<\/p>\n
\u00a0Paper<\/span><\/span><\/p>\n<\/li>\n \u00a0<\/p>\n<\/div>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n<\/div>\n \u00a0<\/p>\n You own University Heights Pizza, a pizza company that provides mostly home delivery. \u00a0 One of your drivers, Donald, routinely drives in excess of speed limits when delivering Pizza, and you are aware of these problems. \u00a0One night while delivering pizzas, Donald decides to visit a girlfriend. \u00a0 You are aware that he sometimes does this, and you have not objected as long as the Pizza gets delivered on time. \u00a0On the way to his girlfriend’s house, but on the way to deliver a customer’s pizza, Donald runs a red light at high speeds and seriously injures Alice, a driver in another car who had the right of way. \u00a0 Alice sues University Heights Pizza and Donald. \u00a0 You assert that \u00a0University Heights is not liable for Donald’s fast driving.<\/p>\n \u00a0<\/p>\n Write<\/strong>\u00a0a paper of 750- to 1,050-words answering the following questions posed by this scenario:<\/p>\n Cite<\/strong>\u00a0to at least three scholarly references.<\/p>\n Format<\/strong>\u00a0your paper consistent with APA guidelines.<\/p>\n Click<\/strong>\u00a0the Assignment Files tab to submit your assignment<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n Here is the reading information :<\/strong><\/p>\n \u00a0<\/strong><\/p>\n Learning Objectives<\/p>\n In this chapter you will learn:<\/p>\n 10-1. To compare how tort law is related to property.<\/p>\n 10-2. To differentiate the three divisions of torts and to generate a theory<\/p>\n of why torts are so divided.<\/p>\n 10-3. To explain the elements of negligence and to relate these elements<\/p>\n to the development of negligence law.<\/p>\n 10-4. To analyze why tort litigation is so controversial in society today.<\/p>\n Torts Affecting<\/p>\n Business 10<\/p>\n 289<\/p>\n Just as contract law is the way owners<\/p>\n exchange what they own in a propertybased<\/p>\n legal system, so also tort law is an<\/p>\n important part of the same system. The property<\/p>\n fence protects our use of things. It is part of<\/p>\n what we own. But our protected use is not infinite.<\/p>\n It may be absolute but because we live with<\/p>\n other people and what is proper to them, we<\/p>\n may not use things just anyway we please. We<\/p>\n do not have a protected use of a thing if our use<\/p>\n harms what others own, including their persons.<\/p>\n Tort law helps define where the property fence is<\/p>\n when it comes to our use of things. It makes our<\/p>\n use legally wrongful and helps anyone injured<\/p>\n by our wrongful use to get compensation, called<\/p>\n \u201cdamages.\u201d<\/p>\n T he word tort means \u201cwrong.\u201d Legally, a tort<\/p>\n is a civil wrong other than a breach of contract.<\/p>\n Tort law sets limits on how people can act and<\/p>\n use their resources so they do not violate the right<\/p>\n 290 PART 3 Legal Foundations for Business<\/p>\n others have to their resources. If you think of property as a type of legal fence<\/p>\n surrounding resources, then tort law defines when someone has crossed that<\/p>\n fence wrongfully so that compensation is due to the owner.<\/p>\n Legal wrongs inflicted on the resources of others may be crimes as well as<\/p>\n torts (see Chapter 12), but the law of tort itself is civil rather than criminal.<\/p>\n The usual remedy for a tort is dollar damages. Behavior that constitutes a tort<\/p>\n is called tortious behavior. One who commits a tort is a tortfeasor.<\/p>\n This chapter divides torts into three main categories: intentional torts,<\/p>\n negligence torts, and strict liability torts. Intentional torts involve deliberate<\/p>\n actions that cause injury. Negligence torts involve injury following a failure to<\/p>\n use reasonable care. Strict liability torts impose legal responsibility for injury<\/p>\n even though a liable party neither intentionally nor negligently causes the<\/p>\n injury.<\/p>\n Important to torts are the concepts of duty and causation. One is not liable<\/p>\n for another\u2019s injury unless he or she has a duty toward the person injured.<\/p>\n And, of course, there is usually no liability for injury unless one has caused the<\/p>\n injury. We explain these concepts under the discussion of negligence, where<\/p>\n they are most relevant.<\/p>\n This chapter also covers the topic (sample nursing essay examples by the best nursing assignment writing service) of damages. The topic (sample nursing essay examples by the best nursing assignment writing service) concerns the<\/p>\n business community because huge damage awards, frequently against businesses,<\/p>\n have become common in recent years.<\/p>\n >> Intentional Torts<\/p>\n An important element in the following torts is intent, as we are dealing with<\/p>\n intentional torts. Intent is usually defined as the desire to bring about certain<\/p>\n results. But in some circumstances the meaning is even broader, including not<\/p>\n only desired results but also results that are \u201csubstantially likely\u201d to result<\/p>\n from an action. Recently, employers who knowingly exposed employees to<\/p>\n toxic substances without warning them of the dangers have been sued for<\/p>\n committing the intentional tort of battery. The employers did not desire their<\/p>\n employees\u2019 injuries, but these injuries were \u201csubstantially likely\u201d to result<\/p>\n from the failure to warn.<\/p>\n The following sections explain the basic types of intentional torts. Sidebar<\/p>\n 10.1 lists these torts.<\/p>\n LO 10-1<\/p>\n * Torts are divided<\/p>\n into intentional torts,<\/p>\n negligence, and strict<\/p>\n liability.<\/p>\n LO 10-2<\/p>\n Intent is the desire<\/p>\n to bring about certain<\/p>\n results.<\/p>\n \u2022 Assault and battery<\/p>\n \u2022 Intentional infliction of mental distress<\/p>\n \u2022 Invasion of privacy<\/p>\n \u2022 False imprisonment and malicious prosecution<\/p>\n \u2022 Trespass<\/p>\n \u2022 Conversion<\/p>\n \u2022 Defamation<\/p>\n \u2022 Fraud<\/p>\n \u2022 Common law business torts<\/p>\n >> sidebar 10.1<\/p>\n Types of Intentional Torts<\/p>\n CHAPTER 10 Torts Affecting Business 291<\/p>\n 1. ASSAULT AND BATTERY<\/p>\n An assault is the placing of another in immediate apprehension for his or<\/p>\n her physical safety. \u201cApprehension\u201d has a broader meaning than \u201cfear.\u201d It<\/p>\n includes the expectation that one is about to be physically injured. The person<\/p>\n who intentionally creates such apprehension in another is guilty of the tort of<\/p>\n assault. Many times a battery follows an assault. A battery is an illegal touching<\/p>\n of another. As used here, \u201cillegal\u201d means that the touching is done without<\/p>\n justification and without the consent of the person touched.<\/p>\n Hitting someone with a wrench causes physical injury, but as the following<\/p>\n case illustrates, the \u201ctouching\u201d that constitutes part of a battery need not<\/p>\n cause physical injury.<\/p>\n case 10.1 >><\/p>\n HARPER v. WINSTON COUNTY<\/p>\n 892 So.2d 346 (Ala. Sup. Ct. 2004)<\/p>\n Sandra Wright, the revenue commissioner of Winston<\/p>\n County, Alabama, fired her employee, Sherry Harper.<\/p>\n Harper sued, claiming among other things that Wright<\/p>\n had committed an assault and battery in grabbing her<\/p>\n and jerking her arm in trying to force her to go to Wright\u2019s<\/p>\n office. Before trial, the court granted summary judgment<\/p>\n in favor of Wright. The plaintiff, Harper, appealed, and<\/p>\n the case reached the Alabama Supreme Court.<\/p>\n SEE, J: . . . Harper argues that the trial court erred in<\/p>\n entering a summary judgment in favor of Wright, on<\/p>\n Harper\u2019s assault and battery claim, because, she claims,<\/p>\n she presented substantial evidence in support of her<\/p>\n claim. Harper argues that Wright admits that she intentionally<\/p>\n grabbed Harper\u2019s arm and, she asserts, Wright\u2019s<\/p>\n grabbing of her arm was offensive. Harper states:<\/p>\n \u201c[Wright] jerked my arm and tried to pull me back.\u201d<\/p>\n She argues that Alabama law does not require that<\/p>\n Wright strike or hit her in order for a battery to occur.<\/p>\n In response, Wright argues that she merely \u201ctook a<\/p>\n hold of [Harper\u2019s] hand.\u201d Wright states that she did not<\/p>\n touch Harper in an offensive manner and that she was<\/p>\n only trying to coax Harper into stepping into her office<\/p>\n so that they could continue their conversation away<\/p>\n from the view of the customers and the employees of<\/p>\n the Department. The trial court stated in its summaryjudgment<\/p>\n order that \u201cthe undisputed evidence from<\/p>\n Sandra Wright clearly points out that the touching was<\/p>\n not in any way harmful or offensive, but was instead<\/p>\n done in an attempt to bring [Harper] under control.