumstances were too remote (compared to Palsgraff). *Swiss Bank wire transfer case* (Evra Corp v. Swiss Bank): ∏ suffered consequential, not actual, damages. No K between ∏ & bank. Should ∏ be awarded damages in tort (negligence) absent a contract because damages were generally foreseeable? HENKE = YES: More than breach of a contract-based duty, a breach of tort-based duty (resulting in personal injury or property damage) supports a broader array of consequential loss because a tort leads to unplanned for & unanticipated loss. In K, parties could have negotiated a contingency/liquidated damages clauses to define the range of loss in the contract. This option isn't available in tort. POSNER = NO: disagreed in this case and didn't find a distinction; plaintiff (not the bank) was in the best position to avoid this incident and mitigate this loss; this outcome is too remote and too unforeseeable - bank had no idea of what their breach of reasonable care might be (Palsgraf) - some accidents are so bizarre that you can't take reasonable steps to avoid the harm . . . cheapest accident avoider here was the plaintiff, not the bank; Swiss Bank pays nothing - although their negligence is probably not worth $2.1 million in consequential damages, it's worth something . . . yet hard to determine damages because plaintiff suffered no actual loss.

PREVENTIVE DAMAGES Injunctive Relief: Equity Mootness (DON'T DISCUSS IF HARM IS ONGOING)

If a wrongdoer voluntarily ceases his wrongdoing in the face of an injunction, that action alone doesn't render the case moot (no injunction needed). Rather, ∆ must additionally persuade the ct that there is no reasonable expectation or it is *exceedingly unlikely* that the wrong will be repeated so propensity no longer exists. This is difficult to show bc the moving party has already proved ripeness and propensity, meaning this past conduct hurts the defendant's *credibility* and it arguably justifies inconveniencing the defendant to make sure that plaintiff is protected. So MOOTNESS comes down to credibility -- no legal standards . . . . ∆ looks judge in the eye & judge either believes ∆ or he doesn't. ∆ has burden of proving MOOTNESS - that an injunction is no longer needed - the ct describes the ∆'s burden as "a heavy one" bc ∆ must show the ct that there isn't the slightest threat that ∆ will attempt any future activity in violation/subsequent events make it absolutely clear that the alleged wrongful behavior couldn't reasonably be expected to recur. *board case* (US v Grant): statute prohibits people from sitting on different boards with commingling interests; defendant removes himself from these boards to comply with the statute; trial ct judge believes defendant; SCt deferential to trial ct judge bc he looked defendant in the eye and believed him to be credible, the SCt didn't. But ct left door open for plaintiff in case defendant begins harm again.

COMPENSATORY DAMAGES Limitations on Damages Economic Loss Rule

In a tort-based claim based on economic harm (lost profits proven by actual financial loss), *∏ must show personal injury or property damage to recover for economic loss* (watch for ct creating a constructive property interest to permit recovery for economic loss even though no one "owns" the marine life). Cts also "get to no" and limit liability using other overlapping, alternative arguments like foreseeable vs. unforeseeable, direct vs. indirect, proximate vs. remote, duty vs. no duty. - *commercial party + commercial party* = UCC applies, never Tort law (Spring Motors - a commercial buyer seeking damages for economic loss resulting from the purchase of defective goods may recover under the UCC against parties in the chain of distribution [no privity required] but NOT in strict liability or negligence bc economic expectations protected by the UCC aren't entitled to supplemental protection by negligence principles) - *consumer + commercial party* = almost all ST now apply UCC principles to cases of economic loss; few ST apply strict liability in Tort *Chesapeake Bay "drawing a line in the wet sand" pollution case* (Pruitt v. Allied Chemical): all ∏s could show direct economic losses that were foreseeable & proximate; but the ct "got to no" using direct vs. indirect loss, drawing the line at the water's edge, bc "the set of potential ∏s seems almost infinite." *BP v. Exxon cases*: like Pruitt, MANY individuals impacted and all file lawsuits; BP = no litigation & voluntary fund; Exxon = 19 years of litigation resulting in dollars to litigation not victims

