How noble the law, in its majestic equality, that both the rich and poor are equally prohibited from peeing in the streets, sleeping under bridges, and stealing bread! -- Anatole France
-- 7/96 --
Follows the Dobbs Hornbook -- the Problem Method!
A SURVEY OF REMEDIES
THE PRINCIPAL REMEDIES AND REMEDIAL RULES
THE NATURE OF REMEDIAL QUESTIONS AND A SURVEY OF BASIC REMEDIES.
GENERAL QUESTIONS OF REMEDY LAW
1) What remedies are potentially available (what remedy should the plaintiff pursue)? and 2) What is the scope or measure of the remedies that might be awarded (what procedural or tactical incidents accompany the chosen remedy)?
Four Types of Remedies:
1) Damages - this is an award of money given as compensation for the
plaintiff's loss, or, less often, to punish the defendant.
2) Restitution - a restitutionary remedy is an award of money, things or status given to prevent unjust enrichment of the D, but not necessarily equal to the plaintiffs losses.
3) Coercive Remedies - force the D to do something or to cease some activity. Coercive remedies are usually some form of injunction, but they do include specific performance of contracts.
4) Declaratory Remedies - DJ's provide an official and authoritative determination of some disputed question.
Three Broad Principles of Remedial Law:
1) It is desirable to compensate for rights but to avoid either over
or under compensation.
2) It is desirable to avoid economic waste,
3) It is desirable to maintain a degree of efficiency in administering remedies.
** Perales v Fenton. General Damages
Facts: Car accident w/ Damages
NB: Here market value of the car here s/b recovered, thus he could recover $5,000.
GR: Here the GR is the cost of performance will be recovered, subject to the exception of diminution in value where the cost of performance will create waste.
Thus, the $7,000 will not be paid here unless the object is unique or had some particular utility.
GR: Most of the time the market value test is determined objectively (thus the FMV here is $5,000).
NB: the subjective view here would be a $6,000 or $7,000 recovery.
** Benton v Henderson.
Facts: 1929 Antique Auto is stolen
Remedy: Damages for out of pocket expenses for car, thus Special Damages or Consequential Damages.
Attachment - before judgement you want to attach someone's assets.
Attachment - The legal process of seizing another's property in accordance with a writ or judicial order for the purpose of securing satisfaction of a judgment yet to be rendered.
While formerly the main objective of attachment was to coerce the defendant debtor to appear in court by seizer of his property, today the writ of attachment is used primarily to seize the debtor's property in order to secure the debt or claim of the creditor in the event that a judgment is rendered.
Special or Consequential Damages - incidental and other damages to the actual harm. Special Damages protects the loss of profits to the plaintiff. Here look to the uniqueness of the damages, this goes to the reasonableness of the damages.
General Damages - actual harm to the subject matter of the K. Here this is a loss in the asset base.
NB: Here the b/p is on the P to prove the loss w/ general and special damages.
NB: Special Damages are to be proven by a stricter standard than general damages, with special damages the P must provide documentation of the loss. Here Benton lost $5,000 out of his income stream, so they are special damages (also consequential damages).
** Zamora v Damson.
Facts: Damson stole an oil painting from Zamora
Wrong: Conversion - tort
Here the remedial goal is to make the P whole, so here he can recover $5,000 under damages as this is the value (FMV) of the painting. But under the unjust enrichment theory he can recover $10,000.
How is restitution measured?
1) Subjective or objective,
2) Are words use as terms of art?
NB: Damages and restitution are different so please use the correct terms.
Restitution is also a remedy in each of these cases: Breach of K, Unenforceable K's (Dr providing service to a patient, and Mistake and in Tort cases.
** Green v Dahlstrom.
Facts: Fraudulent deed of property
Remedy: Injunction, damages, Restitution?
Damages = $90,000 in general damages (10K is already paid). Restitution = $90,000 for unjust enrichment. Injunction to recover property (ejection).
GR: Dobbs says that there is no rule that says that an injunction can't issue if there is an adequate remedy at law.
In this case, $$$ doesn't do it, but there is still irreparable harm here. If the D doesn't convey Blackacre after the order do a constructive trust, a contempt order or recision of the contract, or reformation of the deed by a court decree.