\u201d<\/p>\n The plaintiff in an action alleging assault and battery<\/p>\n must prove \u201c(1) that the defendant touched the<\/p>\n plaintiff; (2) that the defendant intended to touch the<\/p>\n plaintiff; and (3) that the touching was conducted in a<\/p>\n harmful or offensive manner.\u201d In Atmore Community<\/p>\n Hospital, the plaintiff presented evidence indicating<\/p>\n that the defendant \u201ctouched her waist, rubbed against<\/p>\n her when passing her in the hall, poked her in the armpits<\/p>\n near the breast area, and touched her leg.\u201d The<\/p>\n plaintiff also presented evidence indicating that \u201ceach<\/p>\n of these touchings was intentional, was conducted<\/p>\n with sexual overtones, and was unwelcome.\u201d We held<\/p>\n that these factual assertions constituted substantial<\/p>\n evidence that the defendant had committed a battery.<\/p>\n In Surrency, we stated that an actual injury to the<\/p>\n body is not a necessary element for an assault-and-battery<\/p>\n claim. We also stated that when the evidence as to<\/p>\n whether a battery in fact occurred is conflicting, the<\/p>\n question whether a battery did occur is for the jury.<\/p>\n Quoting Singer Sewing Machine Co., this Court stated:<\/p>\n \u201cTo what acts will constitute a battery in a case like<\/p>\n this, the rule is well stated by Mr. Cooley in his work<\/p>\n on Torts. He says: \u2018A successful assault becomes a<\/p>\n battery. A battery consists in an injury actually done<\/p>\n to the person of another in an angry or revengeful or<\/p>\n rude or insolent manner, as by spitting in the face, or<\/p>\n in any way touching him in anger, or violently jostling<\/p>\n him out of the way, or in doing any intentional<\/p>\n violence to the person of another.\u2019 The wrong here<\/p>\n consists, not in the touching, so much as in the manner<\/p>\n or spirit in which it is done, and the question of<\/p>\n bodily pain is important only as affecting damages.<\/p>\n Thus, to lay hands on another in a hostile manner is<\/p>\n a battery, although no damage follows; but to touch<\/p>\n another, merely to attract his attention, is no battery<\/p>\n 292<\/p>\n A store manager who threatens an unpleasant customer with a wrench,<\/p>\n for example, is guilty of assault. Actually hitting the customer with the wrench<\/p>\n would constitute battery.<\/p>\n 2. INTENTIONAL INFLICTION OF MENTAL DISTRESS<\/p>\n Intentional infliction of mental distress is a battery to the emotions. It arises<\/p>\n from outrageous, intentional conduct that carries a strong probability of<\/p>\n causing mental distress to the person at whom it is directed. Usually, one who<\/p>\n sues on the basis of an intentional infliction of mental distress must prove<\/p>\n that the defendant\u2019s outrageous behavior caused not only mental distress but<\/p>\n also physical symptoms, such as headaches or sleeplessness.<\/p>\n The most common cases of intentional infliction of mental distress (also<\/p>\n called emotional distress ) have concerned employees who have been discriminated<\/p>\n against or fired. Many such cases, however, do not involve the type of<\/p>\n outrageous conduct necessary for the mental distress tort.<\/p>\n This tort usually<\/p>\n requires the plaintiff to<\/p>\n prove not only mental<\/p>\n distress but also<\/p>\n physical symptoms.<\/p>\n and not unlawful. And to push gently against one, in<\/p>\n the endeavor to make way through a crowd, is no<\/p>\n battery; but to do so rudely and insolently is and may<\/p>\n justify damages proportioned to the rudeness. . . .\u201d<\/p>\n Alabama courts have recognized that privilege can<\/p>\n be a defense to a plaintiff\u2019s claim that the defendant<\/p>\n battered her. This Court has held that when a merchant<\/p>\n suspects a customer of shoplifting, it is reasonable for<\/p>\n the merchant\u2019s employee to use reasonable force to<\/p>\n ensure that the suspected shoplifter is detained.<\/p>\n In this case, there is no question that Wright intended<\/p>\n to touch Harper\u2019s arm; it is the \u201cmanner or spirit\u201d<\/p>\n in which Wright touched Harper\u2019s arm that is in dispute.<\/p>\n Harper testified at the June 13, 2000, hearing<\/p>\n that Wright forcefully grabbed her arm. Wright testified<\/p>\n that she reached for Harper\u2019s arm in an attempt to lead<\/p>\n her into her office so they could continue their discussion<\/p>\n away from the public area. In Surrency, we noted<\/p>\n that \u201cto touch another, merely to attract his attention,<\/p>\n is no battery and not unlawful. While it is certainly<\/p>\n >> CASE QUESTIONS<\/p>\n 1. The defendant in this case did not hurt the plaintiff, Harper. Explain why the<\/p>\n defendant might still be liable for the tort of battery.<\/p>\n 2. Do all touchings constitute a battery? Discuss and give examples to support your<\/p>\n conclusion.<\/p>\n 3. In litigation what is the difference between a question of law and a question of<\/p>\n fact? What does the Alabama Supreme Court decide in this case about whether this<\/p>\n alleged battery is a question of law or a question of fact? Discuss.<\/p>\n [continued]<\/p>\n conceivable that this type of touching is all that occurred<\/p>\n in this case, Harper presents substantial evidence to the<\/p>\n contrary. Harper testified at her hearing that Wright<\/p>\n \u201cjerked\u201d her arm. In her response to Wright\u2019s motion<\/p>\n for a summary judgment, Harper states that Wright\u2019s<\/p>\n touch greatly offended her and that this fact is evidenced<\/p>\n by the fact that she filed her complaint with the<\/p>\n Winston County Commission on May 9, 2000. In her<\/p>\n complaint, Harper states that \u201c[Wright] grabbed my<\/p>\n arm and tried to force me to go with her.\u201d Reviewing<\/p>\n the facts in the light most favorable to Harper, as this<\/p>\n Court is required to do on an appeal from a summary<\/p>\n judgment, we conclude that the question whether a battery<\/p>\n occurred in this case\u2014specifically, whether Wright<\/p>\n touched Harper in a harmful or offensive manner\u2014is a<\/p>\n question of fact for the jury to decide.<\/p>\n We reverse the summary judgment in favor of<\/p>\n Wright on Harper\u2019s assault-and-battery claim; and we<\/p>\n remand this case to the trial court for proceedings consistent<\/p>\n with this opinion.<\/p>\n CHAPTER 10 Torts Affecting Business 293<\/p>\n In the business world, other examples of infliction of mental distress come<\/p>\n about from the efforts of creditors to extract payment from their debtors. Frequent,<\/p>\n abusive, threatening phone calls by creditors might provide the basis<\/p>\n for a claim of intentional infliction of mental distress. As torts go, this one is<\/p>\n of fairly recent origin. It is a judge-made tort, which furnishes a good example<\/p>\n of how the courts are becoming increasingly sensitive to the range of injuries<\/p>\n for which compensation is appropriate. In some states, courts have gone so far<\/p>\n as to establish liability for carelessly inflicted mental distress, such as the distress<\/p>\n of a mother who sees her child negligently run down by a delivery truck.<\/p>\n 3. INVASION OF PRIVACY<\/p>\n The tort of invasion of privacy is one that is still in the early stages of legal<\/p>\n development. As the statutes and court cases recognize it, the tort at present<\/p>\n comprises three principal invasions of personal interest. An invasion of any<\/p>\n one of these areas of interest is sufficient to trigger liability.<\/p>\n Most commonly, liability will be imposed on a defendant who appropriates<\/p>\n the plaintiff\u2019s name or likeness for his or her own use. Many advertisers<\/p>\n and marketers have been required to pay damages to individuals when pictures<\/p>\n of them have been used without authorization to promote products, or when<\/p>\n their names and identities have been used without permission for promotional<\/p>\n purposes. Before using anyone\u2019s picture or name, an advertiser must obtain a<\/p>\n proper release from that person to avoid possible liability. See Sidebar 10.2 .<\/p>\n That you can<\/p>\n recover damages for<\/p>\n misappropriation of<\/p>\n likeness illustrates that<\/p>\n you own your name<\/p>\n and likeness in certain<\/p>\n respects.<\/p>\n A second invasion of privacy is the defendant\u2019s intrusion upon the plaintiff\u2019s<\/p>\n physical solitude. Illegal searches or invasions of home or possessions,<\/p>\n illegal wiretapping, and persistent and unwanted telephoning can provide the<\/p>\n basis for this invasion-of-privacy tort. In one case, a woman even recovered<\/p>\n Michael Jordan\u2019s name is one of the most recognizable<\/p>\n in all of sports. Jordan has filed several lawsuits<\/p>\n against advertisers who have used his name without<\/p>\n permission in connection with the promotion of their<\/p>\n products. For instance, he sued Avon for $100 million<\/p>\n in connection with a Father\u2019s Day promotion that<\/p>\n used his identity. Avon and Jordan settled that case.