#15074 - Remedies Attack - Remedies

Attack Outline

Remedies – UVA Law

Prof. Laycock, Fall 2016

Damages

Rightful Position

• Rightful Position: P is entitled to recovery that puts him in the position he occupied before the injury.

  • Specificity (Hatahley; see also uncertainty Bigelow, Glendale Federal)

  • Lesser of Two Rule: P gets lesser of market value or replacement cost. See In re September 11th Litigation.

    • Exception: For special purpose property, replacement cost even if greater. (Trinity Church real property & King Fisher Marine chattels; rule in In re September 11th Litigation)

  • See also environmental cases for varying views on the rightful position

• Expectancy vs. Reliance:

  • Contracts: Expectancy is default rightful position in contract (see UCC section).

    • See UCC buyer and seller defaults

  • Torts: No expectancy in tort (Smith) EXCEPT in fraud cases (in most states).

Compensatory Damages

• Types

  • Direct Damages

  • Consequentials

    • Must be a normal and proximate result of the breach (Buck)

    • Not available if they resulted from a failure to pay money (Meinrath)

    • Framing: benefit of the bargain can make consequentials actually direct damages (Texaco)

  • Direct vs. Consequential:

    • Direct (general) Damages: Initial impact of wrong; value of what was taken/destroyed/damages/failed to deliver, etc.

    • Consequential (special) Damages: Everything that happens as a foreseeable and inevitable result of the initial impact. difference is based on the foreseeability/inevitability

• Issues

  • Avoidable Consequences (Mitigation): P is only entitled to damages that he could not reasonably avoid (mitigate). (S.J. Groves for contract; Hataley for tort)

  • Limits on Damages Contract Only

    • Liquidated Damages Clause: Fixes fair compensation for breach to avoid unnecessary litigation. (UCC 2-718(b))

      • May be the exclusive remedy, even if it undercompensates. (Northern Illinois Gas).

      • May not be a penalty. TEST: Reasonable and proportional to actual loss AND damages at time of K difficult to measure. (In Re TWA)

    • Limitation of Remedy Clause: Permissible unless it fails essential purpose (UCC 2-719). (see failed repair/replace clause but OK consequential damages clause limitation in Kearney )

  • Collateral Source

    • Offsetting Benefits and Collateral Sources: Reduction in damages other than lawsuit against D: insurance, workers’ comp, new job, charity payout, SS, disability, etc.

      • Modern Rule (Tort Reform): Many states now subtract all collateral source recovery (except from charity and family, NY also life insurance) from the damages award. Bars double recovery.

      • Oden: must itemize by type with offsetting/reducing

    • Subrogation: collateral source who paid P (e.g., insurance company) can recover from P if P collects for what collateral source paid for (must be specifically identified in damages award – Oden), or from D if P did not collect for what collateral source paid for. (pro rata–Ahlborn vs. in full–McCutchen)

  • Scope of Liability

    • Tort:

      • Economic Harm Rule: No liability in negligence (non-intentional) torts for purely economic harm that occurs without physical impact to yourself or your property. But see dignitary/emotional harms.

        • See Pruitt for relaxing the EHR in part for killed fish; See also In re Oil Spill

      • Proximate Cause: See Hatahley.

    • Contract

      • Economic Loss Rule: No recovery in tort for losses resulting from breach of K. (see Seely)

      • Consequentials: Only awarded with notice (foreseeability). (Swiss Bank)

    • Policy Limits: cannot recover for harms that are outside what the rule was intended to protect, even if violation of the rule caused the harm (see blowing antitrust Brunswick and firing union illegals Hoffman)

  • Measurement:

    • Jury may make reasonable inferences to estimate damages (Cf. Bigelow and Glendale Federal)

    • Grossly Excessive: Standard of review for jury awards on appeal. (Levka)

    • Business damages proven by comparison to similar businesses, or before/after wrong

  • Personal Injury/Wrongful Death

    • See list of Concrete and Abstract (Pain/Suffering) Harms and where they are recoverable

    • Pain and Suffering: Per diem for living persons; see methods of proof

    • Wrongful Death: see valuation of human life; adults vs. children; decedent’s pain & suffering

  • Dignitary: Compensate by P’s reaction, not by market. (Levka)

  • Constitutional Harm: no damages for violation of constitution itself (Carey), except voting rights

  • Tort Reform: usually affects remedy not right. Damage caps are constitutional (Arbino); fees and collateral source rules have changed incentives/recovery in different arenas

Punitive Damages

• Standard for Punitive Damages: see p. 227 n. 4

  • Mens Rea: Many require recklessness

    • Some require intent, some require knowledge or recklessness, and some simply imply things like knowledge

    • Some require actual malice (or implied malice)

  • Other factors: Degree of negligence, size of damage, obviousness of risk, bad-faith motive, whether harm was physical as well as financial, violence of harm, vulnerability of victim, damages that could have been caused (but weren’t).