** Leary v Langtree.
Facts: Contractor removes gravel from nearby land
Wrong: Conversion or Trespass
Remedy: Preventative Injunction, Damages (cost of gravel), or
Preventative Injunction - an injunction that prevents future harm,
here to not take the gravel.
Reparative Injunction - orders the D to repair the harm already done, here to restore the gravel.
Mandatory Injunction - mandates an affirmative act.
Prohibitory Injunction - prohibits conduct.
Question: here is there unjust enrichment?
Yes there is, but the unjust enrichment might be less than the P's cost of the gravel. Is there irreparable harm that will occur without the injunction? No, there is no irreparable harm so the injunction will probably not issue.
1) Adequacy Test - Legal remedy must be inadequate,
2) Will some irreparable injury result?
When should a coercive remedy not be issued?
When some noncoercive remedy is available. The Test is the Adequacy/irreparable harm tests.
Thus here, the injunction s/n issue because damages can issue at the cost to replace the gravel (the FMV), in addition PP plays a big part here as too much of the city depends on the road and the gravel and NO INJUNCTION WILL ISSUE !!!
Class: Injunctions today come when the P really needs one or the P doesn't get one if he comes to court with unclean hands.
GR: in pure equity matters today we have no juries.
The Enforcement Aspect: one of the most important aspects of an injunction is for enforcement. Do not cut down the trees! GR: an injunction and money damages can be awarded together! GR: the adequate remedy at law test is dead!
THE COERCIVE REMEDIES: "EQUITY"
NB: an "equity case" or a purely equitable suit has no right to a jury trial.
GR: a case is "equitable" when the only remedy sought is equitable; this includes all cases where the plaintiff seeks only an injunction.
** Hallows v National Bank of Arizona .
Goal here is Compensation
Facts: Partners try to open there own law firm but bank refuses to
give the loan!
Wrong: Breach of K or Misrepresentation
Remedy: Damages for Loss of income
Damages = not really = need loan,
Restitution = No!
Coercive Remedies = Specific Performance on the K
NB: Here, Irreparable harm will occur if they do not get the proposed
funding for their new firm.
NB: Here there is no way to measure damages with any adequacy!!!
Here we could get the injunction (SP) issue up to the court faster than a damages claim...but the damages claim will take a long time to hear. Here if there is no remedy at law, then go after an injunction for SP!!!
GR: to get equitable relief today all you need is irreparable harm, the adequate remedy at law test is dead.
Here, if the bank does not live up to its commitment, then the P must
show irreparable harm by:
1) an uniqueness feature, or
2) Damages can't be measured w/ reasonable certainty.
NB: remember, the court does not like to supervise the D's, if this
is the case, then chances are that the SP decree will not issue (courts
are crummy administrators)! Courts like clean 1-shot deals like
trespass and etc.
NB: the bank will argue that the K is void as being vague or at what interest rate the law firm will pay
GR: the penalty for the bank ignoring the SP order is the bank
president going to jail for contempt.
In terms of an adequate remedy at law - Dobbs tells us that P's will be successful if the contract or subject of the dispute is unique or the subject of the underlying transaction is unique.
GR: Every piece of property is unique!
Is the uninsured D uncollectible or damages that can't w/ reasonable certainty a presumption of coercive relief?
If so or yes, this is a trigger for an coercive remedy!
** Burton v Winter.
Discretion in Equity
Facts: Burton sells a 600 acre tract to developers and reserves an easement!!! Here Burton moves for an injunction to remove the barricade, because there is no adequate remedy at law because it is difficult to measure damages, here P must prove irreparable harm.
Wintergreen on the other hand will say the property is meant for Burton but not the public.
1) Damages are adequate,
2) Harm isn't irreparable,
3) Balancing of Harm v Benefit.
Wrong: Breach of Covenant
Remedy: Damages - no adequate remedy at law
Restitution - laches based on 2 year delay.
Coercive Remedy - injunction
Laches - where the P sleeps on his rights he is estopped from asserting his rights.
Sum up: this is a discretionary problem of the judge as to or not to grant an injunction. SP v Damages is dependent on what is the substantive right on the occasion.
** Estep v McCauley.
Facts: $300,000.00 w/ 50 year old trees to be cut down!