<\/p>\n More recently, Jordan sued two Chicago-area grocery<\/p>\n stores for using his name in order to attract customers<\/p>\n to their stores. Sports and entertainment stars<\/p>\n especially often sue businesses that use their identities<\/p>\n without permission.<\/p>\n In general, the law considers a right to privacy<\/p>\n as \u201ca right to be left alone.\u201d But notice how similar a<\/p>\n right to privacy is to the property right. Privacy, like<\/p>\n property, is a right to exclude others from interfering<\/p>\n with something that is privately proper to someone.<\/p>\n Would it have been simpler if the law had developed<\/p>\n by saying that people have property in their identities?<\/p>\n Why do you think the law didn\u2019t develop this way?<\/p>\n Privacy concerns arose as new technologies like<\/p>\n cameras and recorders made it easy to peer into the<\/p>\n lives of others. The same concerns continue today<\/p>\n with the Internet and computers. Legislatures have<\/p>\n passed a variety of laws concerning privacy. As with<\/p>\n the common law causes of action mentioned in this<\/p>\n section of the text, some of the new privacy acts<\/p>\n and statutes don\u2019t even mention the word \u201cprivacy.\u201d<\/p>\n Chapter 18 on consumer protection covers some<\/p>\n of the new privacy laws. In general, concern about<\/p>\n various privacy issues illustrate how law develops to<\/p>\n meet changing needs in society.<\/p>\n >> sidebar 10.2<\/p>\n Privacy, Michael Jordan, and Society<\/p>\n 294 PART 3 Legal Foundations for Business<\/p>\n damages against a photographer who entered her sickroom and snapped a<\/p>\n picture of her. Employers who enter their employees\u2019 homes without permission<\/p>\n have also been sued successfully for invasions of privacy. If the invasion<\/p>\n of privacy continues, it may be enjoined by the court. Jacqueline Kennedy<\/p>\n Onassis sought and obtained an injunction that forbade a certain photographer<\/p>\n from getting too close to her and her children. Under this tort, the invasion<\/p>\n of physical solitude must be highly objectionable to a reasonable person.<\/p>\n The third invasion of personal interest that gives rise to the invasionof-<\/p>\n privacy tort is the defendant\u2019s public disclosure of highly objectionable,<\/p>\n private information about the plaintiff. A showing of such facts can be the<\/p>\n basis for a cause of action, even if the information is true. Thus, publishing in<\/p>\n a newspaper that the plaintiff does not pay his or her debts has been ruled to<\/p>\n create liability for the defendant creditor. Communicating the same facts to<\/p>\n a credit-reporting agency or the plaintiff\u2019s employer usually does not impose<\/p>\n liability, however. In these cases, there has been no disclosure to the public in<\/p>\n general. Also, the news media are protected under the First Amendment when<\/p>\n they publish information about public officials and other public figures.<\/p>\n 4. FALSE IMPRISONMENT AND MALICIOUS<\/p>\n PROSECUTION<\/p>\n Shoplifting accounts for some $18 billion a year in business losses, almost<\/p>\n 1% of retail sales. Claims of false imprisonment stem most frequently in<\/p>\n business from instances of shoplifting. This tort is the intentional unjustified<\/p>\n confinement of a nonconsenting person. Although most states have statutes<\/p>\n that permit merchants or their employees to detain customers suspected of<\/p>\n shoplifting, this detention must be a reasonable one. The unnecessary use of<\/p>\n force, lack of reasonable suspicion of shoplifting, or an unreasonable length<\/p>\n of confinement can cause the merchant to lose the statutory privilege. The<\/p>\n improperly detained customer is then able to sue for false imprisonment. Allegations<\/p>\n of battery are also usually made if the customer has been touched. Not<\/p>\n all false imprisonment lawsuits arise because of shoplifting. In one instance<\/p>\n a KPMG employee sued for false imprisonment alleging that his manager<\/p>\n blocked a door with a chair during a performance review and caused the<\/p>\n employee to have to remain in the room against his will.<\/p>\n The tort of malicious prosecution is often called false arrest. Malicious<\/p>\n prosecution arises from causing someone to be arrested criminally without<\/p>\n proper grounds. It occurs, for instance, when the arrest is accomplished simply<\/p>\n to harass someone. In Albany, New York, a jury awarded a man $200,000<\/p>\n for malicious prosecution. His zipper had broken, leaving his fly open, and<\/p>\n a store security guard had him arrested for indecent exposure even after he<\/p>\n explained that he had not noticed the problem.<\/p>\n 5. TRESPASS<\/p>\n To enter another\u2019s land without consent or to remain there after being asked<\/p>\n to leave constitutes the tort of trespass. A variation on the trespass tort<\/p>\n arises when something (such as particles of pollution) is placed on another\u2019s<\/p>\n land without consent. Although the usual civil action for trespass asks for an<\/p>\n injunction to restrain the trespasser, the action may also ask for damages.<\/p>\n Union pickets walking on company property (in most instances), customers<\/p>\n refusing to leave a store after being asked to do so, and unauthorized persons<\/p>\n Don\u2019t forget that<\/p>\n the First Amendment<\/p>\n protects you when you<\/p>\n publish even highly<\/p>\n personal truthful<\/p>\n information about<\/p>\n public officials and<\/p>\n public figures.<\/p>\n One false imprisonment<\/p>\n lawsuit arose<\/p>\n when a tow-truck<\/p>\n operator towed a car<\/p>\n with the driver still in it.<\/p>\n CHAPTER 10 Torts Affecting Business 295<\/p>\n entering restricted areas are all examples of trespass. Note that trespass is often<\/p>\n a crime as well as a tort. Intentional wrongdoing is frequently criminal.<\/p>\n Trespass concerns the crossing of an owner\u2019s boundaries. Today, trespass<\/p>\n usually refers to violating the physical boundaries of an owner\u2019s land, but<\/p>\n in legal history trespass was the legal remedy for direct injuries caused by<\/p>\n another to one\u2019s person as well. The famous British constitutional historian<\/p>\n Frederick Maitland wrote, \u201cTrespass is the fertile mother of actions.\u201d By this<\/p>\n he meant that many of our modern day causes of action in tort\u2014like battery\u2014<\/p>\n come from trespass. Now do you appreciate better the connection of tort<\/p>\n law to property in our legal system? In an important sense, we own ourselves<\/p>\n and various things we have acquired, and those who violate our boundaries<\/p>\n become liable to compensate us.<\/p>\n 6. CONVERSION<\/p>\n Conversion is the wrongful exercise of dominion (power) and control over<\/p>\n the personal (nonland) resources that belong to another. Conversion deprives<\/p>\n owners of their lawful right to exclude others from such resources. The deprivation<\/p>\n may be either temporary or permanent, but it must constitute a serious<\/p>\n invasion of the owner\u2019s legal right. Abraham Lincoln once convinced<\/p>\n an Illinois court that a defendant\u2019s action in riding the plaintiff\u2019s horse for<\/p>\n 15 miles was not sufficiently serious to be a conversion since the defendant<\/p>\n had returned the horse in good condition. The plaintiff had left the horse with<\/p>\n the defendant to be stabled and fed.<\/p>\n Conversion often arises in business situations. Stealing something from<\/p>\n an employer is conversion, as is purchasing\u2014even innocently\u2014something<\/p>\n that has been stolen. Failing to return something properly acquired at the<\/p>\n designated time, delivering something to the wrong party, and destruction or<\/p>\n alteration of what belongs to another are all conversions when a deprivation<\/p>\n of ownership is serious or long-lived. Even if you intend to return something,<\/p>\n if you have converted it you are absolutely liable for any damage done to it.<\/p>\n A warehouse operator who improperly transfers stored goods from a designated<\/p>\n to a nondesignated warehouse is absolutely liable when a tornado<\/p>\n destroys the goods or when a thief steals them.<\/p>\n 7. DEFAMATION<\/p>\n Defamation is the publication of untrue statements about another that hold<\/p>\n up that individual\u2019s character or reputation to contempt and ridicule. \u201cPublication\u201d<\/p>\n means that the untruth must be made known to third parties. If<\/p>\n defamation is oral, it is called slander. Written defamation, or defamation<\/p>\n published over radio or television, is termed libel.