    • In cases (Laycock): conscious business decision, systematic planned wrong, expectation of death/physical harm, fraud, no useful purpose, recklessness vs. willfulness, trial by media

  • Appellate Review: de novo (State Farm)

• Limitations on Punitive Damages:

  • Constitution: Three-factor test from BMW for whether it violates SDP: (1) Reprehensibility of conduct (most important); (2) Ratio to compensatory; (3) Other civil/criminal penalties available. Ratio may not exceed 1:9 (State Farm)

  • State Law: Varies by state. Some cap by dollar amount or ratio to compensatories. Some use multi-factor tests.

  • Federal Common Law: May not exceed compensatory (1:1) Exxon. Only applies in FCL cases (e.g. admiralty).

• Torts v. Contracts: No punitives for breach of K. Must be an independent tort occurring alongside K, and still must justify punitives

  • Independent torts: e.g. fraud, fraudulent inducement, conversion, willful/bad faith breach, tortious interference with K, gross negligence.

  • Not independent torts: Anything by which same action satisfies both tort and breach of K. (Southwestern Bell, Jim Walter Homes; see Formosa as example of when it’s actually independent).

Injunctive Relief

Permanent Injunctions (Final Injunctions):

• Prospective Injunctions: for relief in the future (e.g., stop violating the law)

  • Prophylactic Injunctions: broad injunction against lawful behavior (which could lead to or result in unlawful behavior/consequences) to prevent future harm

• Retrospective Injunctions: to remedy past harms (e.g., give back property)

• Structural Injunctions: injunctions on a public institution to bring into compliance with the law (e.g., school desegregation)

• Modification of Permanent Injunctions: generally res judicata, and no modification absent unforeseen changed circumstances (law or fact)

• Standard for Permanent Injunctions (vs. Damages): irreplaceability but see burden to D and Courts & Public Policy

Pre-Merits Relief

• Preliminary Injunctions: Injunction to prevent irreparable harm that will occur before court can adjudicate the merits

• TROs: Quicker form of pre-merits relief, expires after 14 days (extendable to 28), minimal notice and/or process

• Preliminary Injunction vs. TRO: preliminary injunction is with notice and is appealable. TRO will convert to preliminary injunction or expire after 14 or 28 days. TRO is more cautious because decision with even less information.

Retrospective Injunctions: where harm already happened

• One Satisfaction Rule: you can only get one of damages or a retrospective injunction (but in most jurisdictions you can get punitives with either) (Forster)

• Rightful Position: P’s position but-for the harm (causation/scope). May be defined by returning D to his rightful position. (Winston Research).

  • But see Equitable Discretion: courts may use equity to go beyond the rightful position (Bailey)

Structural Injunctions:

• Definition: Injunction on a public institution to bring it into compliance with the law.

  • E.g. schools (desegregation), prisons,

  • Less common: legislature (can even enjoin legislative acts – Brown, VMI)

• Scope: nature of the wrong determines scope of the remedy (Lewis, VMI, Hutto)

• LAYCOCK: they usually occur when there has been a history of unremedied violations

Modifying Injunctions

• RULE: Injunctions are res judicata unless vacated or modified on appeal, and thus has issue and claim preclusive effects. (Salazar). Enforceable even if they require more than the law (Frew).

  • EXCEPTION: Rule 60(b): may modify injunction for

    • (5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable

    • See Rufo: substantive and unforeseen changes of law or fact

    • See United Shoe: if initial injunction has failed to serve its purpose

  • LAYCOCK on Trend:

    • Rufo remains good law, and there is a trend toward deference to state and local governments

    • However, Horne may signal a loosening of Rufo (i.e., permitting more modifications), especially where certain facts were not litigated

Injunction vs. Damages

• Irreparable Injury Rule: injunctions may only issue to address an irreparable injury (one where there’s no adequate remedy at law that’s complete, practical & efficient)

  • Normally shown by irreplaceability (Pardee, which can include subjective valuation) or difficult to calculate/prove or nonexistent/inadequate damages (Continental, multiplicity of suits doctrine)

  • Contract: No irreparable injury unless goods are...