COMPENSATORY DAMAGES Problems in Evaluation Dignitary Torts

Include assault, false imprisonment, malicious prosecution, IIED, libel, slander, invasion of privacy, battery. Similar to pain & suffering valuation, dignitary torts present *valuation problems* bc, although offensive, there is no physical harm. ∆'s motives and the nature of their conduct, usually relevant only in punitive damages, become relevant here. On appeal, cts often use *Comparative Verdict Review* or *Maximum Recovery Rule* (see Limitations on Damages - Remittitur) for guidance on *remittitur* bc cases are difficult to value; motions for remittitur often granted bc judges think juries are awarding punitive damages disguised as comp damages in response to ∆'s egregious behavior *jail strip-search case* (Levka v. City of Chicago): compared verdict to other verdicts in similar cases for guidance on remittitur; appeals ct found jury award was grossly excessive and must be reduced, comparing the case, aggravating circumstances, & jury award to the same factors in other cases. Are these punitive damages in disguise? *coffin case* in MI - awarded $60,000 to deceased's relatives *judge coffee case* Zarcone v Perry - awarded $80,000 comp damages & $60,000 punitive damages *Walmart case* awarded customer $3,500 after employees accused him of harassing a female employee

COMPENSATORY DAMAGES Limitations on Damages Liquidated Damages

Intended to be a close estimate of actual damages and defined parameters of future loss to avoid litigation. A liquidated damages clause is enforceable UNLESS the clause is *contrary to public policy (penalty)* or *unconscionable (unequal bargaining power)*. Is the clause *enforceable or unenforceable?* (1) Is it *contrary to public policy* (penalty)? - Look at relationship to actual damages. Clause is a penalty (and unenforceable) if disproportionate to actual damages. - Would it be difficult to evaluate actual loss? Clause is a penalty if it's not difficult to evaluate actual loss. - One size fits all? Be suspicious of an overbroad liquidated damages clause that states several obligations of different importance but the clause provides the same liability for breach of any of them (1 number covering all possibilities shows parties didn't really try to match liquidated damages to actual damages) . . . the more nuanced & calibrated the liquidated damages numbers are, the more likely it will be upheld. (2) Is it *unconscionable*? Progression of unconscionability - even though both parties are commercial entities with equal bargaining power, some cts won't enforce liquidated damages clauses if unconscionable. But some cts are weary of second-guessing freely bargained-for liquidated damages clauses and are therefore likely to defer to intent of parties absent a showing of unconscionability or if one/both of the parties are consumers (extra protection by the ct) (see AT&T v. Concepcion) *TWA case*: liquidated damages clause unenforceable bc it was a penalty; liquidated damages had no relationship to/bearing on Interface's actual loss (unpaid rent - consequential damages); one size fits all because all possibilities covered by 1 number; ct found unconscionable despite parties freely agreeing and equal bargaining power. *Ship tied up case* (Farmers Export): liquidated damages clause enforceable bc it wasn't a penalty but an attempt to estimate actual future damages; relationship between actual damages and liquidated damages clause bc numbers were almost identical. *Law firm managing partner case* (Coady): one size fits all

COMPENSATORY DAMAGES Limitations on Damages Remittitur

Judges analyzing a ∆'s motion for remittitur to reduce ∏'s verdict should explore if the verdict is so high that it *"shocks the judicial conscience?* Given the subjective nature of this standard, cts have jurisdictionally employed 1 of 2 techniques to make the inquiry more concrete: (1) *Comparative Verdict Review*: Compare/contrast this verdict to other verdicts in similar cases (Levka jail strip-search case) (2) *Maximum Recovery Rule*: Evaluate how high each category of damages could have been in this case based on the judge's experience (e.g. as the specially assigned product liability & toxic tort judge). The motion for remittitur is *granted* if the jury verdict *exceeds* what the judge considers to be the reasonable maximum; the motion is *denied* if the jury verdict is at or below what the judge considers to be the reasonable maximum. If the motion for remittitur is granted and the jury verdict is reduced, then the plaintiff has 2 options: (1) accept the lower award and the case is complete; or (2) reject the lower award and retry the case -- the judge can limit the trial to damages or liability + damages. These choices ensure the ∏'s right to a jury trial (11th A) is preserved bc ∏ has a choice. *coffin case* in MI - awarded $60,000 to deceased's relatives *judge coffee case* Zarcone v Perry - awarded $80,000 comp damages & $60,000 punitive damages *Walmart case awarded customer $3,500 after employees accused him of harassing a female employee

RESTITUTION Subrogation

Substituting one party's rights for another's rights -- one claimant is substituted for the other. The person asserting subrogation gets exactly the rights (not more, not less) of the person to whom he is subrogated. Typically involves an insurer's right to be reimbursed out of the insured's tort recovery - the insured subrogates his rights to the insurer or the insurer who pays the victim's medical bills is substituted for the victim and allowed to assert his claim against the tortfeasor.

