Torts and Cyber Torts

Basis of Tort Law

Doing business today involves risks, both legal and financial.

A tort is a civil injury designed to provide compensation for injury to a legally protected, tangible or intangible, interest.

There are intentional and unintentional (negligence) torts.

Intentional Torts against Persons and Business Relationships

The person committing the tort, the Tortfeasor or Defendant must “intend” to commit the act. 

Intend means:Tortfeasor intended the consequences of her act; or She knew with substantial certainty that certain consequences would result.

Types of Intentional Torts

ü   Assault and Battery

ü   False Imprisonment.

ü   Infliction of Emotional Distress.

ü   Defamation.

ü   Invasion of Privacy.

ü   Business Torts.

ü   Assault and Battery

ASSAULT is an intentional, unexcused act that:

Creates a reasonable apprehension of fear, or

Immediate harmful or offensive contact.

NO CONTACT NECESSARY.

BATTERY is the completion of the Assault:

Ø  Intentional or Unexcused.

Ø  Harmful, Offensive or Unwelcome.

Ø  Physical Contact.

Defenses to Assault & Battery

ü   Consent.

ü   Self-Defense (reasonable force).

ü   Defense of Others (reasonable force).

ü   Defense of Property.

ü   False Imprisonment

False Imprisonment is the intentional:

Ø  Confinement or restraint.

Ø  Of another person’s activities.

Ø  Without justification.

Merchants may reasonably detain customers if there is probable cause.

Intentional Infliction of
Emotional Distress

An intentional act that is:

Extreme and outrageous, that Results in severe emotional distress in another.

Most courts require some physical symptom or illness.

Defamation

Right to free speech is constrained by duty we owe each other to refrain from making false statements.

Orally breaching this duty is slander; breaching it in print or media is libel. 

Gravamen of defamation is the “publication” of a false statement that holds an individual up to hatred, contempt or ridicule in the community.

Publication requires communication to a 3^rd party.

Damages for Libel

General Damages are presumed; Plaintiff does not have to show actual injury.

General damages include compensation for disgrace, dishonor, humiliation, injury to reputation and emotional distress.

Damages for Slander

Rule: Plaintiff must prove “special damages” (actual economic loss).

Exceptions for Slander Per Se. No proof of damages is necessary:

Ø  Loathsome disease,

Ø  Business improprieties,

Ø  Serious crime,

Ø  Woman is non-chaste.

Defenses to Defamation

Truth is generally an absolute defense.

Privileged (or Immune) Speech.

Absolute: judicial & legislative proceedings.

Qualified: Employee Evaluations.

Defamation-Public Figures

Public figures exercise substantial governmental power or are otherwise in the public limelight.

To prevail, they must show “actual malice”: statement was made with either knowledge of falsity or reckless disregard for the truth.

Invasion of Privacy

Every person has a fundamental right to solitude freedom from public scrutiny.

Use of Person’s Name or Likeness.

Intrusion on Individual’s Affairs or Seclusion.

Publication of Information that Places a Person in False Light.

Public Disclosure of Private Facts.

Appropriation

Use of another’s name, likeness or other identifying characteristic for commercial purposes without the owner’s consent.

Fraudulent Misrepresentation

Fraud is intentional deceit.  Elements:

Ø  Misrepresentation of material fact;

Ø  Intent to induce another to rely;

Ø  Justifiable reliance by innocent party;

Ø  Damages as a result of reliance;

Ø  Causal connection.

Fact vs. Opinion.

Wrongful Interference

Tort that interferes with a contractualrelationship.

Occurs when:

Ø  Defendant knows about contract between A and B;

Ø  Intentionally induces either A or B to breach the contract; and

Ø  Defendant benefits from breach.

Case 5.1: Mathis v. Liu (2002).

Wrongful Interference

With a BusinessRelationship occurs when:

Established business relationship;

Tortfeasor, using predatory methods, causes relationship to end; and

Plaintiff suffers damages.

Bona fide competitive behavior is a defense to this tort.

Intentional Torts to Property

Trespass to land occurs when a person, without permission:

Physically enters onto, above or below the surface of another’s land; or

Causes anything to enter onto the land; or

Remains, or permits anything to remain, on the land.

Intentional Torts to Personal Property

Trespass to personal property is the Intentional interference with another’s use or enjoyment of personal property without consent or privilege.

Disparagement of Property.

Slander of Title or Quality.

Negligence

Tortfeasor does not intend the consequences of the act or believes they will occur.