<\/p>\n False accusations of dishonesty or inability to pay debts frequently bring<\/p>\n on defamation suits in business relationships. Sometimes, such accusations<\/p>\n arise during the course of a takeover attempt by one company of another<\/p>\n through an offering to buy stock. In a recent instance, the chairman of one<\/p>\n company called the chairman of a rival business \u201clying, deceitful, and treacherous\u201d<\/p>\n and charged that he \u201cviolated the standards by which decent men do<\/p>\n business.\u201d If untrue, these remarks provide a good example of defamation of<\/p>\n character. At one major university, a former business professor received a<\/p>\n multimillion-dollar settlement following allegations made by university administrators<\/p>\n that he had vandalized the new business school. The allegations cost<\/p>\n The reason for<\/p>\n emphasizing how tort<\/p>\n relates to property<\/p>\n is to show you how<\/p>\n our legal system has<\/p>\n historically centered<\/p>\n on the concept of<\/p>\n exclusive right, which<\/p>\n applies to your person<\/p>\n as well as to land<\/p>\n and other physical<\/p>\n resources.<\/p>\n In one case a student<\/p>\n drove a rental car<\/p>\n into Mexico although<\/p>\n the lease specifically<\/p>\n prohibited crossborder<\/p>\n driving.<\/p>\n When an earthquake<\/p>\n destroyed the car<\/p>\n while it was parked in<\/p>\n Mexico City, the rental<\/p>\n company successfully<\/p>\n sued the student for<\/p>\n conversion.<\/p>\n Is it defamation of<\/p>\n character to say that<\/p>\n someone is gay or<\/p>\n lesbian? How about<\/p>\n that someone is<\/p>\n of a different race<\/p>\n than is correct? Is<\/p>\n calling someone<\/p>\n a \u201ccommunist\u201d<\/p>\n defamatory?<\/p>\n 296 PART 3 Legal Foundations for Business<\/p>\n him a deanship at another university. Punitive or punishment damages, as<\/p>\n well as actual damages, may be assessed in defamation cases.<\/p>\n Individuals are not the only ones who can sue for defamation. A corporation<\/p>\n can also sue for defamation if untrue remarks discredit the way the corporation<\/p>\n conducts its business. Untruthfully implying that a company\u2019s entire<\/p>\n management is dishonest or incompetent defames the corporation.<\/p>\n Nearly one-third of all defamation suits are currently brought by employees<\/p>\n against present and former employers. Often these suits arise when<\/p>\n employers give job references on former employees who have been discharged<\/p>\n for dishonesty. As a result, many employers will now not give job references<\/p>\n or will do no more than verify that former employees did work for them.<\/p>\n There are two basic defenses to a claim of defamation. One defense is<\/p>\n that the statements made were true. Truth is an absolute defense. The second<\/p>\n defense is that the statement arose from privileged communications. For<\/p>\n example, statements made by legislators, judges, attorneys, and those involved<\/p>\n in lawsuits are privileged under many circumstances.<\/p>\n Defamation and the First Amendment Because of the First<\/p>\n Amendment, special rules regarding defamation apply to the news media.<\/p>\n These media are not liable for the defamatory untruths they print about public<\/p>\n officials and public figures unless plaintiffs can prove that the untruths<\/p>\n were published with \u201cmalice\u201d (evil intent, that is, the deliberate intent to<\/p>\n injure) or with \u201creckless disregard for the truth.\u201d Public figures are those who<\/p>\n have consciously brought themselves to public attention. See Sidebar 10.3 .<\/p>\n In 2008, publisher<\/p>\n Judith Reagan and<\/p>\n her employer News<\/p>\n Corporation settled<\/p>\n her $100 million<\/p>\n lawsuit against<\/p>\n News Corporation<\/p>\n for defaming her by<\/p>\n saying it had fired<\/p>\n her because she had<\/p>\n made anti-Semitic<\/p>\n remarks.<\/p>\n The U.S. Supreme Court issued the \u201cpublic official\u201d<\/p>\n standard requiring defamation plaintiffs to prove<\/p>\n \u201cmalice\u201d or \u201creckless disregard for the truth\u201d in New<\/p>\n York Times v. Sullivan, 376 U.S. 254 (1964), a case<\/p>\n involving criticism of an Alabama police commissioner.<\/p>\n The Court extended essentially the same standard<\/p>\n to defamation cases against \u201cpublic figures\u201d in<\/p>\n Curtis Publishing Co. v. Butts, 388 U.S. 130 (1967).<\/p>\n The facts of this case are interesting.<\/p>\n The Saturday Evening Post, one of the nation\u2019s<\/p>\n leading feature story magazines for many years,<\/p>\n published a story about the University of Georgia\u2019s<\/p>\n athletic director and former football coach Wallace<\/p>\n (\u201cWally\u201d) Butts and the University of Alabama\u2019s football<\/p>\n coach Paul (\u201cBear\u201d) Bryant. The Post alleged that<\/p>\n in a telephone conversation overheard accidentally<\/p>\n by an Atlanta insurance salesman, Butts told Bryant<\/p>\n how to beat Georgia in an upcoming game. \u201cBefore<\/p>\n the University of Georgia played the University of<\/p>\n Alabama. . . , Wally Butts . . . gave to Bear Bryant<\/p>\n Georgia\u2019s plays, defensive patterns, all the significant<\/p>\n secrets Georgia\u2019s football team possessed.\u201d The article<\/p>\n continued, \u201cThe Georgia players, their moves analyzed<\/p>\n and forecast like those of rats in a maze, took a<\/p>\n frightful physical beating.\u201d Georgia lost the game, and<\/p>\n Alabama went on to win the national championship.<\/p>\n Although the conversation between the two<\/p>\n coaches may really have involved only a routine request<\/p>\n to exchange game films, Butts ended up being forced<\/p>\n to resign as athletic director. Both he and Bryant sued<\/p>\n the Post for defamation. The coaches won their lawsuit,<\/p>\n which was appealed to the Supreme Court.<\/p>\n The Court determined that the two coaches were<\/p>\n \u201cpublic figures\u201d and that the First Amendment protected<\/p>\n comment about them in much the same way<\/p>\n it protected comment about public officials. However,<\/p>\n the Court also concluded that the coaches had met<\/p>\n their heavy burden of proof. It affirmed the judgment<\/p>\n against the Post. Within a short time, the Saturday<\/p>\n Evening Post went out of business.<\/p>\n >> sidebar 10.3<\/p>\n Football Coaches as Public Figures<\/p>\n CHAPTER 10 Torts Affecting Business 297<\/p>\n Plaintiffs\u2019 verdicts in media defamation cases are often overturned by trial<\/p>\n or appellate judges. In one instance a Houston investment firm, now defunct,<\/p>\n sued The Wall Street Journal, claiming that a story published by the newspaper<\/p>\n caused the firm to go out of business. Following a huge jury verdict, the<\/p>\n trial judge threw out $200 million in damages, ruling that the firm had not<\/p>\n proved the newspaper published certain statements with knowledge of their<\/p>\n falsity or with reckless disregard for the truth.<\/p>\n Plaintiffs\u2019 verdicts in defamation cases are often overturned by appellate<\/p>\n courts. Because of the constitutional protection given to speech and the<\/p>\n media, appellate judges reexamine trial evidence very closely to determine<\/p>\n whether the necessary elements of defamation had been proven.<\/p>\n 8. FRAUD<\/p>\n Business managers must be alert to the intentional tort of fraud. A fraud is an<\/p>\n intentional misrepresentation of a material fact that is justifiably relied upon<\/p>\n by someone to his or her injury. An intentional misrepresentation means a lie.<\/p>\n The lie must be of a material fact\u2014an important one. The victim of the fraud<\/p>\n must justifiably rely on the misrepresentation and must suffer some injury,<\/p>\n usually a loss of money or other resource one owns.<\/p>\n Fraud applies in many different situations. Business frauds often involve<\/p>\n the intentional misrepresentation of property or financial status. Lying about<\/p>\n assets or liabilities in order to get credit or a loan is a fraud. Likewise, intentionally<\/p>\n misrepresenting that land is free from hazardous waste when the<\/p>\n seller knows that toxic chemicals are buried on the land constitutes fraud.<\/p>\n You can also prove fraud by giving evidence that another has harmed you<\/p>\n by failing to disclose a material (important) hidden fact. The fraud of failure<\/p>\n to disclose arises when the defendant is under a legal duty to disclose a fact,<\/p>\n such as when a defendant seller knows that the foundations of a house are<\/p>\n weakened by termites and must disclose this to the buyer.