RESTITUTION Restitution from "Innocent" Defendants Mistaken improver

Originally many cts said that a mistaken improver who built on another property owner's land had no remedy except if the property owner silently accepted (knew what was happening but stood by silently). Now most states have enacted statutes to protect the mistaken improver who made a mistake of fact but reasonably believed he owned the land and in good faith erected a bldg on another's land. This conferred a benefit on the property owner (∆), who was unjustly enriched. The mistaken improver (∏) is entitled to restitution from the property owner to recover the value of the improvements. Cts require a forced exchange as the remedy where the property owner must either (1) pay the improver the amount by which the value of his land has been improved; or (2) convey the land to the improver for the amt of the value of the land without the improvements (allow the mistaken improver to purchase the land minus the value of the improvements). If the mistaken improver had *constructive notice* (e.g. record notice but mistaken improver didn't check), cts are split (argue both on exam): - mistaken improver still entitled to restitution even though he had constructive notice and the mistake is his fault (LAYCOCK) - a forced exchange & unCON taking or condemnation of private property by private parties for private use--consider if this is an equitable remedy? can structure be removed? shouldn't constructive notice sway things in favor of the property owner? Because a forced exchange is required, cts should be more interested in just how careless the mistaken improver was (i.e. state of mind). No unjust enrichment for *encroachment* bc no benefit conferred on the neighboring property owner (e.g. bldg extends a few inches over the property line). Encroachments are conveyed for a price or an easement is granted for use of the property *bldg on lot case* (Somerville v Jacobs): dissent says the party who made the mistake/failed to exercise reasonable care must suffer the hardship, not the party who was without fault. But in this case, ∏ is favored even though ∏ the only party who made a mistake and had a duty to determine which lot was the proper one.

PREVENTIVE DAMAGES Injunctive Relief: Equity Bonding Requirement

Per FRCP 65, ∏ is required to post a bond for TRO or prelim inj. -The bond guards against an erroneous grant of preliminary relief that is later reversed to the ∆'s detriment -- the bond protects and compensates the ∆ for harm. It forces ∏ to take seriously the dramatic remedy requested. ∏ must put up bond and is liable up to bond amt, which is determined by the ct -- if amount too low then request more or appeal. Can be waived at ct's discretion (e.g. party can't secure a bond). *state prison contractor case* (Coyne-Delany v Capital Development Bd): plaintiff up $5,000 bond; defendant asked but ct refused to increase amt to $50,000 [D's atty didn't appeal]; case law changed & judge reversed; harm to defendant = $56,000

ANCILLARY DAMAGES Remedial Defenses Statute of Repose

Period of time after which a claimant is prohibited from filing a lawsuit even if COA hasn't yet arisen; ∆ can then rest secure knowing there won't be any suits filed (e.g. builders, architects).

