Morgan Stephens

REMEDIES OUTLINEFALL 2011

HOFFHEIMER

§ 1 – Introduction§ 2 – Modern Damages§ 3 – Proving the Amount of Damages§ 4 – Limitations on Damages Recovery§ 5 – Interest§ 6 – Tort Reform§ 7 – Punitive Damages

§ 8 – Attorney’s Fees§ 9 – Injunctions§ 10 - Maxims of Equity§ 11 - Unjust Enrichment§ 12 – Restitution in Transactions§ 13 – Tort and Contract Damages

§ 1 – Introduction

I. TYPES OF RELIEF AVAILABLE – 8/22a. Compensatory Damages

i. Compensate for a lossb. Punitive Damages c. Preventative Remedies

i. Legal court order1. Temporary restraining orders2. Injunctions

ii. Declaration of the rights and liabilities of the parties1. Declaratory judgments

d. Restitution i. Payment of money in which the measure of the remedy is not the loss

suffered by the plaintiff but unjust enrichmentii. No legal wrong occurred

e. Ancillary Remedies i. Supplemental or auxiliaryii. Attorney’s fees

II. GENERAL PRINCIPLESa. Rightful position

i. Restore the plaintiff to the position they would have been in but for the wrong

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ii. Focus on value (something take, property destroyed)b. No double recovery

i. Must elect one of the remediesc. Cheapest possible way

i. Once plaintiff elects a remedy, you cannot impose unnecessary costs on the defendant

III. HISTORY OF REMEDIESa. Seventh Amendment

i. Preserves the right to trial by juryii. Not incorporated to the states

1. But all states have similar provisionsb. English Courts

i. Difference between courts of law and courts of equity

§ 2 – Modern Damages

I. MEAN AND NATURE OF DAMAGESa. Cooper v. FAA (9th Cir. 2010)

i. Facts – Concerns the Privacy Act and what actual damages mean; the plaintiff was looking for actual damages for nonpecuniary injuries after the FAA disclosed his private medical information to the Social Security Administration. Pilot lost his license and was fined as a result. Trial court held that actual damages were economic in nature.

ii. Issue – Whether humiliation, mental anguish, and emotional distress.iii. Holding – Plaintiff was entitled to recover for both pecuniary and

nonpecuniary injuries; In using the term actual damages, Congress clearly intended that when a federal agency intentionally or willfully failed to uphold its recordkeeping obligations under the Act

iv. Analysis – Given the nature of the injuries that most frequently flowed from privacy violations, it was difficult to see how Congress’s stated goal of subjecting federal agencies to civil suit for any damages resulting from a willful or intentional violation of the Act could have been fully realized unless the Act encompassed both pecuniary and nonpecuniary injuries

v. Notes – There is a split on whether actual damages include nonpecuniary damages. Congress could clear this up.

II. MISSISSIPPI LIMITS ON DAMAGES

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a. § 11-1-60 – Limits on Med-Mal Cases i. Noneconomic damages ($500,000 max) means subjective, nonpecuniary

damages include:1. Death2. Pain and suffering3. Inconvenience4. Mental anguish5. Worry6. Emotional distress7. Loss of society and companionship8. Loss of consortium9. Bystander injury10. Physical impairment11. Disfigurement12. Injury to reputation13. Humiliation14. Embarrassment15. Loss of the enjoyment of life16. Hedonic damages17. Other nonpecuniary damages18. Any other theory of damages such as fear of loss, illness or injury19. NOT included

a. Punitive (exemplary) damagesii. Actual economic damages means objectively verifiable pecuniary

damages arising from:1. Medical expenses and medical care (out-of-pocket)2. Rehabilitation services3. Custodial care4. Disabilities5. Loss of earnings and earning capacity6. Loss of income7. Burial costs8. Loss of use of property9. Costs of repair or replacement of property10. Costs of obtaining substitute domestic services11. Loss of employment12. Loss of business or employment opportunities

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13. Other objectively verifiable monetary losses.iii. Limits on other civil cases

1. $1,000,000 max on noneconomic damagesb. § 11-1-69 – Prohibition of hedonic damages in civil actions

i. Loss of enjoyment of life is bundled with pain and suffering damages and is not considered a separate item

1. Expert testimony is not allowed for loss of enjoyment of life

III. PROOF OF THE EXISTENCE OF DAMAGES a. Dura Pharmaceuticals, Inc. v. Broudo (2005)

i. Rule – Must be some kind of loss or damages before a claim arisesb. Youst v. Longo (Cal. 1987)

i. Facts – Plaintiff harness racehorse owner’s horse broke stride during a race when a horse driven by defendant harness racehorse driver moved into his path and defendant struck him with a whip. Plaintiff brought an action for intentional interference and conspiracy to interfere with prospective economic advantage.

ii. Holding – Affirmed; losing the chance to win a horse race did not present a basis for tort liability for interference with prospective economic advantage because the nature of the sporting event was too speculative

iii. Notes –1. Sporting events

a. Impossible to predict the outcome2. Recover for lost chance of living longer

a. I.e., reduction in chance of survival due to physician’s malpractice

b. Some jurisdictions recognize this cause of action3. Recovery for fear of dying younger

a. Like pain and suffering; emotional as opposed to value of the life

b. Example – mother’s fear that her daughter will have cervical cancer because mother took a certain drug while pregnant

c. BUT there MUST be some kind of physical injury to recover for fear of dying

4. Recovery for medical monitoringa. In this instance, not trying to recover for fear of dying

younger, just the costs associated with the annual doctor visits

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c. Rhodes v. E.I. Du Pont De Nemours & Co. (D.C. W. Va. 2009) i. Facts – The company had, for an extended period of time, admittedly

discharged chemicals into the environment surrounding a county in West Virginia. All causes of action, except medical monitoring were disposed at summary judgment.

ii. Holding – Plaintiffs survived summary judgment on their cause of action to recover for medical monitoring despite lack of physical injury

iii. Notes –1. Strong policy reason to disallow recovery of medical monitoring in

that the number of suits will increase

§ 3 – Proving the Amount of Damages

I. SPECIAL VS. GENERAL DAMAGESa. Introduction

i. Distinguished primary for the purposes of pleadingii. Special damages must be itemized and listed in the complaint, while

general damages do notb. Types of special damages (subject to easy calculation)

i. Out of pocket expenses1. Medical2. Lost wages

c. Types of general damages (hard to calculate)i. Non-pecuniary, non-economic

1. Pain and suffering2. Emotional distress

ii. Economic damages not easily calculable 1. Future earnings

II. PLAINTIFF’S LOST CAPACITY TO EARNa. Washington v. American Community Stores Corp. (Neb. 1976)

i. Facts – Plaintiff was injured in car wreck. Plaintiff was a collegiate wrestler before the accident and sued for loss of earning capacity because he was likely to be an Olympian and then wrestling coach.

ii. Issue – Should the jury have heard evidence on plaintiff’s loss of earning capacity?

iii. Held – It was proper and plaintiff was allowed to recover.iv. Notes –

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1. Once you calculate the total amount of damages, you then need to assess whether they are making more money than they otherwise would. I.e., if he falls back on his second job as a brain surgeon, he’s not really lost anything

2. Why is this case different? Because the evidence that Washington was to be a wrestler was reasonable

b. Childs v. United States (S.D. Ga. 1996)i. Federal Law – Sues under the FTCA. Liability is governed by state law, and

the case is decided by a judge, not a jury. No punitive damages, regardless of what state law says.

ii. State Law – In wrongful death suit, entitled to full measure of expense: funeral expenses, pecuniary losses, but no recovery for grief. To value decedent’s lost future income:

1. Base–year or entry level income2. Income growth rate3. Work life expectancy4. Discount rate

iii. Facts – Lady and her unborn fetus were killed when a USPS truck ran a red light and struck her car. Family of decedents brought wrongful death suit seeking damages for lost future income. Competing experts look at lost future income, lost fringe benefits, and lost household services

iv. Issue – Which expert correctly estimates future lost income for both decedents?

v. Held – The court does not feel bound to go with either expert. It makes its own determination to arrive at total damages.

III. PAIN AND SUFFERINGa. Includes –

i. Physical painii. Mental pain

iii. Anguishiv. Fearv. Emotional distress

vi. Loss of enjoyment of lifevii. Loss of consortium

viii. Inconvenienceb. Justification for pain and suffering damages – pg. 77

i. Compensationii. Substitutes

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iii. Deterrenceiv. Litigation finance

c. How to prove –i. Plaintiff’s lawyer shows how plaintiff was hurt and how plaintiff’s life has

been hindered1. Use demonstrative evidence – pictures or videos to show

plaintiff’s lack of enjoyment in life – “Day in the life video”2. Try not to overstate the case because it will seem greedy – you

just want to fully inform the juryd. Loth v. Truck–A–Way Corp. (Cal. Ct. App. 1998)

i. Facts – In her personal injury suit filed after an automobile accident with defendants, a truck owner and its employee driver, the jury awarded plaintiff motorist general damages of $ 890,000. The trial court issued separate instructions on pain and suffering and on loss of life’s enjoyment.

ii. Holding – Reversed; loss of enjoyment was a component of pain and suffering damages, and the two instructions could have resulted in an award of double damages. It was also error to admit the expert testimony, because the loss of enjoyment damages was within the jury’s ken and because the expert’s baseline figure was arbitrary.

e. McDougald v. Garber (N.Y. Ct. App. 1989) i. Facts – Plaintiff undergoes a caesarean section and tubal ligation. During

the surgery, the plaintiff suffered oxygen deprivation, which resulted in severe brain damage and left her in a permanent comatose condition.

ii. Rule – Cognitive awareness is required for an award for loss of enjoyment of life and pain and suffering. It does not serve any compensatory purpose otherwise.

iii. Analysis –1. There are no separate awards for loss of enjoyment and pain and

suffering—this would be double recovery. 2. In determining damages for conscious pain and suffering

experienced in the interval between injury and death, the degree of consciousness, severity of the pain, apprehension of impending death, along with duration are all elements to be considered.