<\/p>\n Likewise, a defendant who has intentionally concealed an important fact<\/p>\n and has induced reliance on it to the plaintiff\u2019s injury is liable for fraud. Following<\/p>\n the financial collapse that began in 2007, hundreds of plaintiffs filed<\/p>\n fraud lawsuits against banks, other financial institutions, and various of their<\/p>\n executives based on concealment. In one such case, the former chief executive<\/p>\n of Countrywide Financial agreed to pay $67.5 million to settle a fraud case<\/p>\n brought by the Securities and Exchange Commission. The alleged fraud was<\/p>\n the intentional concealment of the risks of subprime mortgages from investors<\/p>\n in the then-largest national mortgage lender. Note that not only the common<\/p>\n law but also many statutes regulating the financial industry provide for<\/p>\n causes of action based on fraud.<\/p>\n In another concealment case, New York State filed a lawsuit based on<\/p>\n fraud against Guidant Corporation. The complaint alleged that heart defibrillators<\/p>\n manufactured by the company were defective and that the implanted<\/p>\n devices had already failed in 28 patients. Further, the complaint asserted that<\/p>\n Guidant had known of the defect for several years and concealed this information<\/p>\n while continuing to sell the defibrillators. Said New York\u2019s former<\/p>\n attorney general, \u201cConcealment of negative facts that might influence a consumer<\/p>\n to purchase another manufacturer\u2019s product is the essence of fraud.\u201d<\/p>\n Fraud is not only a tort but a crime as well. Do you understand the difference<\/p>\n between torts and crimes? (See Sidebar 10.4 .)<\/p>\n According to a survey<\/p>\n by the Association<\/p>\n of Certified Fraud<\/p>\n Examiners, U.S.<\/p>\n companies lose an<\/p>\n average of 6% of their<\/p>\n profit to fraud.<\/p>\n 298 PART 3 Legal Foundations for Business<\/p>\n Some torts are crimes and some are not. How do<\/p>\n we make sense out of this? Crimes, which you will<\/p>\n study in Chapter 13, generally require intent (also<\/p>\n called willfulness ). The prosecutor has to prove that<\/p>\n the defendant intended to cross the proper boundaries<\/p>\n (property) established by law. If the primary purpose<\/p>\n of the state (government) is to protect people<\/p>\n and their resources with the legal fence of property,<\/p>\n as was thought by many framers of the Constitution,<\/p>\n it becomes clear that most crimes, which are<\/p>\n offenses against the proper order (property order)<\/p>\n enforced by the government, involve the most serious<\/p>\n and intentional crossings of the legal fences that<\/p>\n protect people. These crossings injure or harm what<\/p>\n belongs to people and the state punishes such harm.<\/p>\n But people also deserve compensation because of<\/p>\n the injury. That is where tort law comes in.<\/p>\n The most serious torts like assault, battery, conversion,<\/p>\n and fraud, which are also frequently crimes,<\/p>\n are all intentional. Accidental boundary crossings are<\/p>\n usually not criminal unless they are extremely reckless,<\/p>\n but when they injure what belongs to an owner,<\/p>\n the owner can still get compensation through tort<\/p>\n law, for example, through proof of unreasonable and<\/p>\n careless boundary crossing called negligence (see<\/p>\n Sections 11\u201313). Likewise, certain other accidental<\/p>\n boundary crossings that cause injury, like the sale<\/p>\n of a defective product, result in the person crossing<\/p>\n the legal fence being held strictly liable, that is, liable<\/p>\n even in the absence of unreasonable behavior in the<\/p>\n crossing (see Sections 15\u201317). However, because<\/p>\n these torts are unintentional, they are usually not<\/p>\n crimes as well.<\/p>\n Since torts are civil and crimes are, well, criminal<\/p>\n in nature, they have different burdens of proof,<\/p>\n as explained in Chapter 4. The judge instructs the<\/p>\n jury that the plaintiff must prove the tort by a preponderance<\/p>\n of the evidence but instructs the jury in<\/p>\n a criminal case that the prosecutor must prove the<\/p>\n victim\u2019s intentional injury by the defendant beyond a<\/p>\n reasonable doubt. The burdens of proof are different<\/p>\n because to deprive criminal defendants of their freedom<\/p>\n is considered much more serious than merely<\/p>\n to deprive them civilly of their money. And burdens<\/p>\n of proof exist in both civil and criminal cases because<\/p>\n to punish a criminal defendant to protect the proper<\/p>\n order of the state or to compensate a civil plaintiff for<\/p>\n a wrongful boundary crossing involves the taking of<\/p>\n something that was previously proper to defendants,<\/p>\n whether it is their freedom, their money, or some<\/p>\n other resource belonging to them.<\/p>\n Do you understand better now why the same<\/p>\n trespass across a legal fence can be both a tort and<\/p>\n a crime?<\/p>\n >> sidebar 10.4<\/p>\n Tort or Crime? Or Both?<\/p>\n Additional Fraud Examples Fraud also can be committed in the<\/p>\n hiring process. For instance, courts have found employers liable for misrepresenting<\/p>\n to employees about conditions at a business that later affect<\/p>\n employment adversely. In one case, former professional football player Phil<\/p>\n McConkey received a $10 million award because his employer misrepresented<\/p>\n the status of merger talks with another company. McConkey lost his<\/p>\n job the year after he was hired when the two companies merged.<\/p>\n Other instances of business fraud can include:<\/p>\n \u2022 Misrepresentation in employment. Screenwriter Benedict Fitzgerald sued<\/p>\n actor\u2013director Mel Gibson and his production company for defrauding<\/p>\n him into taking a much smaller salary based on their representation that<\/p>\n the movie budget was only $4 million\u2013$7 million instead of the estimated<\/p>\n $25 million\u2013$50 million that had been actually budgeted.<\/p>\n \u2022 Misrepresentation about products. The tobacco industry is beginning to<\/p>\n lose lawsuits when plaintiffs allege fraud based on the industry\u2019s claiming<\/p>\n CHAPTER 10 Torts Affecting Business 299<\/p>\n for years that no tobacco consumption harm had been scientifically<\/p>\n proved when it knew that such harm had been established. In 2008, for<\/p>\n instance, the Oregon Supreme Court affirmed a $79.5 million punitive<\/p>\n damage award in the fraud case of deceased smoker Jesse Williams.<\/p>\n \u2022 Concealment about products. Farmers and growers have received over<\/p>\n $1 billion from DuPont in settlements based on the damage the fungicide<\/p>\n Benlate caused various plants. DuPont allegedly committed fraud by concealing<\/p>\n that Benlate could cause crop damage even when the company<\/p>\n was asked about the possibility.<\/p>\n \u2022 Nondisclosure to third parties about home sale prices. Fannie Mae, the<\/p>\n nation\u2019s largest investor in home loans, told lenders in 2008 that it considered<\/p>\n certain \u201cpractices that may distort or artificially inflate\u201d house prices<\/p>\n to be potentially fraudulent. Fannie Mae referenced situations where<\/p>\n home developers or builders represented that they sold homes in an area<\/p>\n for reported high prices but in reality gave back part of the purchase price<\/p>\n to buyers. The concern is that such practices can defraud future home buyers<\/p>\n in that development into paying higher prices than they actually should<\/p>\n and also mislead banks that loan money for home mortgages in the area.<\/p>\n The previous chapter on contracts discussed fraud as voiding a contract.<\/p>\n But fraud is also an intentional tort, and one who is a victim of fraud can sue<\/p>\n for damages, including punitive or punishment damages. Today many frauds,<\/p>\n as well as other intentional torts, occur on the Internet. See Sidebar 10.5 .<\/p>\n A variety of intentional torts take place on the<\/p>\n Internet. Defamation occurs when e-mailers place<\/p>\n messages on Listservs or public chatrooms that<\/p>\n hold others up to \u201cpublic contempt or ridicule.\u201d<\/p>\n Intentional infliction of mental distress arises, for<\/p>\n example, when threats are made via e-mail or websites.<\/p>\n A jury in Oregon awarded plaintiffs over $100<\/p>\n million when it found that a website threatened<\/p>\n abortion providers. When computer hackers break<\/p>\n into company databases, trade secrets are easily<\/p>\n misappropriated.<\/p>\n Perhaps the most common intentional cyberrelated<\/p>\n tort is fraud. The Federal Trade Commission<\/p>\n has released a list of such frauds or scams that include<\/p>\n a variety of pyramid schemes, fraudulent auctions,<\/p>\n deceptive travel offers, sale of unmiraculous \u201cmiracle\u201d<\/p>\n products, health care rip-offs, phony credit card<\/p>\n charges, and work-at-home frauds. There was even a<\/p>\n \u201crebate\u201d check sent to consumers that if cashed gave<\/p>\n them new Internet service that could not be canceled.