Wrong: Trespass and Conversion
Remedy: Preliminary Injunction or TRO done Ex Parte
Here, this is a boundary dispute. Come to court w/ an affidavit from the P (which is self serving) saying the trees are extremely valuable and old. Then after getting the TRO give notice to the D and a copy of the order. Here you must also provide a bond in the case the D is proven the winner!
NB: $1000.00 bond costs $100-200 dollars. Normally a 20% premium and the P doesn't get this back
NB: Tro's should be seldom given, but are easy to get if you prove irreparable damage and imminent injury.
The Leubsdorf Formula as memorialized by Posner
P = probability of success of the plaintiff,
1-P = probability of success of the defendant,
P x Harm (P) > (1-P) x Harm (D) for the injunction to issue for the P.
GR: Bonds are mandatory according to Dobbs, the judge sets the bond price as to the harm to the D w/ his attorneys fees included. The bond sets the limit on recovery and judges tend to err on the high bond side.
NB: P's draft the injunctive order and when this is done there is a need for specificity. The D isn't bound w/ out notice of the injunction
** Aarons v Ballman Industries, Inc.
Injunction v Damages?
Facts: Ballman operated a factory in Charlestown that emits smoke and
particles in a town and some residents want the harm stopped.
Coercive - Injunction
Where is the case to be heard? Either w/ a federal judge or jury or a state judge or jury on the other hand. Federal Jury for the P.
Aarons: File suit in Federal Court w/ a jury trial.
Ballman: Will try to make this an equity case w/ no jury trial.
NB: This is a mixed case and if the case is in federal court they will try all legal questions first to set the facts (JURY) then apply the facts to the equitable case by the judge (here the P will claim RJ).
If in state court the judge under the clean-up doctrine will decide the equitable claims first, then w/ RJ decide the legal, "at law" claims. Here there is no JURY!
NB: Remember: for an injunction do the irreparable harm test.
AT CL there were no jury trials for equitable matters, but today law and equity matters are merged.
Two part test:
1) Remedy - injunction or $$$,
2) Substantive right for history:
- look at the pleading,
- these don't always exist because of the c/a.
GR: A constructive trust and an accounting is done in an equity court
(in personam) and no jury trial.
GR: in a state court check the Stt to see if the state uses the historical approach or the remedy approach. Under the historical approach we look at the substantive wrong.
With Mixed Cases where the relief is both equitable and legal, what is the issue? Which claim do you do first because of the RJ defense. Here where there is INCIDENTAL JURISDICTION the judge does the whole trial himself (this is also called the clean-up doctrine).
RJ - no matter what the judge does, the winning side will always claim RJ and the factual determinations made will be binding on the jury.
Check this - when the P asks for a specific remedy can the D contest the remedy and either remove a jury or get a jury?
Check which is done first then, in state and federal cases...
** Esquivel v Simpson
Contempt of Court
Two types of Contempt:
1) Direct - behavior in the presence of the judge,
2) Indirect - behavior that occurs outside the vision of the judge.
Here we are talking about the D doing something or not doing something.
GR: Equity acts here in personam on the body of the defendant.
Here the judge is ordering a person to do something or not do something.
Facts: Suit for SP to convey Blackacre to Esquivel
Wrong: Breach of K
Remedy: Damages -
Coercive - SP
NB: Here the remedy by choice is equity or SP !!!
How are we to proceed?
1) Contempt Citation --> Fine or imprisonment, the fine is paid to
the P and in a civil case the D is imprisoned for as long as it takes!
Here the fine is paid to the P to:
a) redress harm,
b) Coerce the defendant.
Here the fines could also be the FMV of the property.
2) Decretal Transfer of title by the court -
3) Appoint a receiver or a Master -
4) The court can fashion a less drastic remedy - like a consensual lien, a constructive trust or an equitable lien
Q: How long can the D stay in jail for failure to obey a court order in a civil trial? This is done w/ out criminal safeguards (the fine or jail) and the D stays until he talks!
What are the benchmarks of Civil Contempt?
1) Indeterminant Contempt - is done to coerce a person to comply to a certain behavior and the person is released on compliance,
2) Determinant Sentence - a person is given 30 days or etc and stays there no matter if he cooperates or not.