§ 4 – Limitations on Damages Recovery

I. INTRODUCTIONa. These are doctrines to assure that we are not going past the putting the person

in their rightful position

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b. Plaintiff has a “duty” to mitigate damagesi. No dispute that person should take reasonable steps to minimize

damages to the extent practicablec. Offsetting benefits

i. If the plaintiff received a benefit as a consequence of the breach, the defendant should be able to offset this

ii. Very fact specific

II. AVOIDABLE CONSEQUENCESa. Williams and Robbins v. Bright (N.Y. 1997)

i. Facts – Jehovah’s Witness wouldn’t have surgery to mitigate the damages that resulted from car wreck. Received $2.75 mil in future damages even though she could have probably avoided a lot of this by having surgery. She refused to do this, not because of the risk, but because of her religious beliefs.

ii. Trial court – Did not use the standard reasonable prudent person standard, but presented the question as whether she acted as a reasonable Jehovah’s Witness in refusing surgery which would involve blood transfusions.

iii. Holding – Reversed and remanded for new trial on damages; the trial court’s standard was too subjective

1. You may consider religious beliefs in deciding whether she acted as a reasonably prudent person

2. YOU CANNOT ASK IF SHE ACTED AS A REASONABLY PRUDENT JEHOVAH’S WITNESS WOULD

iv. Notes –1. The “eggshell skull”—traditionally limited to a plaintiff’s pre-

existing physical condition, mental illness, or psychological disability—does not include a person’s religious beliefs.

b. Substitute Employment i. Person who loses job must seek substitute employment, HOWEVER, the

plaintiff is not required to mitigate damage to such an extent as to alter her professional career path to an unreasonable degree

1. Does an equine specialist have to take employment as a general veterinarian? It depends – is this unreasonably different?

ii. What’s reasonable substitute employment? You can see how this will just keep going and going

1. Commuting for a short distance probably okay2. Relocation is probably not okay

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iii. Consequence of not seeking substitute employment may reduce the recoverable damages

c. Lost Use i. A plaintiff whose vehicle is damaged may seek lost use damages for the

period it is out of service

III. COLLATERAL SOURCE RULEa. Introduction

i. Traditional Rule – If plaintiff recovers from a source that is independent from the defendant, defendant is not allowed to bring it up OR deduct it from the plaintiff’s whole recovery

1. Rule of evidence – prohibits testimony or documents from coming in at trial

2. Rule of damages – precludes the defendant from offsetting the plaintiff’s receipt of collateral compensation

ii. States have changed1. More than half of the states’ legislatures have changed the

common law collateral source rule: some have abolished it outright, and some have modified it

iii. Principal Sources1. Insurance (not the defendant’s insurance company, of course)2. Workers’ Compensation3. Medicare4. Life Insurance

b. Lagerstrom v. Myrtle Werth Hospital (2005) – pg 117i. Facts – Supreme Court of Wisconsin had to decide whether the circuit

court erred in admitting evidence of collateral source payments in this medical malpractice action, in refusing to admit evidence of the estate’s potential obligation to reimburse Medicare, and in instructing the jury that it may, but need not consider the collateral source payments in determining the reasonable value of the medical services rendered

ii. Holding – Evidence of collateral payments may come into to evidence, but court cannot automatically reduce the award

iii. Notes – Tortfeasor must pay the reasonable value of medical services, not the lower “written off” amount actually paid

§ 5 – Interest

I. PREJUDGMENT INTEREST

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a. Definition i. Amount of interest you can recover before judgment is renderedii. In order to be made fully whole, the plaintiff should be made whole ON

THAT DAY, not a year later1. I.e., judgment should reflect the delay in the payment

b. Still a common law rule i. Interest only if liquidated (ascertainable)ii. What’s not ascertainable? Pain and suffering

c. Interest rate varies by jurisdiction i. In Mississippi, interest is set by the judge UNLESS the contract in dispute

provides otherwise (§ 75-17-7)1. No prejudgment interest before the complaint is filed2. Statute applies to both pre and postjudgment interest

II. POSTJUDGMENT INTERESTa. Old Common Law – at the legal rate (prime), simple but not compound

i. Simple – every year you would pay just the flat rate on the principalb. Current Rule – Statutory basedc. Federal law – compounding interest (§ 1961)

i. Compound– every year you earn interest on the principal plus interest already earned

§ 6 – Tort Reform

I. LIMITATION OF JOINT AND SEVERAL LIABILITYa. Entergy Mississippi v. Hayes (Miss. 2004)

i. Facts – Wrongful death case involving lots of economic and noneconomic damages. Plaintiffs were first awarded $505,000 by jury, 33% of which EMI was liable for. However, court reallocated EMI’s fault to 67% once it learned that Hayes’ employer was immune. After new trial, jury returned verdict for $10.2 million

ii. Holding – Trial court erred by reallocating fault to the electric company from the immune employer (see § 85-5-7 below) and reversed judgment for new trial; reinstated original judgment of $505,000 (33% of which EMI was liable)

iii. Analysis : Prior to this case, the court had already decided that one party’s immunity does not affect the allocation of fault

iv. Notes :

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1. Of the $10.2 million second verdict, $10 million was for non-economic damages

a. Non-economic damages for civil cases are currently capped at $1 million

2. Contributory negligence has been eliminated in Mississippi in favor of comparative negligence standard

3. Mississippi legislature capped non-economic damagesa. Med-mal cases = $500,000 maxb. Other civil suits = $1,000,000 max

b. § 85-5-7 i. Each separate tortfeasors is only liable for his or her damages which or

proportionate to his or her percentage of fault1. Applies to negligence, malpractice, strict liability, absolute liability

or failure to warn2. Judge should determine percentage of fault for each party alleged

to be at fault without regard to whether the joint tortfeasor is immune from damages

ii. $100k in damages – D1 is 60% responsible, D2 is 40% responsible then D1 is liable for only $60k and D2 is only liable for $40k

iii. Basically – this requires plaintiff to sue every defendantc. Exceptions

i. Common plan schemeii. Specific wrongful intent (may be the same as an intentional tort)

II. Krieser v. Hobbes (5th Cir. 1999) a. Facts – Plaintiff v. doctor and hospital (doctor settles for $650k). Hospital is liable

for 50% of the $200k jury verdict = $100k). Defendant hospital argues that the plaintiff should not receive so much money because the doctor’s settlement paid so much more than the jury verdict.

b. Holding : Hospital’s argument did not work because the pro-tanto rule/one satisfaction rule has no application to liability in light of changes made by the Mississippi Legislature in § 85-5-7

c. Notes – i. Because Mississippi treats claims against multiple defendants as separate

claims, the fact that one party settles has no effect on the remaining defendants

ii. Proportionate Share Reduction (Majority) - settlement reduces judgment in proportion to settling ∆’s fault

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1. Does NOT change other ∆’s obligations in regards to their % share

III. Tanner v. Westbrook (5th Cir. 1999) a. Facts – Tanner’s newborn diagnosed with cerebral palsy. Evidence revealed that

baby untreated in the nursery despite her condition. Tanner awarded $3 million to the newborn and $100,000 to each parent. Tanner had an expert witness testify about the cause of the cerebral palsy.

b. Holding – Reversed and remanded for new trial; expert was not qualified to testify as to the cause of the cerebral palsy, only the standard of care to be given to a baby suffering from asphyxia.

c. Analysis – According to the court, expert did not have the kind of specialized knowledge required to testify, nor did he rely upon medical literature directly addressing the cause issue in the cause. Therefore, his testimony is not reliable.

d. Notes – i. 20 years ago, this would have been a close factual issue left for the juryii. Hoffheimer – this case shows how judges also play a role in tort reform –

they distrust jury verdicts

§ 7 – Punitive Damages

I. INTRODUCTION a. Also called exemplary damagesb. Less than 4% of verdicts include punitive damages (they are often asked for but

rarely granted)

II. PUNITIVE DAMAGES – LIMITATIONS (§ 11-1-65)a. STARTS WITH JURY

i. Hears evidence and awards compensatory damagesii. Jury is told that compensatory damages make the plaintiff whole

b. GOES TO JUDGE i. Conducts evidentiary hearing on whether jury may even consider

punitive damage arguments ii. May ONLY award punitive damages if clear and convincing evidence that

defendant acted with:1. Actual malice2. Gross negligence which evidences a willful, wanton, or reckless

disregard for the safety of others3. Actual fraud

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iii. There will be some division here – varies judge to judge on what constitutes fraud

c. BACK TO JURY i. Jury told that the purpose of punitive damages . . . punish/deter

defendantii. Determines award of punitive damages based on:

1. Defendant’s net worth2. Reprehensibility of defendant’s conduct3. Duration and frequency of conduct and attempts to conceal 4. Any other circumstances

d. BACK TO JUDGE i. Determines if award is excessive based on:

1. Reasonable relationship between award and probable or actual amount of harm

2. Defendant’s net worth3. Degree of reprehensibility of defendant’s conduct4. Sanctions for comparable conduct (criminal or civil)

ii. May issue remittur or new trial if excessive (see below) 1. Can only remit to highest amount jury could have awarded2. Plaintiff has choice: accept remittur (if is one) OR new trial

e. Seller’s Exclusion i. No liable for punitive damages unless seller exercised substantial control

over that aspect of the design, testing, manufacture, packaging, or labeling of the product that caused the harm

ii. Basically – not going to happen unless seller had actual knowledge of the defective condition of the product

f. Monetary Caps i. Do not need to memorizeii. Jury is NOT told about these caps

iii. Greater than $50 million = cap is statutory (never above $20 million)iv. Less than $50 million = cap may NOT exceed 2% of defendant’s net

worthv. Caps DO NOT apply when . . .