<\/p>\n The FTC reports that its enforcement actions against<\/p>\n Internet scams have risen steadily in recent years.<\/p>\n >> sidebar 10.5<\/p>\n Internet Torts<\/p>\n Fraud and Corporate Governance Antifraud laws are a major<\/p>\n weapon in the enforcement of good corporate governance. Much corporate<\/p>\n misgovernance, especially by managers, arises because of misrepresentations<\/p>\n of fact about corporate assets or liabilities. These misrepresentations<\/p>\n usually induce investors to buy corporate stock shares at higher prices and<\/p>\n benefit corporate managers or others inside the corporation who sell their<\/p>\n 300 PART 3 Legal Foundations for Business<\/p>\n stock. Sometimes a misrepresentation that raises the stock price obtains a<\/p>\n bonus or other perk for managers or a loan for the corporation. Usually, a<\/p>\n misrepresentation amounts to fraud because investors (who become owners)<\/p>\n or lenders rely on it to their injury, that is, they lose some or all of their<\/p>\n investment.<\/p>\n Many specific laws create civil and criminal liability for the fraud of<\/p>\n corporate managers and other corporate agents. As you think about fraud,<\/p>\n remember that it violates the principle of property. One does not acquire<\/p>\n proper ownership by defrauding others of their resources. Fraud does not<\/p>\n respect the equal property right of others.<\/p>\n 9. COMMON LAW BUSINESS TORTS<\/p>\n The label business torts embraces different kinds of torts that involve intentional<\/p>\n interference with business relations.<\/p>\n Injurious Falsehood Injurious falsehood, sometimes called trade<\/p>\n disparagement, is a common business tort. It consists of the publication of<\/p>\n untrue statements that disparage the business owner\u2019s product or its quality.<\/p>\n General disparagement of the plaintiff\u2019s business may also provide basis for<\/p>\n liability. As a cause of action, injurious falsehood is similar to defamation of<\/p>\n character. It differs, however, in that it usually applies to a product or business<\/p>\n rather than character or reputation. The requirements of proof are also somewhat<\/p>\n different. Defamatory remarks are presumed false unless the defendant<\/p>\n can prove their truth. But in disparagement cases the plaintiff must establish<\/p>\n the falsity of the defendant\u2019s statements. The plaintiff must also show actual<\/p>\n damages arising from the untrue statements.<\/p>\n As an example of injurious falsehood, consider the potential harm to<\/p>\n Procter & Gamble of the assertions that associated its former logo of moon<\/p>\n and stars with satanism. The company threatened to sue a number of individuals.<\/p>\n In another instance Warnaco sued Calvin Klein, alleging that Klein<\/p>\n had made publicly disparaging remarks about how Warnaco made Calvin<\/p>\n Klein clothing under license. The lawsuit alleged that Klein \u201cfalsely accused<\/p>\n [Warnaco] of effectively \u2018counterfeiting\u2019 Calvin Klein apparel.\u201d<\/p>\n Intentional Interference with Contractual Relations A second<\/p>\n type of business tort is intentional interference with contractual relations.<\/p>\n Probably the most common example of this tort involves one company raiding<\/p>\n another for employees. If employees are under contract to an employer for a<\/p>\n period of time, another employer cannot induce them to break their contracts.<\/p>\n In a variation on this tort, the brokerage firm PaineWebber Group sued Morgan<\/p>\n Stanley Dean Witter & Company over PaineWebber\u2019s merger agreement<\/p>\n with J. C. Bradford & Company. PaineWebber claimed that Morgan Stanley<\/p>\n pursued \u201ca carefully planned, broadbased campaign to raid Bradford personnel<\/p>\n and interfere with the merger agreement between PaineWebber and Bradford.\u201d<\/p>\n One of the most famous tort cases in history involved interference with<\/p>\n a contract of merger. In that case a jury awarded Pennzoil over $10 billion<\/p>\n against Texaco for persuading Getty Oil to breach an agreement of merger<\/p>\n with Pennzoil. After Texaco filed for bankruptcy, Pennzoil accepted a settlement<\/p>\n of around $3 billion.<\/p>\n Do remember that<\/p>\n you can be sued for<\/p>\n making statements<\/p>\n about a competitor\u2019s<\/p>\n product that the<\/p>\n competitor considers<\/p>\n false.<\/p>\n Don\u2019t induce the<\/p>\n employees of another<\/p>\n company to come<\/p>\n to work for you<\/p>\n when they are under<\/p>\n contract to work for a<\/p>\n period of time.<\/p>\n CHAPTER 10 Torts Affecting Business 301<\/p>\n >> Negligence<\/p>\n The second major area of tort liability involves unreasonable behavior that<\/p>\n causes injury. This area of tort is called negligence. In the United States more<\/p>\n lawsuits allege negligence than any other single cause of action.<\/p>\n Negligence takes place when one who has a duty to act reasonably acts<\/p>\n carelessly and causes injury to another. Actually, five separate elements make<\/p>\n up negligence, and the following sections discuss these elements. Sidebar 10.6<\/p>\n also summarizes them. In business, negligence can occur when employees<\/p>\n cause injury to customers or others; when those invited to a business are<\/p>\n injured because the business fails to protect them; when products are not<\/p>\n carefully manufactured; when services, such as accounting services, are not<\/p>\n carefully provided; and in many other situations.<\/p>\n 10. DUTY OF CARE<\/p>\n A critical element of the negligence tort is duty. Without a duty to another<\/p>\n person, one does not owe that person reasonable care. Accidental injuries<\/p>\n occur daily for which people other than the victim have no responsibility,<\/p>\n legally or otherwise.<\/p>\n Duty usually arises out of a person\u2019s conduct or activity. A person doing<\/p>\n something has a duty to use reasonable care and skill around others to avoid<\/p>\n injuring them. Whether one is driving a car or manufacturing a product, she<\/p>\n or he has a duty not to injure others by unreasonable conduct.<\/p>\n Usually, a person has no duty to avoid injuring others through nonconduct.<\/p>\n There is no general duty requiring a sunbather at the beach to warn<\/p>\n a would-be surfer that a great white shark is lurking offshore, even if the<\/p>\n sunbather has seen the fin. There is moral responsibility but no legal duty<\/p>\n present.<\/p>\n When there is a special relationship between persons, the situation<\/p>\n changes. A person in a special relationship to another may have a duty to<\/p>\n avoid unreasonable nonconduct. A business renting surfboards at the beach<\/p>\n would probably be liable for renting a board to a customer who was attacked<\/p>\n by a shark if it knew the shark was nearby and failed to warn the customer.<\/p>\n The special business relationship between the two parties creates a duty to<\/p>\n take action and makes the business liable for its unreasonable nonconduct.<\/p>\n LO 10-3<\/p>\n * A person doing<\/p>\n something has a legal<\/p>\n duty to act reasonably<\/p>\n to avoid injuring<\/p>\n others.<\/p>\n Existence of a duty of care owed by the defendant<\/p>\n to the plaintiff.<\/p>\n Unreasonable behavior by the defendant that<\/p>\n breaches the duty.<\/p>\n Causation in fact.<\/p>\n Proximate causation.<\/p>\n An actual injury.<\/p>\n >> sidebar 10.6<\/p>\n Elements of Negligence<\/p>\n 302 PART 3 Legal Foundations for Business<\/p>\n In recent years, negligence cases against businesses for nonconduct have<\/p>\n grown dramatically. Most of these cases have involved failure to protect customers<\/p>\n from crimes. The National Crime Prevention Institute estimates that<\/p>\n such cases have increased tenfold since the mid-1970s.<\/p>\n One famous case involved the Tailhook scandal. A group of male naval<\/p>\n aviators was sexually groping female guests as they walked down the hallway<\/p>\n at a Hilton hotel. (Remember that an unconsented-to touching is an intentional<\/p>\n tort.) One of the females who was sexually touched sued the Hilton<\/p>\n hotel for negligence in knowing of the aviators\u2019 behavior and failing to protect<\/p>\n her. A jury awarded her a total of $6.7 million against Hilton.<\/p>\n The extent of a business\u2019s duty to protect customers is still evolving. Note<\/p>\n that in Case 10.2 the New Hampshire Supreme Court says that the defendant<\/p>\n restaurant has no special relationship to the plaintiff, but still rules that it<\/p>\n may have a duty to protect restaurant customers.<\/p>\n case 10.2 >><\/p>\n IANNELLI v. BURGER KING CORP.