NB: B/P is on the prosecution in a civil case by a propond-erance of
evidence and in a criminal case as BARD.
NB: With Civil Contemp there is no fine, these are damages paid to the P, but with criminal contempt there is a fixed fine. Criminal contempt is a crime!
** State Dept of Civil Rights v City of Truman.
Facts: The city here is being joined in this suit by the P because of
the perceived unfairness of hiring practices of construction companies
Wrong: Discrimination in Hiring
Remedy: Injunction - w/ Contempt then the mayor is put in jail, or the dept head !!!
Can you bind a TP, like the city here w/ no notice and if they are not even a party? No you can't unless they are an agent.
BASIC PROBLEMS OF THE DAMAGES REMEDY
General Damages - are awarded to protect the asset base of the P, the expectancy of the asset base; GD's are for lost profit if it's something you had an expectancy of. These damages are much more theoretical.
Consequential Damages - decrease income as a result of the act. These damages are much more actual and you must prove the amount with reasonable certainty.
General Damages = Contract Price - Market Price!
NB: General and Market Damages are the same; as are substitution
damages or cover (these are viewed objectively).
NB: Consequential and Special Damages are the same!
GR: Consequential damages may be awarded in addition to or instead of
general damages if the facts make such an award appropriate.
GR: Consequential damages are not ordinarily awarded unless the P has realized or will realize a loss.
** Story v Grayson.
Facts: Llama Breeder
Wrong: Tort of Conversion
Remedy: Damages and grab bag of restitution of DJ, Caps, Multipliers, and Contempt
Story: $150,000.00 is the cost of the replacement Llama or the substitution costs, which are GD's. These are objectively measured.
Grayson: the Llama is only worth $130,000, because this is the FMV and the damages are market oriented. Here there was $130,000 of asset depletion.
GR: the market value measure is the rule for replacement in damages while the "cost of replacement" is the exception. Here MV compensates the P.
NB: Here, Special Damages or Consequential Damages are $3,000 and are designed to protect the P's income or the $$$'s spent in consequence. Here these must be proved w/ reasonable certainty. The $10,000 lost in breeding time is also special damages.
NB: Morgan doesn't like Goodwill!
GR: in our society we don't award transaction costs!
** Re Washington.
Facts: Contract to build home w/ tile floor.
Wrong: Breach of K
GR: Cost of completion is generally favored where it does not create windfall or waste. If the cost measure is disproportionately high compared to the value lost, the loss in asset value is the limit of recovery.
Exception: When the contract requirement was bargained for to serve the owner's personal or aesthetic values, that fact may be considered in determining whether the cost of repair or completion is diproportionately high.
NB: Morgan says this is a MB of the contract!
NB: Waste is the destruction of some asset or property.
NB: A Windfall - is where the charge to the D is > the utility to the P.
NB: many people think that if the P wins in court here, that he will not spend the money to replace the tile.
GR: Cost of repair is the rule unless clearly dispropor-tionate.
GR: We don't care in contracts whether or not the D willfully or intentionally breached the contract, this does not give the P punitive damages!!!
Cost of Performance Test: here, is this the same as SP? YES, here by getting $6,000.00 this is the same as SP!
** Berwyn's Dress Shop v Allyn-Thomas Leasing .
Facts: The mall was not completed on time!
Wrong: Breach of K,
Remedy: Damages - General Damages!
NB: here the kind of damages are general damages, and these damages
are K price - Mkt price = $0.00, thus the general damages awarded is
NB: other damages are consequential damages for the water damages, according to Hadley v Baxendale - were they foreseeable? Also, lost profits but how do you prove them?
GR: bookkeeping losses do not count to prove consequential damages.
GR: Proximate cause and Hadley limits - CD's are also subject to the limitations expressed in rules of proximate cause or legal cause in contract cases, while GD's are not subject to these constraints.
Thus in this case:
1) CD's - was the water damage foreseeable? Hadley Limits!
2) CD's - lost profits, how do we prove them:
a) W/ certainty-how do we tell economic certainty?
b) The New Business Rule.
3) Loss of the Competitive Advantage.
4) Two weeks of storage costs.
5) Interest on Inventory.
6) Liquidated Damages.
Additional Limitations on Special Damages: higher pleading requirements, w/ certainty, hard v soft approach, foreseeability, Avoidable Consequence Rule, and Mitigation.