1. Defendant convicted of felony (Mississippi or federal law only) which caused injury OR

2. Defendant under the influence of alcohol or drugs while causing injury

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III. DUE PROCESSa. BMW v. Gore (1996)

i. Facts – Recent purchaser of a BMW was upset because his car was repainted before he bought it and he was not informed of it. He claimed that failure to disclose equated to suppression of a material fact. The jury returned a verdict for Gore of $4,000 in compensatory damages and $4,000,000 in punitive damages for the nondisclosure was thought to constitute gross, oppressive, or malicious fraud.

ii. Holding – Reversed because no aggravating factors were foundiii. Rule – Supreme Court states that punitive damages must conform to due

process by giving defendant fair notice; which is done by factoring: 1. Degree of Reprehensibility of defendant’s conduct

a. Most important factorb. Repeated unlawful behavior is aggravating factor but

Court hesitant to punish conduct that may be legal in other states

2. Ratio of punitive to compensatory damagesa. 500:1 unconstitutional, 10:1 may even be too high

3. Sanctions for comparable conduct (criminal or civil) 4. Punitive damages that are grossly excessive are

unconstitutional!!b. Philip Morris v. Williams (2007)

i. Facts – Jury found Philip Morris negligent and in addition to economic and noneconomic damages, the jury hit them up for $79.5 mil in punitive damages (reduced and later reinstated). Nearly 100-1 ratio to the $821k in compensatory damages.

ii. Issue – Whether a jury may base an award in party upon its desire to punish the defendant for harming persons who are not before the court

iii. Holding – No, such an award would amount to taking of “property” from the defendant without due process

iv. Rule – Due Process Clause forbids a state to use a punitive damages to punish a defendant for injury that inflicts upon nonparties or those whom they direct represent (strangers to litigation)

1. Jury may consider third party harm when considering reprehensibility, but it may not punish for it

2. How to apply this rule – trial court should give a jury instruction

IV. ADMIRALTY/MARITIME a. Exxon Shipping v. Baker (2008)

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i. Facts – Exxon oil tanker spilled lots of oil; captain was an alcoholic and was drinking right before the tanker departed; captain left bridge during a maneuver that needed his attention; left inexperienced person in charge; tanker hit reef and spilled 11 mil gallons of crude oil; Exxon spend $2.1 bil on clean up and paid fines for violations in CWA, Refuse Act, and Migratory Bird Treaty Act

1. Cleary gross negligence on part of captain2. Jury returned verdict for $287 mil in compensatory (reduced to

$192.5 mil) and $5 bil against Exxon and $5,000 against captain3. 9th Cir. reduced punitive damages to $2.5 bil

ii. Held – Reduced award to match compensatory damages ($507.5)iii. Rule – Punitive to compensatory ratio of 1:1 is maximum punitive

damages

V. Vicarious Liability a. Will come up a lot with corporations

i. Impugning liability on the corporation for the acts of the agentb. Courts are Divided

i. Some courts say that punitive damages are NOT attributable to the principal in a vicarious liability situation unless:

1. Principal authorized the act or2. Ratified or approved the act3. California and Restatement of Torts follow this

ii. Other courts are more willing to charge an employer with punitive damages

1. Alabama – allows punitive damages if employee was acting within scope of employment

VI. TAX CONSEQUENCES a. Introduction

i. Tax liability will push some parties to settleii. Structured settlements allow you to classify damages by type

b. Punitive Damages i. Taxable

c. Compensatory Damages i. Taxable

1. Any type of damages that substitutes for incomea. Lost wages – just as they would have been

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2. Emotional distress (not medical treatment)ii. Excludable

1. Physical injury – disfigurement, or pain, and suffering2. Lost wages during recovery from personal injury3. Consortium damages for another’s physical injury4. Medicals – actual treatment costs

a. Including psychiatric costs for emotional distress5. Property value that’s been destroyed

§ 8 – Attorney’s Fees

I. INTRODUCTIONa. Contracts and Statutesb. Attorney’s fees must always be reasonable

i. Court may deny attorney fees altogether if an unreasonable request is made

c. May only be awarded to a prevailing partyi. When plaintiff only wins on some of its theories, they may only be able to

recover for fees dedicated ii. Must be some consent decree, or judgment on the merits

II. AMERICAN RULEa. Generally

i. Both willing and losing litigants bear their own expenses, including attorney’s fees

ii. Policy behind – making the loser pay the winner’s lawyer’s bill brings a possible deterrent effect for poor litigants with meritorious claims

b. Exceptions i. Contracts – Some contracts call for the breaching party to pay the

nonbreaching party’s attorney feesii. Statutes – Congress created more than 100 exceptions in statutes and

state courts have followed suitiii. Bad faith – Federal district judges have the power to sanction a litigant’s

abusive, bad-faith litigation misconductiv. Common-fund doctrine – A litigant who recovers a common fund for the

benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the fund as a whole

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1. Court may award fees from the entire fund and thereby spread litigation costs proportionately among those the suit benefits

2. Class actions - Attorneys who create a settlement fund in a class action are entitled to recover gees against the fund

3. Fees paid from plaintiffs’ recovery (fee sharing) as opposed to being paid by defendant (fee splitting)

v. Private-attorney-general – attorney who litigates successfully and implements a strong public policy may request attorney fees

vi. Common-benefit doctrine – court may award attorney fees when plaintiff’s meritorious action creates a substantial, but nonmonetary, benefit for a clear defined group

1. I.e., awarding attorney fees when a share holder’s successful lawsuit creates a significant, substantial nonmonetary benefit for the entire corporation (Delaware)

c. Tort Reformers i. Want to reverse the American Rule and require the loser to pay all or part

of the winner’s attorney feesii. Argue that the loser-pays rule deters frivolous litigation, give defendants

a respite, and clear congested court dockets

III. COMPETING APPROACHESa. Lodestar Approach

i. Reasonably hourly billing rate * Hours Reasonably Worked * Enhancement (if any) = Lodestar amount

1. Lawyer’s billing rate is based on geographic area, nature of the services provided, and lawyer’s experience

2. Judge gets to decide what’s reasonableii. Enhancement – either add it in before to increase the amount or come

up with a total and then figure out the multiplier1. Reserved for cases where the issues litigated were complex and

the prospect of success dim2. Supreme Court’s standards or considerations

a. Reasonable fee is one that is sufficient to induce a capable attorney to represent plaintiffs in meritorious civil rights case

b. Trial court applies strong presumption that loadstar method yields sufficient attorney fees

c. Never sustained an enhanced attorney fee but may award one in rare and exceptional circumstances

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d. May not base enhancement on factor that is subsumed in lodestar calculation – i.e., novelty, complexity, or quality of attorney’s performance

e. Attorney-fee applicant bears burden of proof that enhancement is necessary

f. Attorney-fee applicant must produce “specific evidence” to support the enhancement

b. Percentage-of-Recovery i. Take actual recovery (dollars and nonmonetary winnings) and multiply by

some percentageii. Percentage may vary from case to case (3% to as much as 38%)

IV. UFBDH v. Davis County Clerk (Utah 2007)a. Facts – In the 2000 election, Davis County asked its residents whether they

wanted fluoride in the water. 52% favored adding fluoride. UFBDH sought declaratory and injunctive relief against the Davis County clerk, questioning the constitutionality of placing the revote on the 2002 ballot. Lower court found in favor of UFBDH but did not award them attorney’s fees.

b. Held – Reversed the lower court’s decision on attorney’s feesi. Awarded UFBDH because of vindication of a strong or societally

important public policy

V. Nilsen v. York County (D. Maine 2005) a. Facts – Class action strip search case; after class was certified, the county settled

with the inmates for $3.3 mil, which was placed in a common fund. Fund was to be distributed to inmates after deduction of costs and fees, with plaintiffs’ lawyers receiving 30% along with costs. Lodestar was $520,000 and plaintiffs was 30% of the common fund, or $990,000

b. Analysis – Judge does not adopt the lodestar approach; rather, he prefers the percentage approach for common fund; judge went through a lot of analysis to determine that the attorney’s fees for the $3.3 mil common fund was 25% or $825,000

i. This resulted in a multiplier (enhancement) of 1.6 times the lodestar amount

ii. Multifactor approach – huge range where judge could pick anythingiii. Market mimicking approach – what percentage of fees the plaintiffs and

attorneys would agree upon in the real worldc. Notes –

i. If lodestar is higher than percentage, then the judge will go with the lodestar approach

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ii. A court of appeals judges decisions setting lawyers’ fees for an abuse of discretion.

iii. If a winner’s attorney fee requested is excessive, the judge may deny the fee request entirely.

