Business And Its Legal Environment (Mgmt 246)

1. Business And Its Legal Environment (Mgmt 246) Professor Charles H. Smith Intentional Torts, Negligence, Strict Liability and Product Liability (Chapters 10 and 11) Spring 2004

2. Types of Torts • Intentional torts – arise from an act defendant consciously performs; key is the intent to perform the act and not necessarily the intent to do harm (e.g., shooting gun into the air), though an intent to cause harm is the best way to prove an intentional tort. • Negligence – no intent required; act (or omission) creates risk of harm; accident, careless, mistake, misjudgment. • Strict liability – traditionally, harm caused by ultrahazardous activity or consumption of drugs/food/beverages supports liability without fault; theory extended to product liability starting in the mid-20th Century.

3. Causation and Damage Required For All Torts • Causation – the “bridge” between the defendant’s bad act and injury/damages suffered by the plaintiff; must be a reasonable relationship between the bad act and injury/damages. • Damage – tort law is based on compensation for a loss that can somehow be measured in financial terms; if no damage, then no compensation is necessary and the defendant will win; “damage” includes any kind of measurable financial loss; e.g., physical injury, loss of business, emotional distress; “damage” also called injury or loss.

4. Some Intentional Torts • Intentional infliction of emotional distress – “outrageous” conduct by defendant causes plaintiff to suffer severe emotional distress; e.g., Stern case. • Defamation – based on defendant’s false statement of fact that causes damage to plaintiff; statement can be spoken (slander) or written or on the internet (libel). • Invasion of privacy – use of person’s name, picture or likeness for commercial purposes without permission; intrusion into a person’s private life; public disclosure of private facts.

5. Some More Intentional Torts • Wrongful interference with contractual or business relationship/wrongful interference with prospective economic advantage – see Mathis v. Liu (pp. 237-38). • Trespass – defendant’s entry onto plaintiff’s real or personal property without permission; some say e-mail “spam” is trespass. • Conversion (includes embezzlement) – defendant initially entrusted with plaintiff’s property (e.g., car, money) but defendant then converts property to own use (e.g., unpermitted use of car, spending money on personal matters). • Fraud (also called misrepresentation or deceit) – defendant’s false statement of purported fact made with knowledge of falsity and intent to deceive plaintiff; plaintiff’s reasonable reliance on this statement causes damage to plaintiff.

6. Negligence - Elements • Duty of care – defendant owes a duty of care to plaintiff; see Martin v. Wal-Mart Stores, Inc. (pp. 242-43). • Breach – defendant breaches the duty of care owed to plaintiff. • Causation and damage – defendant’s breach of the duty of care owed to plaintiff causes damage to plaintiff; see Palsgraf v. Long Island Railroad Co. (page 245) re causation.

7. Negligence – Some Defenses • Assumption of the risk – see Crews v. Hollenbach (pp. 246-47) (“fireman’s rule” case); recreational/sports activities. • Comparative negligence – liability proportioned per percentage of plaintiff’s fault; recognizes that plaintiff may contribute to the accident but should still be entitled to win. • Superseding/intervening cause – is there a break in the causal connection between defendant’s bad act and plaintiff’s damage?

8. Strict Liability • Liability without fault as a matter of public policy – three elements: • The activity involves potentially serious harm to persons or property; • The activity involves a high degree of risk that cannot be guarded against completely by the exercise of reasonable care; and • The activity is not commonly performed in the community.

9. Product Liability • “Product liability” is part of strict liability; sometimes called “products liability” or “strict products liability.” • Recognizes that there will be defects in mass-produced products even ifused as intended; someone other than the injured consumer or bystander should be legally responsible for damage caused by those defects. • Three types of product liability in Restatement (Third) of Torts – manufacturing defect; design defect; warning defect. • Alleging product liability and negligence together – gives plaintiff options since (1) no need to prove fault for product liability (while negligence requires fault in form of breach of duty) but (2) if fault for negligence can be proved, jury may award more money vs. “blameworthy” defendant who “did a bad thing.” • Case studies – Jarvis v. Ford Motor Co. (pp. 256-57), Greenman v. Yuba Power Products, Inc. (page 259), Liriano v. Hobart Corp. (pp. 261-62), Smith v. Ingersoll-Rand Co. (pp. 264-65) and McDonald’s coffee case.

10. Damages – What Kind of Money Can You Get in a Tort Case? • Special damages – can be measured in exact terms; easiest to prove since usually documentation and/or other clear way to show nature/amount; e.g., medical bills re personal injury case, contract re fraud case or to show loss of income. • General damages – intangible damages, so harder to prove with any precision; e.g., emotional distress or pain and suffering; not available for Br/K cause of action. • Punitive damages – assessed as punishment in addition to special and general damages; based on (1) defendant’s oppression, fraud or malice (how “bad was the defendant?), and (2) defendant’s wealth (in order to truly punish the defendant); not available for negligence or Br/K cause of action; subject of much political debate re “tort reform” though rarely awarded; new U.S. Supreme Court case held that there should be a single-digit ratio between (1) amount of punitive damages and (2) amount of general and special damages.