The Soft Approach - in effect says the P must show he has realized or will realize actual losses, but once he has made the proof, the court will not require precision as to the amounts. The soft approach includes an escape clause that says the court will not permit speculation. Bookkeeping losses don't count!
The Hard Approach - is more like the escape clause in the soft approach. It asserts that the P must prove consequential damages w/ reasonable certainty, both as to there existence and amount. Bookkeeping losses don't count!
Profit has a couple of different meanings: a) GD's that flow from the failure or loss of delivery, or b) Circumstances where the P has lost something in addition to general damages.
Hadley v Baxendale is a classic lost profit, contract case!
Dobbs says: you have to prove your damages w/ certainty, which sometimes bears it's head under the new business rule.
The New Business Rule - in the case of a new BUSINESS you cannot predict an amount from the amount of lost profits b/c 73% of all new businesses fail.
Avoidable Consequence Rule (ACR) - this rule which reduces the P's recovery to the extent he did or reasonably could have minimized loss, this rule is aimed at CD's not market damages.
General Scope of the Avoidable Consequences Rule - the rule or rules for minimizing are cardinal instruments of damage measurements. The minimizing rules apply in all kinds of cases including K, Tort, and Sttory claims, but they do not apply to every kind of damages measurement.
In General - ACR's apply to require the P to minimize Special or CD's, but do not usually affect measurement of general or market damages.
The 4 Rules of AC's:
1) The D is entitled to a credit against liability for any CD's the P
avoided or minimized (he works a half day).
NB: here the teacher doesn't have to go to McDonald's and get a job!
Now more bite in the ACR:
2) If the P could have avoided or minimized any CD's by reasonable effort and expense, the D is entitled to a credit, whether or not the P actually avoided or minimized such damages (the P could have worked 3.5 days).
3) The P gets an added credit for failed mitigation attempts (the $750 resume that didn't work) under rule 1. And this rule is not clearly established, yet:
The formula Approach:
4) If your going to impute to the P for failure to undertake a job, then we must also subtract the cost from what the D owes. Here if the P is going to sit at home we must subtract out what the resume would have cost.
GR: the Avoidable Consequences Rule only works as a Contracts DEFENSE says Morgan!
** Esterhazy v Heyman.
Facts: Renting a field for Sheep!
Wrong: Breach of K!
Remedy: Damages - $15,000 consequentials
$15,000 = loss of sheep
$ 1,000 = Contract Price
$ 3,000 = Feed Cost (to feed animals)
$ 2,000 = Expectancy Meat Profit
Here should Esterhazy had done something the damages would be less, so....without mitigation we get a large number.
Exception: with use of the avoidable consequences rule only an amount of $3,000 is recoverable ($2,000 + $1,000). And here there is a chance of knocking the $1,000 K Price off too!
Morgan says: w/ CD's there is a chance that we are double counting.
GR: Not having money trumps the failure to minimize or mitigate damages of the ACR.
NB: Here though Morgan asks, why didn't he liquidate some of the
heard to feed the rest?
NB: if this is a TORT of Conversion and there is FRAUD, then you can get $15,000 and PUNITIVES !!!!
GR: The ACR only works in K actions on CD's !!!
Morgan says that steps 3 and 4 are reduced to this formula:
Recovery to the P === Damages minus Costs Avoided (but re- cognizing costs spent or incurred).
GR: Dobbs says we must be careful in ordering or recommending P's to MITIGATE or minimize damages by spending additional resources.
What happens if the D acts intentionally or willfully? Generally we do not care why he breached (Car Parking lot example v Cab fair for a month).
NB: Morgan says, that at some point in time you don't have to give up your rights to avoid consequences (cab example).
NB: Some states say that financial inability is a complete defense to the ACR.
GR: Mitigation only applies to CD's not GD's!
GR: Here, if this is a tort we don't have a Avoidable Consequences Defense!
GR: Avoidable Consequences is a Contract Defense ONLY!
Lastly, if the P did buy feed but it was too late then he would get $3,000 plus the $17,000.
The B/P: here the D has the B/P to prove that the P DID NOT make a great personal sacrifice.