§ 9 – Injunctions

I. INTRODUCTIONa. Mississippi Courts (separate courts with overlapping jurisdiction)

i. Chancery courts – full jurisdiction over all equitable remediesii. County courts – up to $200,000

iii. Circuit courts – have supplemental jurisdiction to issue equitable remedies

b. Types of Equitable Remedies i. Injunctions – order to private persons to do or not to do somethingii. Specific performance

iii. Constructive trusts – create a property interestiv. Subrogationv. Accounting for profits

c. Requirements i. Irreparable injuryii. Remedies available at law are inadequate to compensate

iii. Considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and

iv. Public interest would not be disserved by a permanent injunction

II. PLAINTIFF’S INADEQUATE LEGAL REMEDY, IRREPARABLE INJURYa. eBay v. MercExchange (2006)

i. Facts – MercExchange sued eBay seeking an injunction for patent infringement; district court denied the injunction because MercExchange was willing to sell the patent; court of appeals reversed under its general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances

ii. Holding – Reversediii. Rule – Before court may grant an injunction, plaintiff must demonstrate:

1. Irreparable injury2. Remedies available at law (money damages) are inadequate to

compensate

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3. Considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and

4. The public interest would not be disserved by a permanent injunction

iv. Notes –1. Lots of discretion given to the trial judge2. Standard of review is for abuse of discretion

III. EQUITY ACTS IN PERSONAMa. Introduction

i. Equity requires a personal, in personam response or conduct from the defendant

ii. Judges uses contempt to enforce in personam reliefiii. Court may order defendant to act or refrain from acting in another state

1. Cannot exercise power over land in another state because of local action rule – lies with court where land is located

2. If the court has personal jurisdiction over the defendant, then the court can order the defendant to do pretty much anything (including transferring land that lies outside of the court’s jurisdiction)

iv. Equity ordering someone to stop litigating in another state1. CANNOT do

b. Tabor & Co. v. McNall (Ill. 1975)i. Facts – Tabor (Illinois corporation) and McNall (Wisconsin corporation)

had a contract, which McNall defaulted on. Tabor sued McNall in Illinois and McNall brought a proceeding in Wisconsin. Tabor petitioned the Illinois to enjoin McNall from proceeding further with its suit in Wisconsin (anti–suit injunction)

ii. Holding – Reversed. Court can only enjoin defendant from proceeding in an out-of-state lawsuit if there is a showing of fraud, gross wrong, or oppression

iii. Notes –1. Federal courts CANNOT do this (statute)2. Local action rule forbids a court from entertaining an action for

trespass to out-of-state land or for title or ownership of out-of-state land

3. Dueling injunctionsa. Forum court may enjoin litigant from litigating in an out-

of-state court but the forum court cannot affect the out-

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of-state court itself (even with personal jurisdiction of litigant

b. Out-of-state court may in turn enjoin the other litigant from litigating back in the forum court

c. Matarese v. Calise (R.I. 1973) i. Facts – The plaintiff, a businessman from Italy, brought suit against an

American citizen over a piece of land located in Italy. The plaintiff purchased a piece of land in Italy, and needed to purchase as adjacent piece of another American citizen, whom he could not easily find in the beginning of the case. The defendant said he knew where the other citizen was, and that he would do his best to get her to contract away her land. But, the defendant put title in the land in his own name, and breached his agency contract. Thus, this suit followed.

ii. Issue – Does a U.S. court have the power to issue an injunction requiring the defendant to sell the land to the plaintiff?

iii. Analysis – The court is not rejecting the local action rule, but they do not see it as a bar to jurisdiction in this case. It had original personal jurisdiction over this defendant because he was served in the U.S. It has the power to directly order the defendant to take action—it is not directly doing something to the land. The court says it is acting indirectly on the land.

d. United States v. McNulty (N.D. Cal. 1978) i. Facts – Defendant McNulty won the Irish Hospitals Sweepstakes and

collected $128,410. IRS believed his winnings were taxable, so the defendant deposited the money in a bank account on the Island of Jersey. Defendant was convicted on tax evasion and the government prevailed on civil action to collect taxes ($67,791). However, the government cannot collect the money unless the defendant transfers his assets from the Island of Jersey. Government moved for an order directing the defendant to repatriate his assets and deposit them with the court clerk.

ii. Holding – Because the court has jurisdiction over the defendant, the court has the power to order him to repatriate the assets located in the foreign bank

iii. Analysis –1. No problem with local action rule because no land is involved2. United States v. First National City Bank (1965)

a. No personal jurisdiction over defendant but did have jurisdiction over bank whose branch the corporation maintained an account

b. Government allowed to freeze the account

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3. SEC v. Minas De Artemisa (9th Cir. 1945)a. Corporation ordered to produce corporate books located

in Mexicoiv. Notes –

1. Defendant never paid; after serving his criminal conviction for tax evasion, he was found in contempt for failing to obey the court order

2. Held in prison for five months before being released

IV. EQUITY LACKS JURISDICTION TO ENJOIN A CRIMINAL PROSECUTIONa. Norcisa v. Board of Selectmen (Mass. 1975)

i. Facts – Petitioner/plaintiff owned and operated a retail clothing business in Provincetown, Massachusetts. While the criminal complaint was pending, plaintiff sought an injunction in probate court against the town, arguing that she was not a transient vendor, but the owner of a full time retail clothing shop. The probate court enjoined the town from enforcing any of the provisions of Mass. General Law 101 against the plaintiff

ii. Holding – Reversed the order to enjoin the pending criminal prosecutioniii. Analysis –

1. The probate judge should have applied the test for an injunctiona. Substantial right will be impairedb. Remedy at law is inadequatec. Injunctive relief can be applied with practical success and

without imposing an impossible burden on the court 2. Sole issue is whether the remedy at law would be adequate3. Plaintiff argued that the law was unconstitutional on its face or as

applied, or that the statute does not apply to her at alla. These defenses amount to an adequate remedy at law

4. Shumana. Six merchants alleged that the chief of police threatened

to prosecute them for operating with a business license that the claimed they were not obligated to obtain

b. Plaintiffs argued that it would take several months to obtain a decision and during that time they would lose profits and suffer harm to their business relations

c. Court found that the repeated complaints were not sufficient to issue an injunction

5. Kenyon

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a. Jehovah’s Witnesses were repeatedly arrested, prosecuted, and convicted under an unconstitutional ordinance prohibiting the distribution of handbills

b. Evidence showed that the defendant judge knew that the ordinance was unconstitutional

c. Court found that actions for malicious prosecution or false arrest were not adequate

6. Here, plaintiff was charged with only one violation of the statute7. Her defenses, would, if established, constitute a complete

defense to the violation chargedb. Reasons not to enjoin

i. Burden on the court systemii. Sanctions are increased

1. Including contempt of courtiii. Creates private legislation

1. Should be left up to the legislature

V. EQUITY LACKS JURISDICTION TO ENJOIN A CRIME a. People ex rel. Gallo v. Acuna (Cal. 1997)

i. Facts – City of San Jose filed for injunction against gang members because they were creating a public nuisance; preliminary injunction was granted by the lower court; leaders of the gangs ordered not to engage in certain behavior; actual history of gang activity within this small area of San Jose

ii. Issue – Only two of the provisions are being appealed (Provisions A & K)1. Provision A said that a known gang member cannot be seen in

public with another known gang member2. Provision K said that gang members cannot annoy, harass, or

provoke members of the communityiii. Rule – Equitable relief is available to counter conduct that substantially

and unreasonably interferes with private property based on collective values arising out of a shared ideal of community and the minimum conditions for a civilized society

iv. Holding – Reversed; court held that the two challenged provisions fell within the trial court’s equitable power to abate a public nuisance, and did not violate defendant’s constitutional rights. Trial court’s preliminary decree was not overbroad, because it was addressed to identifiable parties and to specific circumstances, and the enjoined acts were particularly described.

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VI. EQUITY WILL NOT ENJOIN A LIBEL a. General Rule

i. Injunctions of speech are normally treated like prior restraints, which are disfavored but not always barred

1. An injunction is a prior restraint if, in advance, it forbids a defendant’s speech

2. Not an absolute rule – courts simply indulge a heady presumption against the constitutional validity of a prior restraint

b. Tory v. Cochran (2005)i. Facts – Accusations and findings that the statements are libel against

Johnnie Cochran; lower court issued an injunction from picketing, displaying signs, or orally uttering statements about Johnnie Cochran or his law firm.

ii. Holding – An order issued in the area of First Amendment rights must be precise and narrowly tailored to achieve the pin-pointed objective of the needs of the case. Much of the underlying rationale for the injunction was gone because of Cochran’s death.

iii. Notes – 1. SC basically punts because of Cochran death2. California Supreme Court held that a judge could grant a plaintiff

an injunction that forbids the defendant from repeating a specific defamatory statements

a. Distinguishable from Tory v. Cochran because the prior restraint here was narrowly tailored to one statement

VII. INJUNCTION PROCEDUREa. Note:

i. Courts’ goal is to preserve the status quo unless the status quo is the result of some wrong doing

b. Temporary Restraining Orders – FRCP 65(b)i. No adversary hearing needed if:

1. Specific facts in an affidavit or a verified complaint . . .2. Clearly show that immediate and irreparable injury, loss, or

damage . . . 3. Will result to the movant . . . 4. Before the adverse party can be heard in opposition5. Also, movant’s attorney certifies in writing . . .