RESTITUTION Rescission

Rescission is a COA in restitution following a breach of K where the K is rescinded & the parties are restored to their pre-K position (reverse all benefits that may have been exchanged as part of the K). Avoids the risk of error from speculating about litigating the decline in value and resulting damages. Rescission is most advantageous when there's a substantial change in value since the K was created (e.g. *terminate case*: risky to award damages because don't know the total residual reduction in value of the house from termite damage; value of house changed so rescission is the better option). But if no change in value since the K was created (time from original transaction to rescission), then no advantage between rescission & damages. - If grounds for rescission are substantial, ∏ can choose to rescind or enforce the K & sue for damages, subject to SOL or laches defenses - If K can't be reversed, ∆ must pay the FMV of the benefit received - e.g. FMV of materials removed in land fill case, not diminution in value of land. - Similarly, when SP isn't available or an inadequate remedy (e.g. real estate buyers entitled to SP), *full disgorgement becomes the substitute* if: - Breach was profitable (breach led to gains greater than the breaching party could have earned by performing the K) - Breach was intentional/deliberate by a conscious wrongdoer who is motivated by the potential for extra profit *Typical COA that lead to Rescission*: (1) Duress (coercion) (2) Misrepresentation = misrepresentation of a material fact that was the basis of the bargain - a statement made with the intent to induce reliance, other person relies on statement, & harm results - fraud (Mutual case) - silence (Property I case: house haunted and seller silent/covered it up) - negligent misrepresentation (book of mushrooms case; typically goes to relationship with speaker) - innocent misrepresentation (seldom get money damages but basis for rescission) (3) Mistake - misunderstanding/mutual mistake of fact - a mistaken belief by both parties that goes to basic assumptions of the K and defeats the purpose of the K - unilateral mistake (mistaken bidder) (4) Substantial Breach of K *land fill case* (May v Muroff): breach of real estate K & restitution - disgorgement in lieu of specific performance; specific performance was no longer available (land with fill) because defendant sold fill, so ∏ buyer was awarded full disgorgement (full value of the materials removed, not diminution in value of land) *key man smoker life insurance policy* (Mutual Benefit): intentional misrepresentation; values changed dramatically; judgment ordered rescission of a life insurance policy so parties put back to their original position before the K.

PREVENTIVE DAMAGES Injunctive Relief: Equity Scarcity

Resource becomes scarce & can't be replicated in the open market *Campbell Soup case*: this case can also be argued within the context of uniqueness (probably best argument) and inability to calculate damages; some would say this was an efficient breach of K except that defendant was opportunistic but short-sighted and damaged his reputation

ANCILLARY DAMAGES Contempt

Ruthless or toothless --- The enforcement remedy for equitable decrees and coercive orders. *Where did contempt occur?* Direct = in ct's presence; usually no jury trial bc judge has unfettered discretion in her courtroom but no "serious" criminal penalties without full procedural protection Indirect = outside ct's presence (contumacious -- stubborn or willfully disobedient -- conduct); may need jury trial; can be criminal or civil

PREVENTIVE DAMAGES Injunctive Relief: Equity Temporary Restraining Order (TRO)

TROs are designed to prevent irreparable harm that will occur even before a preliminary injunction hearing can be held -- issued when what is about to happen is so bad that you don't have time for a preliminary injunction (e.g. domestic violence); may be issued ex parte but exceedingly rare especially in 1st A context (see FRCP 65) -- but see Vuitton case where ex parte injunction was upheld based on a showing of prior conduct; dissolved in 14 days or transitioned to preliminary injunction. *Bonding requirement applies.* SEE COLLATERAL BAR RULE *white supremacy rally case* (Carroll v Princess Anne): *ex parte* injunction issued under ST law; case not moot bc contested authenticity of injunction but didn't violate it - to find the case moot now would penalize them for following law re contesting vs. violating -- and continuing vitality of controversy between parties bc petitioners want to continue their activity (SCt decided in Walker v City of Birmingham that the proper procedure was to seek judicial review of the injunction and not to disobey it - can't defend contempt charges by asserting unCON of injunction -- so here, "in view of the continuing vitality of petitioners' grievance, we cannot say that their case is moot..."

PREVENTIVE DAMAGES Injunctive Relief: Equity Winter Test

SCOTUS articulated a 4-part test to determine if prelim inj should be issued. Historically, cts evaluated the 4 factors on a sliding scale, meaning if the moving party was especially strong on #1 or #2, the ct would apply the sliding scale to #3 and #4 so these arguments could be less compelling. The continued viability of this sliding scale approach was called into question by the Winter case. So now unclear if cts will apply the sliding scale (several fed circuit cts interpret to mean sliding scale no longer applies). Thus complete and full proof is needed for all 4 factors. ∏ has BOP to establish: (1) ∏ likely to succeed on the merits in the future . . . moving party must convince the ct that it will support ∏'s contention after a full trial on the merits (crystal ball test) (2) Irreparable harm to ∏ if injunction is denied -- ∏ to suffer irreparable harm if preliminary relief is denied (SEE RIPENESS . . . . "As to the 2nd factor, as discussed previously, this matter is ripe for preliminary injunctive relief based on the imminent threat of irreparable harm"). (3) *Balance of equities tips in ∏'s favor* -- balance #2 with harm to ∆ if inj isn't granted . . . . "the imposition of an equitable remedy must not itself work an inequity on the other party" (former chief judge of NY Ct of Appeals Judge Kaye in the Van Wagner case) (4) Injunction is in the public interest (if applicable) (this was a critical consideration in Winter case -- per Roberts the overall public interest tipped strongly in favor of the Navy; note Ginsberg's dissent: env harm is a classic prelim inj case. *sonar Navy case* (Winter v Natural Resources Defense Council 2008): ct denies preliminary injunction request for EIS before use of sonar in Navy training activities; plaintiffs strong on #1 and #2