<\/p>\n 200 N. H. Lexis 42 (N. H. Sup. Ct. 2000)<\/p>\n MCHUGH, J.: The plaintiffs, Nicholas and Jodiann<\/p>\n Iannelli, individually and on behalf of their three children,<\/p>\n brought a negligence action against the defendant,<\/p>\n Burger King Corporation, for injuries sustained<\/p>\n as a result of an assault at the defendant\u2019s restaurant.<\/p>\n During the late afternoon or early evening hours of<\/p>\n December 26, 1995, the Iannelli family went to the<\/p>\n defendant\u2019s restaurant for the first time. Upon entering<\/p>\n the restaurant, the Iannellis became aware of a<\/p>\n group of teenagers consisting of five males and two<\/p>\n females, whom they alleged were rowdy, obnoxious,<\/p>\n loud, abusive, and using foul language. Some in the<\/p>\n group claimed they were \u201chammered.\u201d Initially this<\/p>\n group was near the ordering counter talking to an<\/p>\n employee whom they appeared to know. The Iannellis<\/p>\n alleged that one of the group almost bumped into<\/p>\n Nicholas. When that fact was pointed out, the teenager<\/p>\n exclaimed, \u201cI don\u2019t give an F. That\u2019s his F\u2019ing problem.\u201d<\/p>\n Nicholas asked his wife and children to sit down<\/p>\n in the dining area as he ordered the food. While waiting<\/p>\n for the food to be prepared, Nicholas joined his family<\/p>\n at their table. The teenagers also moved into the dining<\/p>\n area to another table. The obnoxious behavior and<\/p>\n foul language allegedly continued. One of the Iannelli<\/p>\n children became nervous. Nicholas then walked over<\/p>\n to the group intending to ask them to stop swearing.<\/p>\n As Nicholas stood two or three feet from the closest of<\/p>\n the group, he said, \u201cGuys, hey listen, I have three kids.\u201d<\/p>\n Whereupon, allegedly unprovoked, one or more of the<\/p>\n group assaulted Nicholas by hitting him, knocking him<\/p>\n to the ground and striking him in the head with a chair.<\/p>\n The plaintiffs argue that a commercial enterprise<\/p>\n such as a restaurant has a general duty to exercise reasonable<\/p>\n care toward its patrons, which may include a<\/p>\n duty to safeguard against assault when circumstances<\/p>\n provide warning signs that the safety of its patrons<\/p>\n may be at risk. The most instructive case, given the<\/p>\n issues presented, is Walls v. Oxford Management Co.<\/p>\n In Walls, a tenant of an apartment complex alleged<\/p>\n that the owner\u2019s negligent maintenance of its property<\/p>\n allowed her to be subjected to a sexual assault in the<\/p>\n parking lot. We held that as a general principle landlords<\/p>\n have no duty to protect tenants from criminal<\/p>\n attacks. In as much as landlords and tenants have a<\/p>\n special relationship that does not exist between a commercial<\/p>\n establishment and its guests, it follows that the<\/p>\n same general principle of law extends to restaurants<\/p>\n and their patrons. We recognized in Walls, however,<\/p>\n that particular circumstances can give rise to such a<\/p>\n duty. These circumstances include when the opportunity<\/p>\n for criminal misconduct is brought about by the<\/p>\n actions or inactions of the owner or where overriding<\/p>\n foreseeability of such criminal activity exists.<\/p>\n Viewing the evidence in the light most favorable to<\/p>\n the plaintiffs, we must decide whether the behavior of<\/p>\n the rowdy youths could have created an unreasonable<\/p>\n risk of injury to restaurant patrons that was foreseeable<\/p>\n to the defendant. If the risk of injury was reasonably<\/p>\n 303<\/p>\n Note that the duty to act reasonably also applies to professional providers,<\/p>\n like doctors, lawyers, CPAs, architects, engineers, and others. In most negligence<\/p>\n cases, however, the standard of reasonableness is that of a reasonable<\/p>\n person. In negligence cases involving professionals, the negligence standard<\/p>\n applied is that of the reasonable professional. The negligence of professionals<\/p>\n is called malpractice.<\/p>\n As Sidebar 10.7 suggests, professional negligence is a controversial area<\/p>\n of tort law.<\/p>\n 11. UNREASONABLE BEHAVIOR\u2014BREACH OF DUTY<\/p>\n At the core of negligence is the unreasonable behavior that breaches the<\/p>\n duty of care that the defendant owes to the plaintiff. The problem is how do<\/p>\n we separate reasonable behavior that causes accidental injury from unreasonable<\/p>\n behavior that causes injury? Usually a jury determines this issue,<\/p>\n but negligence is a mixed question of law and fact. Despite the trend for<\/p>\n judges to let juries decide what the standard of reasonable care is, judges<\/p>\n also continue to be involved in the definition of negligence. A well-known<\/p>\n definition by Judge Learned Hand states that negligence is determined by<\/p>\n \u201cthe likelihood that the defendant\u2019s conduct will injure others, taken with<\/p>\n A train rounds a bend<\/p>\n but cannot stop in<\/p>\n time to avoid running<\/p>\n over an intoxicated<\/p>\n person who has fallen<\/p>\n asleep on the track. A<\/p>\n jury is not likely to find<\/p>\n the railroad\u2019s behavior<\/p>\n \u201cunreasonable.\u201d<\/p>\n [continued]<\/p>\n foreseeable, then a duty existed. We hold that the teenagers\u2019<\/p>\n unruly behavior could reasonably have been anticipated<\/p>\n to escalate into acts that would expose patrons to<\/p>\n an unreasonable risk of injury. The exact occurrence or<\/p>\n precise injuries need not have been foreseen.<\/p>\n Viewed in a light most favorable to the plaintiffs,<\/p>\n the evidence could support a finding that the teenagers\u2019<\/p>\n obnoxious behavior in the restaurant was open and<\/p>\n notorious. Because the group was engaging in a conversation<\/p>\n at times with a restaurant employee, it could<\/p>\n be found that the defendant was aware of the teenagers\u2019<\/p>\n conduct. The near physical contact between one<\/p>\n teenager and Nicholas Iannelli at the counter and the<\/p>\n indifference expressed by the group member thereafter<\/p>\n could be deemed sufficient warning to the restaurant<\/p>\n manager of misconduct such that it was incumbent<\/p>\n upon him to take affirmative action to reduce the risk<\/p>\n of injury. The plaintiffs allege that at least one other<\/p>\n restaurant patron expressed disgust with the group\u2019s<\/p>\n actions prior to the assault. The manager could have<\/p>\n warned the group about their behavior or summoned<\/p>\n the police if his warnings were not heeded.<\/p>\n In summary, the trial court\u2019s ruling that as a matter<\/p>\n of law the defendant owed no duty to the plaintiffs<\/p>\n to protect them from the assault was error. While as<\/p>\n a general principle no such duty exists, here it could<\/p>\n be found that the teenagers\u2019 behavior in the restaurant<\/p>\n created a foreseeable risk of harm that the defendant<\/p>\n unreasonably failed to alleviate. Accordingly, we<\/p>\n reverse and remand.<\/p>\n >> CASE QUESTIONS<\/p>\n 1. Under the decision in this case, when does a duty arise for the defendant restaurant<\/p>\n to protect its customers?<\/p>\n 2. What does the court suggest that the restaurant manager should have done in this<\/p>\n case that would have satisfied the duty?<\/p>\n 3. What do you think is the difference in this case between a \u201cspecial relationship\u201d<\/p>\n duty and the duty of the restaurant?<\/p>\n 304 PART 3 Legal Foundations for Business<\/p>\n the seriousness of the injury if it happens, and balanced against the interest<\/p>\n which he must sacrifice to avoid the risk.\u201d<\/p>\n Examples of Negligence Failure to exercise reasonable care can cost<\/p>\n a company substantial sums. In one instance the licensed owner of a National<\/p>\n Car Rental agency in Indianapolis was ordered to pay $5.5 million to a man<\/p>\n who slipped on the floor and broke his hip. To save overtime pay the rental<\/p>\n agency had had its floors mopped during, instead of after, normal working<\/p>\n hours. Unaware that someone was mopping the floors behind him, the plaintiff<\/p>\n had stepped backwards, slipped, and fallen on the wet floor.<\/p>\n In another case arising from unreasonable behavior, Wal-Mart Stores<\/p>\n agreed to pay two young girls a settlement of up to $16 million. A store<\/p>\n employee had sold the girls\u2019 father a shotgun used to kill their mother in spite<\/p>\n of the fact that a federal form filled out by the buyer indicated that he was<\/p>\n under a restraining order. Federal law bars those under restraining orders<\/p>\n from purchasing guns.