a. Any efforts made to give notice andb. Reasons why it should not be required

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ii. 14 day limitiii. Bond – must provide security to the court

1. Defendant’s only remedyiv. NOT APPEALABLE!!!

c. Preliminary Injunctions – FRCP 65(a)i. Adversary proceeding needed

1. I.e., must provide notice to the adverse partyii. Bond – must provide security to the court

iii. Plaintiff must establish:1. Likely to succeed on the merits2. Likely to suffer irreparable harm in the absence preliminary

injunction3. Balance of equities is in his favor

iv. Appealabled. Permanent Injunction

i. May only grant after a full trialii. Appealable

e. Winter v. Natural Resources Defense Council (2008) i. Court reasserts that the four factors for injunctions are independent

1. You cannot eliminate one factor by weighing it against the other three

ii. Must make an individual determination in every case before granting an injunction using each of the four factors

f. Salinger v. Colting (2d Cir. 2010) i. Facts – J.D. Salinger sues some guy for copyright infringement, seeking an

injunction to prohibit the guy from selling his bookii. Holding – Remand to the lower court, but set up a “quasi” preliminary

injunction for ten days to allow plaintiffs an opportunity to apply for a TRO pending the rehearing of the motion for the preliminary injunction

iii. Notes – Seemed to adjust the test 1. Probability of success (eBay) OR serious questions that require

litigation with the balance tips decidedly in favor of the plaintiff2. Likely to suffer an irreparable injury3. Balance of hardships between the defendant and the plaintiff tips

decidedly in favor of the plaintiff4. Must ensure that the public interest will not be disturbed by the

issuance of the preliminary injunction

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a. eBay states it differently (“that the injunction is in the public interest”)

VIII. JURY TRIALSa. Introduction

i. Must demand/request jury trial in federal courtii. Legal – right to trial by jury

1. Claims for compensatory (money) damages2. Punitive damages

b. Federal Trial By Jury Test i. History of Cause of Action – Status of the cause of action before the

merger of law and equityii. Remedy Involved – the relief sought (most important/give greater

weight)c. Mississippi

i. No state constitutional right to trial by jury in chancery courtsii. Chancellors may panel a jury but it’s a matter discretion

1. Results of the jury in chancery court are purely advisory!d. Feltner v. Columbia Pictures Television (1998)

i. Facts – Columbia sued Feltner alleging copyright infringement arising from the stations’ unauthorized broadcasting of the a few television shows. Columbia sought an injunction along with actual damages or in the alternative statutory damages. Columbia opted for statutory damages. The district court denied Feltner’s request for a jury trial on the statutory damages, ruling instead that the issue would be determined by a bench trial. The Ninth Circuit affirmed.

ii. Law – A copyright owner may recover statutory damages ($500 to $20,000) instead of actual damages and profits

iii. Issue – Whether § 504(b) or the Seventh Amendment grants a right to a jury trial when a copyright owner elects to recover statutory damages

iv. Holding – Seventh Amendment provides a right to a jury trial, which includes a right to a jury determination of the amount of statutory damages

v. Analysis – Court first determined that the Copyright Act does not grant a right to have a jury assess statutory damages. However, the right to a jury trial includes the right to have a jury determine the amount of statutory damages, if any, to be awarded to a copyright owner.

1. LONG HISTORY of copyright cases being heard by jury

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IX. EQUITABLE CLEANUP a. AKA Equitable Pendant Jurisdiction in Mississippi

i. If the chancellor has appropriate jurisdiction over the dispute, then the chancellor exercise pendant jurisdiction can provide equitable relief

1. Judge looks at the face of a well-pleaded complaintii. To get into chancery court, first state a claim for equitable relief

1. I.e., specific performance of the contract and then ask for damages to the extent that the specific performance will not make you whole

2. Just requesting for an equitable remedy does not mean you are automatically in – the remedy must be available

iii. Chancellor’s discretion1. Not required to exercise pendant jurisdiction, especially if the

equitable side of the case has been dismissedb. Ziebarth v. Kalenze (N.D. 1976)

i. Facts – Ziebarth, a cattle buyer, sought specific performance of a contract of a contract for the sale of cattle from Kalenze. Ziebarth brought this case in equity. District court found for Ziebarth and awarded $4,589 instead of specific performance.

ii. Issue – Whether the trial judge erred in denying Kalenze’s motion to dismiss when it became apparent that the specific relief that plaintiff was asking for was impossible to grant as a remedy.

iii. Holding – The right to a jury trial is waived if not demanded in a case where the complaint demands equitable relief but the defendant is aware that only legal relief could be granted should the plaintiff prevail.

iv. Traditional Rule – Court does not have equitable jurisdiction unless plaintiff proves that he is entitled for equitable relief

v. Notes –1. If we’re in the federal system or a state with a uniform court

system, can you bring a claim that’s a combination of legal and equitable relief? Yes, of course

X. MODERN INJUNCTION: DISCRETION AND FLEXIBILITYa. Extraordinary writs at common law – KNOW FOR EXAM!

i. Habeas corpusii. Mandamus

iii. Prohibitioniv. Petition for a writ of certiorari

b. Equitable Forms of Relief

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i. Injunctionsii. Specific performance

iii. Accounting – actual and constructive trustsiv. Interpleader – stakeholder that is subject to multiple claims petitions the

court to decide who is entitled to the property at issue1. Rule interpleader – FRCP 222. Statutory interpleader – § 1335

a. Deposit moneyb. Diversity between claimantsc. Amount in controversy just $500

v. Quiet title – removing clouds on a titlevi. Bill of peace – some potential defendant can preempt something by

suing all of the potential plaintiffs; differs from interpleader because there’s no property at issue; sort of like an early class action suit

vii. Ne exeat – ordering a person not to leave the jurisdiction; not very common

viii. Writ of attachmentc. Chancellor’s Discretion

i. Navajo Academy v. Navajo UM Miss. Sch. (N.M. 1990) 1. Facts2. Issue3. Holding4. Analysis5. Notes:

ii. Weinberger v. Romero–Barcelo (1982) 1. Facts:2. Issue3. Holding4. Analysis5. Notes –

a. Discretion does not mean anything goes – can have conflicting decisions BUT the abuse of discretion appellate review will consider whether:

i. Wrong legal standard was used (e.g., no using eBay standard)

ii. When trial court issues (or doesn’t) an injunction without explaining why – must articulate reasons

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§ 10 - Maxims of Equity

I. UNCLEAN HANDS a. Introduction

i. “He who comes into equity must come with clean hands”1. Person who’s invoking jurisdiction of equity court must have clean

handsii. To establish unclean hands defense:

1. Trial court discretion (abuse of discretion on review)2. Conduct must be willful + either fraudulent, illegal, OR

unconscionable 3. Objectionable misconduct must bear an immediate relation to the

subject-matter of the suit and the subject matter of suit (relief being sought)

4. Public interest may come into play –Alpo Petfoods v. Ralston Purina on page 390

b. Green v. Higgins (Kan. 1975) i. Facts – Higgins executed a contract for some property to the Greens in

April 1975. In order to avoid paying the real estate commission to Lienna McCulley, the contract was dated June 2, 1971.

ii. Holding – On appeal, the court affirmed the judgment of the district court. The district court, in its discretion, properly dismissed the action.

iii. Analysis – Neither of the parties was entitled to equitable relief because their conduct, which was related to the issues before the court, constituted seeking relief with unclean hands. The facts were undisputed that the parties’ conduct towards the sales agent and the third-party purchasers was fraudulent, illegal, and unconscionable.

II. LACHESa. Introduction

i. “Equity aids the vigilant not those who slumber on their rights”ii. Equitable equivalent to statute of limitations

iii. Requirements1. Laches asks whether the plaintiff in asserting her rights was guilty

of unreasonable delay that prejudiced the defendants2. Possible prejudices includes an inability to litigate the case

because of fading memories or stale evidence OR change in defendant’s position (reliance)

3. Abuse of discretion on review

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b. Stone v. Williams (2d Cir. 1989) (Stone I) \i. Facts – Appellant, illegitimate daughter of famous musician, sued her

father’s heirs and several music companies for share of copyright renewal rights to songs composed by her father. The trial court granted summary judgment and dismissed complaint based on laches because of 11-year delay in filing suit from time she became aware of her parentage.

ii. Holding – The court affirmed the dismissal because appellant’s delay in filing suit was unexcused and prejudiced appellees, and so the trial court did not abuse its discretion in barring suit on ground of laches.

iii. Analysis – On appeal, the court reviewed the record and concluded that the trial court did not abuse its discretion in dismissing complaint against appellees because appellant’s delay in filing suit was both unjustified and prejudicial to appellees. The court acknowledged that a delay for the first six years might have been excusable based on appellant’s desire for privacy, the delay for last five years, after appellant had received a certain amount of publicity, was inexcusable. Furthermore, appellees were prejudiced because evidence had been lost by death of witnesses during the delay, and appellees might have acted differently concerning renewal rights had they known there was another interested party.

c. Stone v. Williams (2d Cir. 1989) (Stone II)i. Facts – In the time since the first federal appellate court decision, state

supreme court had found that heirs had fraudulently concealed facts relating to appellant’s claims against estate, and held that this fraud excused appellant’s delay in asserting her state claim.

ii. Holding – Petition for rehearing was granted, previous opinion of court was vacated, and court reversed dismissal of appellant’s complaint by trial court on ground of laches because state supreme court in separate proceeding had found that heirs fraudulently conspired to keep facts relating to plaintiff’s claim concealed from her.