Actor’s conduct merely creates a foreseeable risk of injury. Analysis:

Ø   Defendant owed Plaintiff a duty of care;

Ø   Defendant breached that duty;

Ø   Plaintiff suffered legal injury;

Ø   Defendant’s breach caused the injury.

Duty of Care

Defendant owes duty to protect Plaintiff from foreseeable risks that Defendant knew or should have known about.

Courts use reasonable person standard (jury) to determine whether duty exists.

Duty of Landowners to invitees.

Case 5.2: Martin v. Wal-Mart Stores, Inc. (1999).

Duty of Care: Foreseeability

The consequences of an act are legally foreseeable if they are consequences that typically occur in the course of event.

Whether an act is foreseeable is generally considered a matter of fact determined by the reasonable person standard (jury).

Duty of care varies, based on the Defendant’s occupation, relationship to Plaintiff.

Professionals may owe higher duty of care based on special education, skill or intelligence. Breach of duty is called professional malpractice.

Injury and Damages

To recover, Plaintiff must show legally recognizable injury.

Compensatory Damages are designed to reimburse Plaintiff for actual losses.

Punitive Damages are designed to punish the tortfeasor and deter others from wrongdoing.

Causation

Even though a Tortfeasor owes a duty of care and breaches the duty of care, the act must have causedthe Plaintiff’s injuries.

Ø  Causation in Fact, and

Ø  Proximate Cause.

Case 5.3: Palsgraf v. Long Island RR Co. (1928)

Causation in Fact

Did the injury occur because of the Defendant’s act, or would the injury have occurred anyway?  

Usually determined by the “but for” test, i.e., but for the Defendant’s act the injury would not have occurred.  Proximate Causation

An act is the proximate (or legal) cause of the injury when the causal connection between the act and injury is strong enough to impose liability.

Foreseeability of injury is an important factor.

Think of proximate cause as an unbroken chain of events.

Defenses to Negligence

Assumption of Risk.

Superceding Intervening Cause.

Contributory or Comparative Negligence.

Assumption of Risk

Plaintiff has adequate notice and understanding of the risks associated with an activity.

He knowingly and willingly engages in the act anyway.

Plaintiff, in the eyes of the law, assumes the risk of injuries that fall within the scope of the risk understood.

Case 5.4:   Crews v. Hollenbach (1999).

Superceding Cause

An unforeseeable, intervening act that occurs after Defendant’s act that breaks the causal relationship between Defendant’s act and Plaintiff’s injury relieving Defendant of liability.

If the intervening act was foreseeable, however, Defendant may be liable for Plaintiff’s injuries.

Contributory Negligence

Under common law, if Plaintiff if any way caused his injury, he was barred from recovery.

Most states have replaced contributory negligence with the doctrine of comparative negligence.

The operative concept in comparative negligence is that one cannot recover from another for any injuries one has caused to oneself.

Comparative Negligence

In determining liability, the amount of damages a Plaintiff causes to herself are subtracted from the amount of damages suffered by the Plaintiff and only the remainder is recoverable from the Defendant.

However, if Plaintiff is more than 50% liable, she recovers nothing.

Special Negligence Doctrines

Res Ipsa Loquiter.

Negligence Per Se occurs when Defendant violates statute that causes injury to Plaintiff:

Ø  Statute sets out standard of care.

Ø  Plaintiff is member of class intended to be protected by statute.

Ø  Statute designed to prevent Plaintiff’s injury.

Special Negligence Statutes

“Danger Invites Rescue” Doctrine.

Good Samaritan Statutes.

Dram Shop Acts.

Cyber Torts

Defamation Online.

Ø  Liability of ISP’s.

Ø  Piercing the Veil of Anonymity.

Spam.

Ø  Trespass to Personal Property.

Ø  Statutory Regulation of Spam.