NB: it is important to get the correct underlying right (if it is a contract) to get to the Avoidable Consequence Defense Rule.
** Mariakakis v Bastian.
A Direct Benefit - Side Issues
Facts: Lease of a House w/ Fire Insurance Payment
Wrong: House Burned Down - Tort - Negligence
Remedy: Subrogation of Rights
Real Estate Leases - when a tenant breaks a lease is the LL supposed to mitigate and try to re-lease the apartment?
Old Law - No, the LL has no right to mitigate and re-lease.
New Law - the LL has a duty in some laws and Stt's to reasonably try to re-lease the property.
Does the D get a credit for benefits to the P resulting from his acts?
GR: the D does get such a credit when the benefits are direct benefits but does not get such a credit when the benefits are collateral benefits.
Direct Benefit Rule - when the P benefits directly rather than collaterally from the D's breach of duty in tort or K, then subject to exceptions, the P's recovery is reduced by the amount of the benefits received.
A Direct Benefit - is one that results from the D's breach of duty itself, or one that is derived from the D or someone who act's on the D's behalf.
Here, Bastian says, I paid for the insurance, so I don't have to pay!
The Direct Benefit Rule 3.8(2) - if the P has received a benefit from the D directly, then we force the payment to be subtracted.
Two arguments in this case:
NB: On the one hand, the LL paid the insurance and on the other hand, the D paid the insurance.
Ans = the insurance company has received the $$$ from the LL so they can't proceed against him...no direct payment v a direct payment. Here the insurance responsibility is that of bastian (the LL).
Offset of Funds
NB: without a ready fund of awarded damages (a fund of money) offset of unjust enrichment is not done (results of survey), while w/ a fund of money the offset is a lot easier to do.
Example: $1000 - 250 = $750.
** Le v Bonnet.
The Collateral Source Rule - side issues
Facts: Bonnet is a Doctor who left sponges in Le.
Wrong: Malpractice - tort.
Remedy: Damages -
Collateral Source Benefits - there is no credit given (to reduce the D's liability) when the P receives benefits from a source collateral to the D. The most common application of this rule appears in Personal Injury cases (and some contract cases).
Where Collateral benefits come from: Insurance and similar medical benefits, gifts (the donors intent to benefit the P and not the D) and public benefits to the P from family, and replacement of support and tax savings in wrongful death cases and on personal injury awards. Also included here is subrogation rights.
Windfall - here it is argued that the P should not get a windfall but that is what exactly this rule sets out to cure.
Does the fact the P is covered by insurance mean the P lost the c/a? No!
Why do we have a rule like this when it appears there will be a windfall?
1) it's not a windfall, if he's paying insurance for the last 20 years, 2) The insurance company still has a right of subrogation, 3) Attorney's benefit the most here (33% plus costs).
NB: the tort reform act in some states cancels this rule out! NB: Morgan says that the Avoidable Consequence Rule is a tort defense, but is secondary to CN and etc.
** Mendel v Murphy.
Facts: Sale of Closely Held Corporation Stock
Wrong: Breach of K
Remedy: Yes, prejudgment interest!
NB: after the judgment interest is done by stt.
NB: a false issue here is unconscionability !!!
Test is: Is the loss liquidated and ascertainable, if it is there is no prejudgment interest
GR: pre-j interest is not allowed here because the sum is unliquidated or unascertainable by fixed standards.
NB: Morgan here says that the sum of $900.00 is a liquidated and ascertainable sum, but no in class agreed with him. Here there were various numbers in play as well as expert testimony, stock book value and etc.
Here, one way around this problem is to put the interest that is due and payable in the contract or to claim the interest as consequential damages.
Why is no interest payable from the time of the contract?
Ans = the P w/b overcompensated or that at CL no pre-j interest was given!
Dobbs says that this is a place to get a little creative for pre-j interest:
1) D has been unjustly enriched,
2) D has P's property (the rental theory and thus we make the D pay for the use),
3) D should get a sanction for the delay,
4) D got $7,000 in dividends.
Consequentials here - money w/b invested if the P had it so there is a consequence of not having the money. Here this must be proven w/ certainty and be foreseeable. Proximate cause and the Hadley factors!
Here, the suit s/n probably go forward
** Harry's Inc v Miracle Strip Merchants Assn.
Facts: Zoning ordinance may cause millions of dollars of loses.