III. REVIEW a. Example 1 – Stealing Property Worth $100

i. Plaintiff (victim) sues defendant (thief)ii. Types of relief

1. Eithera. $100 of compensatory damages ORb. Specific relief in the form of replevin to get the property

back2. May get punitive damages if there’s malice

b. Example 2 – Contract for Sell of Land

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i. Defendant agreed to sell plaintiff land (worth $100K) for $10K and the defendant breaches

1. Money damagesa. Measure of damages is likely $90K (benefit of the bargain)b. FMV – contract price

2. No punitive damages for just a breach of contract3. Specific performance for property

a. Courts have been enforcing land-sale contracts for a long time (under the theory that land is unique)

b. Talk about eBay four factors and traditional specific performance stuff

c. Cannot recover damages AND compensatory damages (must elect)

ii. What if plaintiff only paid defendant $100 in the form of a deposit?1. Entitled to $90,100

iii. What happens if defendant sold property to third person?1. Of course, plaintiff can still get money damages from defendant2. No specific performance because the defendant no longer has the

land3. If third person paid value for the property and did not have notice

of the other contract (thereby taking legal title and becoming bona fide purchaser for value), then the plaintiff cannot use specific performance to get the property back

a. However, third party cannot be in collusion with defendant or equity will step in and return the property to the plaintiff by way of specific performance (if requested)

IV. CONTEMPT a. Introduction

i. Direct vs. Indirect Contempt1. Direct – behavior occurs within the courtroom2. Indirect – behavior occurs outside of the courtroom

ii. Civil vs. Criminal Contempt (turns on whether you can get out of contempt)

1. Civila. Compensatoryb. Coercive (fines, prison with opportunity to get out if X)

2. Criminal

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a. Fines, prison for X amount of timeb. FRCP 65(d) – Injunctions and Restraining Orders

i. (1) Contents1. Every order granting an injunction and every restraining order

must:a. (A) state the reasons why it issued;b. (B) state its terms specifically; andc. (C) describe in reasonable detail—and not by referring to

the complaint or other document—the act or acts restrained or required.

i. Note: BE VERY SPECIFIC c. Criminal Contempt

i. International Union, United Mine Workers v. Bagwell (1994) 1. Facts – The unions and their members repeatedly violated the

trial court’s orders regulating the conduct of a labor dispute. The trial court announced a schedule of fines for various acts and, after hearings at which the trial court required that contumacious acts be proved beyond a reasonable doubt but did not afford a right to jury trial, imposed $64 million in fines against the unions. After the unions settled the labor dispute, the trial court refused to vacate the fines it had made payable to the counties. The Supreme Court of Virginia held that the fines were civil and coercive in nature.

2. Holding – Reversed. The Court held that the unions were entitled to a criminal jury trial. Supreme Court reviewed the differences between civil and criminal contempt and held that the fines were criminal in nature.

3. Analysis – The unions had no opportunity to purge once the fines were imposed, their conduct did not occur in the court’s presence and did not implicate its ability to maintain order, and the fines effectively policed the unions’ compliance with a code of conduct imposed by the court. Finally, the fines were serious in amount.

4. Notes –a. If it’s criminal contempt – you have to follow criminal

procedure (i.e., right to jury trial, right to counsel, right not to testify against yourself, etc.)

b. Where a fine is not compensatory, it is civil only if the contemnor is afforded an opportunity to purge

c. Clearly Criminal Contempti. Fixed prison termii. Fixed fines for past behavior

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d. Confinement, Contempt, and Cash i. Moss v. Superior Court, Ortiz (Cal. 1998)

1. Facts – Respondent, real party in interest mother, brought an action petitioner contemnor father for contempt to pay child support. Petitioner alleged that he was unable to pay child support because he was unemployed. Respondent mother alleged that petitioner refused to seek employment. The trial court held petitioner in contempt and imposed a sentence of 5 days in jail for each of 6 counts of contempt and 10 hours of community service for each of 6 counts. Petitioner alleged that an order to force him to seek employment violated his U.S. Const. amend. XIII right against involuntary servitude. The appellate court set aside the contempt judgment and concluded that the Todd decision was controlling.

2. Holding – The court overruled its previous holding in the Todd decision that a parent who refused to work could not be held in contempt.

3. Analysis – Because petitioner contemnor father reasonably relied on case precedent, the court refused to apply its ruling retroactively and affirmed the appellate court’s reversal of the trial court’s finding of contempt.

4. Notes –a. Elements (prove beyond reasonable doubt)

i. Valid court order to pay sum certainii. Knowledge

iii. Non-compliance b. If unsure about whether the contempt is civil or criminal,

then treat it like criminal contempt – the higher burden of proof!

e. Collateral Bar Rule i. Introduction

1. Prevents challenges to the validity of the injunctiona. I.e., cannot challenge injunction because the court

conduced an improper analysis under eBay or that the injunction is unconstitutional

2. Procedurea. Injunction hearing conducted by court

i. Allows defendant to directly challenge constitutionality of injunction or raise other defenses

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b. Injunction issued by courti. Defendant either lost or didn’t appear

c. Defendant then held in contempt for violating the injunction (must obey until injunction is modified)

i. Collateral bar prevents defendants from raising defenses that were either lost at the original hearing or waived by not appearing

3. Note: there is no statutory right appeal issuance of a TRO in federal court

a. Reasons – TROs are temporary and defendants have a right to hearing within two days

ii. Ex Parte Purvis (Ala. 1980)1. Facts – Petitioner was an employee of the city’s water works

department and joined other employees in a strike when the water works board (board) refused to engage in collective bargaining with their union. The board successfully obtained a TRO to enjoin the strike, which petitioner disobeyed on three occasions. The trial court denied petitioner’s motion to dissolve or modify the TRO and entered three separate judgments of criminal contempt against him. Sentenced to 15 days in prison.

2. Holding – The court denied petitioner’s application for a writ of habeas corpus and vacated the stay of execution for the remainder of his sentence.

3. Analysis – Petitioner was obligated to obey the TRO issued by the trial court until its reversal in proper proceedings, regardless of its impact on petitioner’s First Amendment rights. Violent picketing on the street did not warrant the level of protection afforded to peaceful picketing under the First Amendment. The board had a compelling interest in seeking the TRO as the city’s water supply was threatened by the strike and a hearing on the validity of the TRO was scheduled within five days in accordance with Ala. R. Civ. P. 65(b)(1).

4. Notes –a. ON TEST – apply eBay test to determine whether TRO was

warrantedb. Exceptions to collateral bar where compliance would

cause irreparable injury:i. Injunction is transparently invalid (maybe means

invalid on its face?)1. California is more generous than Alabama2. Texas doesn’t follow the collateral bar rule

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ii. Frivolous pretense to validityf. Who must obey?

i. Introduction1. Certainly the defendants are bound2. If defendant is unnamed:

a. Notice – publication or emailb. Enforcement might be an issue

3. FRCP 65a. Allows court order to bind anyone

ii. People v. Conrad (Cal. Ct. App. 1997) 1. Facts – Appellant protestors challenged their convictions for

disobedience of a lawful court order under Cal. Penal Code § 166(a)(4). The trial court denied appellants’ motion for acquittal. The appellate court reversed the judgment of conviction because the evidence linking the enjoined parties to appellants was insufficient to prove that appellants acted with or for the enjoined parties.

2. Holding – The court reversed appellant protestors’ convictions for disobedience of a lawful court order

3. Analysis – The evidence linking the enjoined parties to appellants was insufficient to prove that appellants acted with or for the enjoined parties where the evidence showed a single interaction between appellants and an enjoined party, and this was too insubstantial to support the conclusion that appellants acted in concert with an enjoined party.

4. Notes:

V. ENFORCING CONSTITUTIONAL AND PUBLIC LAW THROUGH STRUCTURAL INJUNCTIONS

a. Introduction – 10/31 at 6 mini. Has the effect of restructuring government bureaucracyii. Parties are a class of plaintiffs versus the federal government or a state

iii. Object of the litigation is to change the way the government is behavingiv. If it’s prison litigation – 30 min

1. No further than necessary to correct the violation

VI. INJUNCTION REFORMa. Frew ex rel. Frew v. Hawkins (2004)

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i. Facts – The officials contended that state immunity barred enforcement of the consent decree since the program complied with general Medicaid requirements and thus any failure to comply with specific requirements of the decree did not otherwise constitute a violation of federal law. The officials also argued that enforcement of the decree would undermine the officials’ accountability in deciding how best to discharge their governmental responsibilities.

ii. Holding – Reversed and remandediii. Analysis – state immunity did not bar enforcement of the consent decree

since the decree was a federal court order that resulted from a federal dispute and furthered the objectives of federal law, and the officials voluntarily accepted the obligations set out in the decree. Even though the decree required state action which Medicaid did not specifically require, it reflected a choice among various ways that the officials could implement the Medicaid program. Further, any infringement of the officials’ sovereign authority and responsibilities was subject to remedial modification of the decree upon a showing of appropriate grounds.