Constitutional Authority to Regulate Business

History
Before the Revolutionary War, States wanted a confederation with weak national government and very limited powers.
After the war, in 1787, the States voted to amend Articles of Confederation and create a new, federal government that shared power with States.
Constitutional Powers of Government
Constitution established a federal form of government with checks and balances among three branches: executive, legislative and judicial.
National government has limited, enumerated powers delegated from States.
Privileges and Immunities Clause.
Full Faith and Credit Clause.
U.S. Commerce Clause
Power to regulate interstate commerce defined in Gibbons v.Ogden (1824).
Expansion to private businesses began with Wickard v. Fillburn (1942). Today, Commerce Clause it authorizes the national government to regulate virtually any business enterprise, including internet.  Limits: U.S. v. Lopez (1995)
Case 4.1:  Reno v. Condon (2000)
State Commerce
States possess inherent police powers to regulate health, safety, public order, morals and general welfare.
“Dormant” Commerce Clause.
Case 4.2:  Ferguson v. Friend finders. Inc.(2002)
State laws that substantially interfere with interstate commerce will be struck down.
U.S. Supremacy Clause
Article VI of the Constitution “Supreme Law of the Land.”In case of direct conflict between state and federal law, state law is invalid.
Congress can preempt states.
Federal Taxing and Spending Powers.
Business and the Bill of Rights
Bills of Rights are not absolute.
Originally the Bill of Rights was a limit on the national government’s powers.
During the early 1900’s, the Supreme Court applied the Bill of Rights to the States via the “due process” clause of the 14^th amendment.
Free Speech
Afforded highest protection by courts.
Symbolic Speech.
§Texas v. Johnson (1989).
§R.A.V. vs. City of St.Paul(1992).
Commercial Speech
Advertising is protected speech.  Restrictions must:
§Implement substantial government interest;
§Directly advance that interest; and
§Go no further than necessary.
Case 4.3: Bad Frog Brewery (1998).
Corporate Political Speech
Afforded significant protection by the first amendment but not to the degree of speech of natural persons.
First National v. Bellotti(1978).
Consolidated Edison v. Public Service Commission (1980).
Unprotected Speech
Certain types of speech are not protected by the first amendment:
§Slander.
§Obscenity (Miller v. California).
§Fighting Words.
Online Obscenity
§CDA, COPA, Children’s Internet Protection Act.
Freedom of Religion
First amendment many neither prohibit the “establishment” nor prohibit the “free exercise” of religion.
The first amendment does not require complete “separation of church and state.”
First amendment mandates accommodation of all religions and forbids hostility toward any.
Zorach v. Clauson(1952) and Lynch v. Donnelly (1984).
First amendment guarantees the “free exercise” of religion.
Employers must reasonably accommodate beliefs as long as employee has sincerely held beliefs.
§Frazee v. Illinois(1989).
Searches and Seizures
Fourth amendment requires  warrant with “probable cause.” Warrantless exceptions exist for “evanescent” evidence.
Searches of Business:  generally business inspectors must have a warrant.  Marshall v. Barlow’s(1978).
Self-Incrimination
Fifth amendment guarantees no person can be compelled to testify against himself in a criminal proceeding.
Does not apply to corporations or partnerships.
Due Process and Equal Protection
5^thand 14^th amendments provide “no person shall be deprived of life, liberty or property without due process of law.”
Procedural and Substantive issues.
Procedural Due Process
Procedures depriving an individual of her rights must be fair and equitable.
Constitution requires adequate notice and a fair and impartial hearing before a disinterested magistrate.
Substantive Due Process
Focuses on the content or substance of legislation.
Laws limiting fundamental rights (speech, privacy, religion) must have a “compelling state interest.”
Laws limiting non-fundamental rights require only a “rational basis.”
Equal Protection
Strict Scrutiny.
Laws that affect the fundamental rights of similarly situated individuals in a different manner are subject to the “strict scrutiny” test. Any “suspect class” (race, national origin) must serve a “compelling state interest” which includes remedying past discrimination.
Intermediate Scrutiny.
Applied to laws involving gender or legitimacy.
To be constitutional laws must be substantially related to important government objectives.
EXAMPLE: Illegitimate teenage pregnancy).
Rational Basis Test.
Applied to matters of economic or social welfare.
Laws will be constitutional if there is a rational basis relating to legitimate government interest.
Privacy Rights
Fundamental right not expressly found in the constitution, but derived from 1^st, 5^th and 14^th amendments.
Laws and policies affecting privacy are subject to the compelling interest test.

Court Procedures

Introduction

American and English court systems follow the adversarial system of justice.

Each client is represented by an attorney although a client is allowed to represent herself (called “pro-se”).

The American Court system follows procedural rules that ensure due process.

Procedural Rules

Court systems developed around the common law concept of “due process” which requires adequate notice and a fair and impartial hearing.

For example, all federal trials are governed by the Federal Rules of Civil Procedure and Federal Rules of Evidence.

Consulting an Attorney

Generally, the first step in litigation is contacting any attorney to seek qualified legal advice.

Legal Fees (hourly vs. contingent fee).  

Settlement Considerations.

Pre-Trial Procedures
(Stages of Litigation)

ØPleadings.

ØDiscovery.

ØPre-Trial.

ØTrial.

ØPost-Trial.

1^stStage: Pleadings-Complaint

Prepare Pleadings

File Petition/Complaint.

Court acquires jurisdiction over subject matter and Plaintiff.