PUNITIVE DAMAGES Constitutional Considerations PDP

SCt outlined 3 PDP requirements: - Exacting jury instruction given by judge to include the Gore Guideposts and leave nothing to the jury's imagination - Probing de novo review by Dist Ct judge of any jury verdict - If appealed, appellate ct conducts a de novo review of the record The double de novo review is unique to the PDP requirements for punitive damages.

RESTITUTION

Shift from ∏'s loss to ∆'s ill-gotten or consequential gains. The remedy for unjust enrichment is restitution (restoration/restoring status quo), which can be legal or equitable--an alternative remedy entirely distinct from damages (choose restitution or damages but NOT both!) that is most attractive when the ∆'s unjust enrichment exceeds ∏'s loss. ∆'s culpability (negligence, recklessness, fraud) translates to the % of disgorgement. "Benefit" denotes any form of advantage - can confer a benefit by adding to another's property and saving another from expense or loss. (e.g. Kate Moss brings an invasion of privacy COA against Gap for using a look-alike; her damages are de minimis so better to demand restitution bc Gap's gain is more substantial than her loss) Generally unavailable to *officious intermeddlers* bc no mutual assent & no K; OI can't deliver unrequested goods/services and then demand payment for the benefit (A leaves for vacation and B mows A's lawn without a K; B becomes an OI if he demands payment that he isn't entitled to). Different from quasi-K where a person knowingly accepted the goods/service with the intention of benefitting from them without providing compensation.

PREVENTIVE DAMAGES Injunctive Relief: Equity Ripeness ~ Prophylactic Relief

To what extent can the ct *enjoin or prevent lawful activity/conduct* (as it was asked to do in Nicholson)? (Contrast to Almurbati and Humble Oil where injunction sought to prevent unlawful activity.) *halfway house case* (Nicholson): prophylactic injunction & anticipatory nuisance to prohibit lawful use as a halfway house to eliminate the risk of harm; re 1st issue, case wasn't ripe bc no demonstrated propensity -- based only on neighbors' fears re increasing crime and decreasing property values -- ∏s couldn't show data re propensity for halfway house to actually cause harm ("No court of equity should ever grant an injunction merely bc of the fears or apprehensions of the party applying for it. Those fears or apprehensions may exist without any substantial reason. Indeed, they may be absolutely groundless. Restraining the action of an individual or a corp by injunction is an extraordinary power, always to be exercised with caution..."). re 2nd issue, ct can enjoin operation of an existing nuisance but can it enjoy an anticipated nuisance? Ct must additionally consider (e.g. in CL nuisance cases) that it may be preempting the legisl branch & substantive laws like zoning for activities it has deemed lawful. Compare *Pepsico case* where Pepsi sought an injunction to prevent a former employee from divulging confidential info, trade secrets, and working for competitor Quaker - was this really a noncompete imposed by the ct but never bargained for by Pepsi or agreed to by employee? Did Pepsi get a noncompete without the usual compensation to the employee? Note that ct found that employee couldn't be trusted, which exacerbated the situation. Prophylactic relief often needed bc of inevitable disclosure theory - employee is human and so will inevitably use information gathered at Pepsi regardless of confidentiality agreement, etc.