Wrong: Unconstitutional Act by the city.
Remedy: Fee shifting or Fee Sharing!
Here there are two fee pockets: Fee shifting and fee sharing!
GR: The American Rule - is that the losing party in litigation is not liable to pay the winner's attorney's fees. Atty's look to there own clients for payment of these fees, but the losing litigant is normally charged with costs.
Rational: This is done to provide an incentive to keep litigation in cost effective limits and that any general regime of fee-shifting could punish litigants for their honest exercise of their rights to go to court and could discourage valid and even important claims and defenses.
Here, as w/ the Common Fund Rule as other merchants are benefitted they must pay for their benefit they received for unjust enrichment.
The main arguments are:
1) Indemnity: two way fee shifting (prevailing P or D gets fees),
2) Fees as damages: one way fee shifting (a litigant in the role of the P entitled to recover damages is also entitled to recover the reasonable costs of those damages, only prevailing P gets fees,
3) Fees as incentives: some litigation determines important public issues; where benefits exceed costs, that litigation should go forward; yet if costs exceed benefits the P is unlikely to proceed unless she can recover costs.
NB: this may be the case where the D is a public entity and the public in general benefits from the plaintiffs litigation. This is characterized in Civil Rights cases.
Fee Sharing under the Common fund Rule:
GR: when a prevailing P's litigation produces or preserves a fund in which others share, those who share in the fund must share as well in the cost of producing it.
NB: Here the burden is imposed by deducting the fee from the fund itself and then distributing the fund to those entitled to it. Example: Class Actions and etc.
The special elements that justify an award in these cases are that
those who must share in the fees:
1) have received a benefit;
2) have received a specific fund and an attorney can be paid from that fund so that there is no other personal obligation to pay from the other sources; and
3) are not required to pay for benefits they do not want at the price.
NB: this idea of common fund is based in restitutionary considerations, those who share in the fund w/b unjustly enriched if they could take the benefit w/o the burden.
The Substantial Benefit Extension (SBE) - this rule goes beyond the common fund doctrine in that it permits the P's lawyer to recover from persons who share in a supposed benefit which is not a cash benefit and does not provide funds from which a lawyer can be paid.
Examples are: Free speech cases, tenant who litigates against a lessor, employee v employer, and SH against the corporation.
NB: In the SBE as opposed to the restitutionary claim in the Common Fund Rule there is no restitutionary unjust enrichment. Because the benefits are intangible, the beneficiaries have no method of rejecting the benefit of being too costly or undesirable.
The Private Attorney General Theory - says in certain kinds of important litigation that will result in public benefits the P should recover fees from the D at least where such fees are necessarily important and beneficial to litigation that might not be brought.
NB: this has a lot in common w/ fee shifting stt's and has very little in common w/ restitutionary arguments.
Three PP Factors that s/b considered in determining whether a fee s/b
1) strength or societal importance of the PP vindicated by the litigation,
2) the necessity for private enforcement and the magnitude of the resultant burden,
3) The # of people standing to benefit from the decision.
** Wallace v City of Rich Springs.
Facts: The city operates there own electrical company!
Wrong: Negligence - tort.
Remedy: Injunction and Punitives?
GR: punitive damages are extra compensatory and go beyond the obvious elements of ordinary compensation and are intended to punish or deter extreme conduct from acceptable conduct.
To award punitive damages:
NB: you need reckless conduct or a reckless disregard, gross
negligence or malice. In addition, the person doing the act or action
must have an intent to harm and scienter (knowledge).
NB: in the case of an employee of a corp using a reckless disregard, the P must prove the corp had an intent to injury and had scienter or that the corp negligently trained their employees. Here documents must be dug up to prove scienter.
NB: the corp here would be liable through scienter if documents in the corps possession were uncovered.
Are Punitives awardible here? No. Here the underlying c/a is wrongful death, but this c/a may not work.
How do we measure punitives? Here we allow the jury knowledge of the
corp's assets, insurance or etc. Here the award must be big enough to
send a message.
So, first determine what the standard is, then determine the measurement of punitives.
Morgan says the COA's in some areas has developed "a ratio" and that there must be some relationship, while other courts say, NO!
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