Facts: what happened?

Prayer: Court relief.  

Pleadings-Service

Defendant served with Complaint and Summons.

Court acquires Personal Jurisdiction over Defendant (person or corporation).

Corporate Defendants served via Registered Agent. If the Defendant is out-of-state, Court can acquire jurisdiction by “long-arm” statutes.

Case 3.1:  Rio Properties v. Rio International Interlink (2002)

Pleadings-Answer

The Answer is the Defendant’s response to the allegations stated in the Plaintiff’s Complaint.

In the Answer, the Defendant must specifically admit or deny each allegation in the Complaint.

Pleadings-Answer

Defendant’s Answer:

§States General Denial.

§Move for Change of Venue.

§Allege Affirmative Defenses.

§Counter Claim against Plaintiff.

Answer-Affirmative Defense

Defenses in which the defendant essentially claims that even if all of the plaintiff’s allegations are true, the plaintiff cannot win because there is a more powerful law on the defendant’s side that will allow the defendant to win.

Fraud is an example of an affirmative defense that might be asserted in a breach of contract case.

Burden of proof is on the Defendant to show fraud actually took place.

Answer-Counter or Cross Claims

A counterclaim is a lawsuit filed by the Defendant against the Plaintiff, in response to the original complaint.  A cross-claim is against a co-Plaintiff or co-Defendant.

Answer-Motion to Dismiss

Defendant can move the Court to dismiss the Action for various reasons, such as:

The Court lacks jurisdiction.

The Plaintiff has failed to make all of the allegations, in his Complaint, that the law requires (i.e., the plaintiff has failed to state a cause of action).

Pleadings-Answer

Move to Dismiss.

Motion for Judgment on Pleadings.

Motion for Summary Judgment.

Case 3.2: Ausley v. Bishop(1999).

2^ndStage: Discovery

Discovery is the process by which parties obtain information from the opposing party prior to trial.

Depositions & Interrogatories.

Requests for Admissions.

Requests for Production Of Documents, Object and Entry.

3^rdStage: Litigation-Pretrial

Mediation-Arbitration.

Disposition without Trial.

Default Judgments.

Dismissals  (With/Without Prejudice).

Summary Judgment.

Settlement.

Pre-Trial Orders (ex:TRO, In Limine).

The Trial

Trial is fundamentally an evidence presentation and authentication procedure.

To prevail in a civil trial, Plaintiff must introduce a preponderance of competent evidence with respect to each disputed allegation in order to prove it.

The Defendant will “object” to Plaintiff’s evidence and the judge will rule on each objection. If the judge “overrules” the objection, the evidence is admitted for the jury to consider.  If the judge “sustains” the objection, the evidence is not admitted into the trial.

Bench Trial (no jury).

Jury Selection.

§Voire Dire.

§Challenges/Pick the Jury.

§Impanel Jury.

§Alternate Jurors.

Opening Statements.

Plaintiff’s Case--Evidence:

Witnesses- Direct examination vs. Cross X.

Admissibility of evidence decided by judge. Parties object to admission of evidence and judge decides, as a matter of law, whether evidence may be admitted into the trial.

Plaintiff’s Case (cont’d).   

Party may impeach the testimony or credibility of opposing witness by showing prior inconsistent statements and/or Perjury.

Defendant’s Case.              

üClosing Arguments.         

üJury Instructions and Deliberations.

Verdict.

Criminal case--burden of proof is “beyond a reasonable doubt” and the verdict (for guilty or acquittal) must be unanimous.  If not, mistrial/hung jury.

Civil Cases—generally, burden of proof is by “preponderance” of the evidence and a majority of jurors must agree on verdict. If not, then mistrial/ hung jury.

Judgment is the Court’s acceptance and recording of the jury’s verdict.

Post Trial Motions

Once the trial is concluded, a dissatisfied party may:

File a Motion for a New Trial.

Case 3.3: LeBlanc v. American Honda Motor Co (1997).

Ask that the judge enter a judgment contrary to the verdict (JNOV) rendered by the jury.

The Appeal

A party may appeal the jury’s verdict or any legal issue, motion or court ruling during the trial.

The party filing the appeal (Appellant) files a brief that contains a short statement of the facts, issues, rulings by the trial court, grounds to reverse the judgment, applicable law and arguments on Appellant’s behalf.

Appeals court can affirm (agree with) or reverse (disagree with) the lower court’s decision.

Enforcing the Judgment

Once a judgment becomes final (i.e., subject to no further judicial review) the defendant is legally required to comply with its terms.