§ 11 - Unjust Enrichment

I. RESTITUTIONa. Introduction

i. Free standing remedy for unjust enrichment – defendant’s breach of contract, tort, or violation of plaintiff’s property rights is not a prerequisite

ii. Example – plaintiff’s mistaken transfer to defendant is an example of freestanding restitution (i.e., bank accidentally gives you $10K)

iii. May seek restitution as an alternative remedy to compensatory damages or an injunction

b. Restatement’s Definition i. A person who is unjustly enriched at the expense of another is subject to

liability in restitutionc. Analysis

i. Buyer must first receive a benefit (often clear but perhaps debatable)d. Kistler v. Stoddard (Ark. Ct. App. 1985)

i. Facts – A farmer planted wheat on the land and the landowner dies. The new owner terminates the lease. Before the former landowner died, there was a twenty year agreement of planting on the land. Stoddard’s efforts were undertaken in good faith, because he reasonably could have

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relied on past practices and was unaware of the impending sale to Shannon until well after the planting date.

ii. Holding – New landowner has to reimburse Stoddard for his costs in planting the wheat

iii. Analysis – New landowner would unjustly reap the benefits of the Stoddard’s labor and expense. While Stoddard had no legal or equitable claim to the wheat crop, the new landowner was not entitled to be unjustly enriched in the amount expended to plant the crop.

1. Stoddard’s efforts were undertaken in good faith since he reasonably could have relied on past practices and was unaware of the impending sale until after planting time

iv. Rule – One party should not be allowed to benefit at the expense of another because of innocent mistake or unintentional error

e. Patureau-Miran C. Boudier (1892) i. Facts – Patureau rented property to Garnier in March 1886 for 5,500

francs – the lease terminated in December 1888 when the tenant owed 15,000 francs for rent and equipment. Garnier gave Patureau the standing crop and Patureau took back possession of the improved property. Boudier, plaintiff, billed Patureau for 324 francs for manure sold and delivered to Garnier before termination of the lease.

ii. Holding – Awarded judgment to Boudieriii. Analysis – Patureau’s crop was improved by the plaintiff’s fertilizers; i.e.,

he was unjustly enriched iv. Notes:

f. Kossian v. American National Insurance Co. (Cal. Ct. App. 1967) i. Facts – Owner of an inn that burned down contracted with plaintiff to

clean up the debris, but declared bankruptcy after the clean up was finished. The property was subject to a deed of trust in which defendant was the beneficiary. Defendant had no knowledge of the agreement between owner and plaintiff. Trial court granted defendant’s motion for summary judgment.

ii. Holding – Reversediii. Analysis – Doctrine of unjust enrichment applied to situations regardless

of the intent of the parties. Defendant’s indemnity payment was based in part upon a claim of loss that did not exist because plaintiff had already remedied the loss by his work for which he was not paid.

iv. Notes:

II. CAPRICE ROBERTSa. Unjust enrichment

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i. Benefitii. Unjust?

b. Freestanding unjust enrichment i. Bank accidentally deposits money into your account

c. Opportunistic Breach i. Example

1. A agrees to sell a book to B for $152. Before the exchange, A sells to C who is willing to pay $1003. B entitled to difference between FMV and agreed contract price

(I.e., if book valued at $50, then B is entitled to $35)4. B cannot get specific performance from A because he no longer

has the bookii. Under opportunistic breach, the buyer may be able to obtain the profits

made by the seller if . . . 1. It was deliberate AND2. It would be unjust for them to keep it

iii. Problems1. Not a lot of case law on point2. How does this work in practice?

III. MEASURING THE DEFENDANT’S BENEFIT a. Legal Restitution

i. Quasi contract – very different than contracts1. No contract (express or implied) because . . .

a. No meeting of the mindsb. Statute of frauds required the contract to be in writingc. Matters of public policy required something mored. Party did not have authority to enter into a contract

2. Restitution is the only remedy for quasi contract ii. Quantum Meruit

1. Valuable materials or services rendered2. Services were conferred for the benefit of the person sought to be

charged3. Defendant accepted and enjoyed the benefits4. Circumstances demonstrate that the plaintiff had a reasonable

expectation of being compensated by the defendant for the benefits conferred

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b. Campbell v. TVA (5th Cir. 1969) i. Facts – Campbell made an oral agreement with Daniel, director of the

TVA Technical Library, to put a bunch of journals onto microfilm. Daniel did not have the authority to make the contract here. This was going to be a huge contract, with lots of money involved—$30,000. This is all ORAL. With unjust enrichment, the statute of frauds does not come into play. TVA later did not accept the microfilm when delivered, and sent it back to Campbell with a note from Daniel saying there was no contract. Campbell promptly sent it back to the TVA, where it was stored. TVA refused to pay for the film.

ii. Holding – Court found that the proper measure for damages was the fair market value – not the actual benefit realized by TVA from the microfilm

iii. Analysis – 1. Court used the contract price for fair market value because the

microfilm had no readily available market value to anyone except TVA.

2. The value of the microfilm to TVA cannot be expressed in dollars and cents. Original copies were destroyed making the microfilm copies the only ones available.

3. TVA benefits because the microfilm is available for usec. Maglica v. Maglica (Cal. Ct. App. 1998)

i. Facts – Man and woman hold themselves out as husband and wife, and then they start the Mag-Light Company. The woman helped the defendant with the multi-million dollar business. They then break off their relationship when she sees that he is sneakily providing for his children and not her. She sues for breach of fiduciary duty, implied-in-fact contract, and quantum meruit. The trial jury looked at the evidence and found that he had a fiduciary duty to her, and that he owed her in restitution. It awarded $84,000,000.

ii. Holding – Fiduciary claim must fail because California did not recognize common-law marriage. The court then focuses on the unjust enrichment theory and decides to value the restitution at the fair market value, not the actual benefit of the defendant.

iii. Analysis – People who make $84 mil own equity in the company—it’s not payment for services; no employee would ever earn that much

iv. Notes –1. Legal test for recovery in quantum meruit is not the value of the

benefit, but value of the services (assuming the services are beneficial in the first place)

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IV. EQUITABLE RESTITUTIONa. Constructive Trust –

i. Introduction1. If the defendant’s fiduciary breach or fraud deprived the plaintiff

of property, the chancellor reasoned that a defendant who was enriched unjustly is constructively a “trustee” for plaintiff, the “beneficiary.”

2. When property is in the possession of someone who cannot in good conscience keep it, a constructive trust will be imposed

a. Can reclaim the actual item3. Elements

a. A transaction in which the defendanti. Has been unjustly enrichedii. By acquiring legal title to specifically identifiable

propertyiii. At the expense of the claimant or in violation of the

claimant’s rightsii. Simonds v. Simonds (N.Y. Ct. App. 1978)

1. Facts – The Simonds were married, and created a separation agreement in which the husband would insure the wife at least $7,000 in life insurance. Husband remarries. He let his original life insurance policy lapse. He purchased three more policies, none of which were named plaintiff as a beneficiary. He then he died. Essentially, second wife got the insurance that the first was entitled to. She could not sue her husband’s estate because it was insolvent, so she went after the second wife under unjust enrichment.

2. Holding – Second wife holds legal title to the insurance proceeds, but the court finds that that it was never hers to hold; gets $7,000 plus interest

3. Analysis – Since the first wife was entitled to $7,000 of the insurance proceeds at the time of the husband’s death, she is no less entitled because the proceeds have already been converted by being paid, erroneously, to the named beneficiaries

4. Notes – a. Must have consideration (contractual) before you can

trace b. First wife has no legal claim against the insurance

company because they did nothing wrong

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c. If the first wife demands that the insurance company pay her, insurance company could use interpleader to bring both parties to court OR seek declaratory judgment

d. Massachusettsi. Idea of substitution that the New York court

approached does not work; the innocence of the legal title holder (spouse) is relevant to tracing the constructive trust

e. Wisconsini. Additional factors include actual or constructive

fraud, duress, abuse of confidential relationship, mistake, commission of a wrong, or any form of unconscionable conduct

b. Tracing i. Plaintiff must trace!

1. Plaintiff identifies her asset which effected the defendant’s enrichment

2. Plaintiff traces or identifies the asset as belonging in “good conscience” to her even though the defendant owns title of the asset

3. Chancellor, assuming that the defendant owns title, decrees the defendant to be trustee of the asset for the benefit of the plaintiff

4. Defendant then ordered to convey the propertyii. Exceptions

1. Numerous Fraud Victims a. When there are lots of victims of fraud, only the most

recent victims of the fraud will be able to trace their fundsb. Courts will normally treat all the fraud victims equally

2. Illegally Obtained Funds (Innocent spouse) a. Accountant embezzles $75K and used $250 to buy $100K

life insurance policyb. Account dies, leaving nothing to his estate – proceeds

were claimed by employer and his surviving spousec. Court awarded $75K of the insurance proceeds to

employer, not the typical $100Ki. Innocent wife changes the analysis

iii. Hypotheticals 1. Defendant committed fraud against Plaintiff 2. Plaintiff sues defendant for $75K

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a. Can seek punitive damages3. Paid some of the money for a piece of property4. Plaintiff can go after the legal owner of the property (tracing the

money from fraud to new property)5. If the property appreciated, Plaintiff may recover more than the

amount he was defraudediv. Tillman v. Mitchell (Miss. Ct. App. 2011)

1. Facts – Tillman sued Mitchell (his half brother) for constructive trust. Mitchell owed the property and Tillman rented the house. Mitchell counter-sued for back rent. Trial court denied Tillman’s claim and awarded Mitchell back rent.