PREVENTIVE DAMAGES Injunctive Relief: Equity Uniqueness

Uniqueness = property is irreplaceable and unique bc no 2 parcels of land or the resources on the land are the same & cannot be replaced by $$ (similar to personal property, heirlooms). *timber case* (Pardee v. Camden Lumber): land and timber are unique -- irreplaceable bc can't be replaced with $$ -- granted injunction to prevent ∆ from cutting timber on ∏'s land (before this case, couldn't get an injunction to prevent this). "As equity follows the law, and, as far as possible, supplies omissions therein, so far as may be necessary to the effectuation of substantial justice, it vindicates the right of an owner to enjoy his property without injury or molestation by the exercise of its preventive powers." *see also VanWagner*: given location of billboard in Manhattan facing the tunnel exit, property was decidedly unique despite appellate ct's decision that only owned property is unique. Rather, ALL property interests are unique!

ANCILLARY DAMAGES Contempt The Collateral Bar Rule

∆ must contest authenticity of injunction before violating it; ∆ who violates an injunction without first contesting its authenticity is collaterally barred from contesting the injunction at a criminal contempt hearing. Disobedience of a court order is punishable by contempt even if the order is unconstitutional, unless the order has been vacated or reversed. ONLY applies to criminal contempt, NOT civil contempt *MLK Jr. march case* (Walker v City of Birmingham): they marched against a court order that said they couldn't march; when underlying order is unCON and therefore invalid, the party cannot violate the order -- party cannot avoid contempt by alleging that the underlying order is invalid - party cannot ignore a court order just bc he thinks it's invalid -- party must go through the proper procedure and appeal first

ANCILLARY DAMAGES Contempt Order to Show Cause

∏ alleges the contempt in a motion, and if the ct is satisfied that the motion deserves a hearing, it orders ∆ to appear and show cause re why he shouldn't be held in contempt. Burden then shifts to ∆ to show they ARE complying w/ court order.

COMPENSATORY DAMAGES Problems in Evaluation Constitutional Torts

∏ must prove: - CON rights were violated, - CON-right violation caused injury, and - actual damages resulted. *Different from defamation per se* (compensatory damages presumed without evidence of actual loss bc virtually certain to cause serious injury to reputation and injury is extremely difficult to prove) because the nature of the tort causing the CON-right violation can't be so offensive that damages are presumed absent a showing of actual harm. *marijuana-in-school* case - what is the value of CON rights violation? student claimed violation of due process rights and damages should be presumed, like defamation per se where plaintiff doesn't have to prove injury to recover compensatory damages; SCt says defendants could be liable for punitive damages and attorneys fees in certain cases (nominal damages awarded but fee shifting bc school bd pd atty fees)

COMPENSATORY DAMAGES Limitations on Damages Offsetting Benefits: Collateral Source Rule (Tort cases)

∏'s damages are reduced by some *offsetting benefit* that resulted from the wrong: - lost wages offset by the wages earned in another job that could not have been held had the first job not been lost - costs of childrearing from failed vasectomy are offset by the presumed benefits of parenthood - lack of informed consent offset by the benefit of the operation - defamation damages offset by ∏'s increased lecture fees that result from the publicity - inmate murder NOT set off against the murderer saving the state the costs of feeding and housing the victim *EXCEPTION = Collateral Source Rule* = No setoffs for ∆ if Rule is in effect; ∏'s damages are NOT reduced by compensation ∏ received for injuries from a source wholly independent of and collateral to the tortfeasor. So ∏ recovers from ∆ irrespective of ∏'s own insurance coverage. Evidence of a ∏'s alternative or addtl payment sources for expenses or losses (e.g. ins coverage) is excluded by the ct as irrelevant. *Public policy* arguments: - jury verdict may be affected by jurors' knowledge that ∏'s medical costs were pd - not unusual to keep this info from the jury - other examples include not disclosing attorney's fees, damages not taxable income, etc. - encourage citizens to purchase & maintain insurance - without the rule, ∏s would be discouraged - ∏ pd the ins premiums and shouldn't be penalized for doing so - changes the dynamics of settling personal injury cases But most insurance contracts now include *subrogation or waiver clauses* (see Ancillary Remedies) that require ∏ to repay the ins co. *Blue Cross case* (Helfend v. SCARTD): ∏'s damages not offset by Blue Cross's payment of medical costs *9-11 victims' fund / Jack Weinstein* (see Helfend N9)