Defendants who will not voluntarily comply with a judgment can be compelled to do so by seizure and sale of the Defendant’s assets.

Courts and Alternative Dispute Resolution

The Judiciary’s Role In American Government

Judicial Review was established by the U.S. Supreme Court in Marbury v. Madison (1803) where Chief Justice Marshall wrote:

“It is emphatically the province and duty of the judiciary to say what the law is….”

Basic Judicial Requirements

Jurisdiction: “Juris” (law) “diction” (to speak) is the power of a court to hear a dispute and to “speak the law” into a controversy and render a verdict that is legally binding on the parties to the dispute. 

Jurisdiction over Persons

Power of a court to compel the presence of the parties (including corporations) to a dispute to appear before the court and litigate.

Courts use long-arm statutes for non-resident parties based on “minimum contacts” with state.

Case 2.1: Cole v. Mileti (1998).

Jurisdiction over Property

Also called “in rem” jurisdiction.

Power to decide issues relating to property, whether the property is real, personal, tangible, or intangible.

A court generally has in rem jurisdiction over any property situated within its geographical borders.

Subject Matter Jurisdiction

This is a limitation on the types of cases a court can hear, usually determined by federal or state statutes.

For example, bankruptcy, family or criminal cases.

General (unlimited) jurisdiction.

Limited jurisdiction.

Original and Appellate Jurisdiction

Courts of original jurisdiction is where the case started (trial).

Courts of appellate jurisdiction have the power to hear an appeal from another court.

Federal Court Jurisdiction

“Federal Question” cases in which the rights or obligations of a party are created or defined by some federal law.

“Diversity” cases where:

The parties are not from the same state, and

The amount in controversy is greater than $75,000.

Exclusive vs. Concurrent Jurisdiction

Exclusive: only one court (state or federal) has the power (jurisdiction) to hear the case.

Concurrent: more than one court can hear the case.

Venue

Venue is concerned with the most appropriate location for the trial.

Generally, proper venue is whether the injury occurred.

Standing

In order to bring a lawsuit, a party must have “standing” to sue.

Standing is sufficient “stake” in the controversy; party must have suffered a legal injury.

Case 2.3:  High Plains Wireless LP vs. FCC (2002)

Trial Courts

Courts of record-court reporters.

Opening and closing arguments.

Juries are selected.

Evidence, such as witness testimony, physical objects, documents, and pictures, is introduced.

Witnesses are examined and cross-examined.

Verdicts and Judgments are rendered.

Appellate Courts

Middle level of the court systems.

Review proceedings conducted in the trial court to determine whether the trial was according to the procedural and substantive rules of law.

Generally, appellate courts will consider questions of law, but not questions of fact.

Supreme Courts

Also known as courts of last resort.

The two most fundamental ways to have your case heard in a supreme court are:

Appeals of Right.

By Writ of Certiorari.

Alternative Dispute Resolution

Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve.

There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved.

ADR

ADR describes any procedure or device for resolving disputes other than the traditional judicial process.

Unless court-ordered, there is no record which is an important factor in commercial litigation due to trade secrets.

Most common:negotiation, mediation, arbitration.

Negotiation

Less than 10% of cases reach trial.

Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case.

Successful negotiation involves thorough preparation, from a position of strength.

Assisted Negotiation

Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3^rdparty (e.g., a retired judge) who renders a non-binding “verdict.”  This facilitates further discussion and settlement.

Expert evaluations.

Conciliation: 3^rdparty assists in reconciling differences.

Mediation

Involves a neutral 3^rdparty (mediator).

Mediator talks face-to-face with parties (who typically are in different adjoining rooms) to determine “common ground.”
Advantages: few rules, customize process, parties control results (win-win).

Disadvantages: mediator fees, no sanctions or deadlines.

Arbitration

Many labor contracts have binding arbitration clauses.

Settling of a dispute by a neutral 3^rd party (arbitrator) who renders a legally-binding decision; usually an expert or well-respected government official. 

Recall the 1997 UPS strike when US. Labor Secretary Alexis Herman helped arbitrate the strike.

Arbitration Disadvantages

Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence.

Arbitrators do not have to issue written opinions.

Generally, no discovery available.

Arbitration Process

Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award.

Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement.

Providers of ADR Services

Non-profit organizations:

American Arbitration Association.

Better Business Bureau.

Online Dispute Resolution

Also called ODR

Uses the Internet to resolve disputes.

Still in its infancy but is gaining momentum.

International DisputeResolution

Forum Selection and Choice-of-Law clauses in contracts govern the transaction.

Arbitration clauses are generally incorporated into international contracts.