2. Holding – Affirmed. No constructive trust and ordered Tillman to pay back rent.

3. Notes –a. Constructive trusts are not always winnersb. They go to chancery courtc. Standard of review on appeal

i. Question of law – de novoii. Question of fact – plain error or abuse of

discretiond. What gives rise to constructive trusts? Unjust enrichment

i. Crime, fraud, duress, concealment, breaches of trust/fiduciary relationship

ii. Any other situation in which equity and good conscience would make it improper to retain the property

e. In Mississippi, the existence of a constructive trust must be proved by clear and convincing evidence

i. Higher standard than normal

V. DEFENSES TO RESTITUTIONa. Introduction

i. Affirmative defense if different than negating an element of plaintiff’s cause of action (failing to plead or otherwise prove)

ii. Rather, affirmative defense consists of new factual material that the defendant brings in, not to challenge the truth of plaintiff’s facts, but to defeat or reduce the plaintiff’s recovery

b. General defenses apply i. Issue preclusion

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ii. Claim preclusioniii. Unclean hands

c. Restitution-specific defenses i. Time bar

1. For legal restitution (i.e., quasi-contract, quantum meruit, contract implied in law)

a. Can be time-barred under the state’s contract statute of limitations

2. For equitable restitution (i.e., constructive trust, subrogation or accounting)

a. Can be barred under chancery’s equitable doctrine of laches

ii. Change of position estoppel1. Ought to accept defense to both legal and equitable restitution 2. Primary used as a defense to plaintiff’s transfer by mistake3. Defendant must not learn of mistake before disbursing the funds

iii. Bona fide purchase or purchase for value1. Third party who buys property for value and without notice of

constructive trust claimiv. Bona fide creditor or payment for value

1. X mistakenly received $500 from Bank2. X used money to pay debt to Y3. Bank sues Y to recover4. Y is a bona fide creditor with a successful defense

a. Y lacked notice that the money was not X’s and gave up X’s debt to him in return for the money

§ 12 – Restitution in Transactions

I. ELECTION OF ANOTHER REMEDYa. Introduction

i. You can plead multiple, and even inconsistent theories, of recovery1. BUT you cannot get a double recovery

ii. No requirement at the beginning of the case to elect a remedyiii. You should think about pleading all of the following claims at the

beginning of the case—Ex. Sale for Little Bear book1. Breach of contract

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a. Elements – contract existed, it was breached, damages2. Tort

a. Elements – duty, breach, causation, damagesb. Damages – loss suffered, expectation damages

3. Restitutiona. Elements – unjust enrichmentb. Damages – benefit to seller could be recovered

b. Gannett Co. v. Register Publishing Co. (D. Conn. 1977) i. Facts – Register refused to pay after learning of overvaluation of assts

and inflated circulation figures (fraud). Action was brought by Gannett of newspaper against buyer for failure to pay amount due. Buyer counterclaimed for compensatory and exemplary damages or in alternative for rescission.

ii. Holding – Buyer not entitled to rescissioniii. Rules –

1. May rescind contract that’s induced by frauda. Remedy – goes back to the status quo

2. Right to rescind must be exercised within a reasonable timeiv. Analysis –

1. Register gave no notification of intent to rescind to Gannett within reasonable time after it discovered alleged frauds

2. Register exercised dominion over newspaper by treating it as its own property

a. Increased prices, changed typeface, alter editorial policies, altered geographic regions of distribution, etc.

3. Register did not operate it as gratuitous bailee for benefit of ultimate owner

v. Notes – 1. So much time has passed that it would be difficult to put the

parties back in their original position2. Mutual Mistake

a. There was no contract so you cannot get breach of contract

b. You only get restitution!

II. LACK OF INJURYa. Earl v. Saks & Co. (Cal. 1951)

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i. Facts – Barbee and Earl went to the store's fur salon and chose a $5,000 fur coat for the donee. Barbee offered to buy the coat for $4,000 and the store refused. Unknown to the Barbee, the Earl asked the store to pretend to sell the donor the coat for $4,000, and that the Earl would pay the difference. Earl later paid difference. Barbee then came to the store and said he had revoked the gift of the coat to the Earl, and that he wanted the coat. The store tried to return to the Earl her money on the coat, but she refused. She sued Saks and Saks interpleads Barbee.

ii. Holding – Reversed for Barbeeiii. Notes –

1. Allowed to rescind the contract for fraud

§ 13 – Tort and Contract Damages

I. WILL BE ON EXAM – Buy and Seller Situationa. Facts

i. Buyer is a restaurant1. Spends $2000 on advertisement and menus2. $1000 deposit

ii. Contract with seller for 10,000 oysters at $0.50 per oyster1. Friday by 2:00 pm2. Statute of frauds is satisfied

iii. Seller breaches contract1. Sells oysters to third party for $1.00 per oyster

iv. Buyer intends to sell oysters for $2.00 per oyster1. All oysters would have been sold

v. Buyer still turns a profit, but restaurant gets a bad reputationvi. Buyer goes out of businessvii. Seller offers to give back $1000 deposit

b. Potential Remediesi. Rescission, plus $1000 deposit

1. WATCH OUT – state that you’ll need to research whether agreeing to rescission waivers your contractual or tort damages

a. Don’t waive remediesii. Contract Damages

1. Specific performance is out (not fresh)2. Entitled to be put in the place they would have been but for the

breach

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a. Difference and consequential damages = $15,000b. BUT the restaurant still made a profit

3. Expectation Damagesa. Cover + incidentals

i. If you can get the oysters, party must pay for replacement costs

b. Difference + incidental + consequentiali. FMV – some evidence that $1.00 per oyster is FMVii. $0.50 per oyster is difference between contract

price and FMVc. Lost sales for Friday night

i. Expected to sale 10,000 at $2.00 = $20,000ii. Paid $0.50 per oyster = $5,000

iii. Entitled to $15,000d. No reliance damages in addition to expectation

4. Consequential Damagesa. You don’t get all of the damages that have been causedb. Hedley Test – Must be loss that is directly related to

breach or within the reasonable contemplation of the parties

c. Lost profits after Fridayi. Hard to show

iii. Tort Damages1. Fraudulent Misrepresentation

a. Misrepresentation (Fraud/Deceit; Negligent; or Innocent)b. Reasonable Reliancec. Damagesd. Degree of Fault

i. Fraud/Deceit- intentional: knowledge and reckless disregard

ii. Negligent- breached duty to speak truthfullyiii. Innocent- strict liabilityiv. Compensatory Damages

e. General – reasonably foreseeable f. Special – business failure, decline in reputation

2. Punitive Damagesa. Only with malice or gross negligence

iv. Restitution

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1. Unjust enrichment

II. INTRODUCTIONa. Contract Limitations

i. Reasonable Liquidated Damagesii. Exclusion of Certain Damages

1. Not all liability2. Personal and property exclusions unconscionable

b. Consequential Damagesi. Parties are entitled to but recovery is limitedii. Contracts

1. Directly caused or within the reasonable contemplation of the parities

2. Requires knowledge or noticeiii. Torts

1. Reasonable foreseeabilityc. Evra Corp. v. Swiss Bank Corp. (7th Cir. 1982)

i. Facts – Swiss Bank failed to deposit Hyman-Michaels’ money in the bank account of a third party. Failing to do so cost Hyman-Michaels its charter contract with Pandora Shipping. Hyman-Michaels sued Swiss Bank to recover arbitration costs and los profit due to cancellation of charter.

ii. Holding – Swiss Bank was not required in the absence of a contract to take precautions or insure against a harm that it could not measure but that was known with precision to Hyman-Michaels, which could by the exercise of common prudence have averted it completely

iii. Analysis – 1. If you can avoid the consequences, you cannot recover damages

iv. Notes – 1. General and special damages have different meanings for

contract/tort and personal injury2. General Damages

a. Harm any victim would encounter as following naturally from the breach

i. Contract – differenceb. Calculation of general damages is based on value

i. Breach – buyer recovers item’s FMV less its contract price

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ii. Property – owner recovers diminished value, the property’s value before the harm less its value after

c. Here, seeking funds or interest that were lost during transfer (i.e., the $27,000 Hyman-Michaels tried to transfer)

3. Special Damagesa. Special damages that are peculiar to a plaintiffb. Here, seeking loss from dislocation in one’s business

triggered by failure to payc. Types

i. Incidental and consequential damagesd. Limits – harder to recover

i. Pleading – FRCP 9(g) requires plaintiff must plead special damages specifically

ii. Proof – Plaintiff must prove special damages with reasonable certainty, as accurately as is reasonably possible

iii. Remoteness – Plaintiff may not recover special damages that are too remote, even if they were realized, pleaded, and proved

iv. Waiver – Plaintiff’s opportunity to recover special damages is subject to bargaining

III. ECONOMIC LOSS RULEa. Local Join Executive Board v. Stern (Nev. 1982)

i. Facts – Employees and union brought suit against the architects of the MGM Grand to recover lost wages as a result of a fire.

ii. Holding – Employees may not recover economic losses whose persons or property have not been touched by the tortfeasor’s negligence

iii. Analysis – Employees did not have contract with defendant, nor were injured by the fire

iv. Rule –1. Absent privity of contract or an injury to person or property, a

plaintiff may not recover in negligence in economic loss2. Reasons

a. Not proximately caused – Too remote and speculativeb. Not foreseeable – Economic damages in these

circumstances are not foreseeable

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c. No duty – A plaintiff suffering purely economic damages from defendant’s negligence is outside the circle of those defendant owes a duty

d. Policy approach – slippery slope

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