<\/p>\n Even before the terrorist attacks of 9\/11, New York\u2019s World Trade Center<\/p>\n (WTC) had been bombed. In 2005 a Manhattan jury determined that<\/p>\n the Port Authority of New York was negligent in the earlier attack, which<\/p>\n involved a blast from a truck filled with explosives that terrorists had driven<\/p>\n into the public parking lot under the WTC. Six people died and over a<\/p>\n thousand were injured. Is it an example of litigation gone wild to hold the<\/p>\n Port Authority liable for a terrorist act? Consider that before the bombing<\/p>\n a report commissioned by the Port Authority, which controlled the WTC<\/p>\n Few people would disagree that physicians are extremely<\/p>\n unhappy about the rapidly growing insurance<\/p>\n premiums they have to pay. Some physicians have<\/p>\n gone on strike; others have left the practice of medicine.<\/p>\n The exact causes of the situation, however, are<\/p>\n difficult to determine. Consider the following and<\/p>\n make your own Assessment.<\/p>\n \u2022 Studies suggest between 44,000 and 98,000<\/p>\n people die annually from medical errors.<\/p>\n \u2022 A study in the New England Journal of Medicine<\/p>\n found that 9 out of 10 patients who suffer disability<\/p>\n from medical errors go uncompensated.<\/p>\n \u2022 In 2004 total payments for medical malpractice<\/p>\n claims fell 8.9% nationally.<\/p>\n \u2022 As of 2005, 27 states have capped malpractice<\/p>\n awards.<\/p>\n \u2022 In 2004 malpractice insurance costs for various<\/p>\n medical specialties rose between 6.9% and 24.9%.<\/p>\n Question: what would be the impact on the cost<\/p>\n of malpractice insurance if physicians had patients<\/p>\n sign arbitration clauses before providing service<\/p>\n in all but emergency cases? These clauses might<\/p>\n provide that disputes with a physician be resolved<\/p>\n before an arbitration board appointed by the state<\/p>\n medical association. These clauses are currently not<\/p>\n widely used and are specifically prohibited by several<\/p>\n states. But under the Federal Arbitration Act,<\/p>\n the state prohibitions are likely preempted by the<\/p>\n federal law because medical practice has a substantial<\/p>\n impact on interstate commerce. The Supreme<\/p>\n Court has already ruled that law practice has such<\/p>\n an impact, so it is likely that medical practice does<\/p>\n as well.<\/p>\n Sources: BusinessWeek, The New York Times, Department of Health and<\/p>\n Human Services.<\/p>\n >> sidebar 10.7<\/p>\n Medical Malpractice Crisis<\/p>\n CHAPTER 10 Torts Affecting Business 305<\/p>\n parking, had specifically warned against such a bombing and recommended:<\/p>\n \u201cEliminate all public parking at the World Trade Center.\u201d Citing potential<\/p>\n loss of revenue, the Port Authority had declined to follow the report\u2019s<\/p>\n recommendation.<\/p>\n Willful and Wanton Negligence A special type of aggravated<\/p>\n negligence is willful and wanton negligence. Although this does not reveal<\/p>\n intent, it does show an extreme lack of due care. Negligent injuries inflicted<\/p>\n by drunk drivers show willful and wanton negligence. The significance of this<\/p>\n type of negligence is that the injured plaintiff can recover punitive damages<\/p>\n as well as actual damages. For example, following the Exxon Valdez oil spill<\/p>\n in Alaska, commercial fishers sued Exxon for damage to their livelihoods.<\/p>\n A jury awarded substantial actual and punitive damages when it found that<\/p>\n Exxon was willful and wanton in allowing the ship captain to be in charge of<\/p>\n the ship when they knew he was an alcoholic.<\/p>\n In 2005 a New Jersey state court awarded a 2-year-old boy $105 million<\/p>\n for an accident that left him permanently paralyzed from the neck down. A<\/p>\n drunken Giants football fan had caused the accident. Before driving, the fan<\/p>\n consumed at least 12 beers sold to him by a Giants Stadium concessionaire.<\/p>\n The award for willful and wanton negligence against the concessionaire is the<\/p>\n largest ever for the careless sale of alcohol. The award included $30 million in<\/p>\n compensatory and $75 million in punitive damages.<\/p>\n Because employers are also liable for the intentional torts of employees<\/p>\n in advancing the interests of their employers (see Chapter 14), employers face<\/p>\n punitive damage awards in those instances even when they are also liable for<\/p>\n simple negligence, or have not acted negligently at all. (See Sidebar 10.8 .)<\/p>\n * Willful and wanton<\/p>\n negligence allows<\/p>\n an injured plaintiff<\/p>\n to recover punitive<\/p>\n as well as actual<\/p>\n damages.<\/p>\n The caller identified himself as a police officer and<\/p>\n told the McDonald\u2019s Helpant manager that Louise<\/p>\n Ogburn had stolen the purse of a customer who had<\/p>\n recently left the restaurant and should be searched.<\/p>\n For more than an hour the Helpant manager and<\/p>\n other McDonald employees detained, searched, and<\/p>\n even committed sexual battery against Ogburn at the<\/p>\n instruction of the caller. However, the caller was not a<\/p>\n police officer and the call was a hoax.<\/p>\n Ogburn sued McDonald\u2019s and the jury awarded<\/p>\n her a million dollars in actual damages for pain and<\/p>\n suffering and $5 million in punitive damages against<\/p>\n the company. To understand why McDonald\u2019s is liable,<\/p>\n you have to understand that numerous instances<\/p>\n of such hoaxes were known to the company involving<\/p>\n various fast-food restaurants, yet the jury found that<\/p>\n the company had not reasonably trained its employees<\/p>\n such calls might be hoaxes.<\/p>\n If McDonald\u2019s negligence were extreme, that<\/p>\n is, willful and wanton, that would justify the $5 million<\/p>\n punitive damage award, but McDonald\u2019s is also<\/p>\n liable for the intentional torts of its employees that<\/p>\n justify awarding punitive damages. In this case the<\/p>\n employees committed such intentional torts as false<\/p>\n imprisonment and battery in the course of Ogburn\u2019s<\/p>\n detention. Such detention advanced the interests of<\/p>\n McDonald\u2019s in dealing with dishonest employees and<\/p>\n made the intentional acts accompanying Ogburn\u2019s<\/p>\n treatment the company\u2019s responsibility when they<\/p>\n turned out to be wrongful.<\/p>\n >> sidebar 10.8<\/p>\n Strip Search Hoax Costs McDonald\u2019s $6.1 Million<\/p>\n 306 PART 3 Legal Foundations for Business<\/p>\n 12. CAUSATION IN FACT<\/p>\n Before a person is liable to another for negligent injury, the person\u2019s failure<\/p>\n to use reasonable care must actually have \u201ccaused\u201d the injury. This observation<\/p>\n is not so obvious as it first appears. A motorist stops by the roadside<\/p>\n to change a tire. Another motorist drives past carelessly and sideswipes the<\/p>\n first as he changes the tire. What caused the accident? Was it the inattention<\/p>\n of the second motorist or the fact that the first motorist had a flat tire? Did<\/p>\n the argument the second motorist had with her boss before getting in the car<\/p>\n cause the accident, or was it the decision of the first motorist to visit one more<\/p>\n client that afternoon? In a real sense, all these things caused the accident.<\/p>\n Chains of causation stretch out infinitely.<\/p>\n Still, in a negligence suit the plaintiff must prove that the defendant actually<\/p>\n caused the injury. The courts term this cause in fact. In light of the many<\/p>\n possible ways to attribute accident causation, how do courts determine if a<\/p>\n plaintiff\u2019s lack of care, in fact, caused a certain injury? They do so very practically.<\/p>\n Courts leave questions of cause in fact almost entirely to juries as long<\/p>\n as the evidence reveals that a defendant\u2019s alleged carelessness could have been<\/p>\n a substantial, material factor in bringing about an injury. Juries then make<\/p>\n judgments about whether a defendant\u2019s behavior in fact caused the harm.<\/p>\n A particular problem of causation arises where the carelessness of two or<\/p>\n more tortfeasors contributes to cause the plaintiff\u2019s injury, as when two persons<\/p>\n are wrestling over control of the car which strikes the plaintiff. Tort law<\/p>\n handles such cases by making each tortfeasor jointly and severally liable for<\/p>\n the entire judgment. The plaintiff can recover only the amount of the judgment,<\/p>\n but she or he may recover it wholly from either of the tortfeasors or get<\/p>\n a portion of the judgment from each.<\/p>\n Approximately 40 states have limited joint and several liability in certain<\/p>\n cases, for example, medical injury cases. In these states and types of cases,<\/p>\n multiple defendants are each liable usually only for that portion of the damages<\/p>\n juries believe they actually caused.<\/p>\n 13. PROXIMATE CAUSATION<\/p>\n It is not enough that a plaintiff suing for negligence prove that the defendant<\/p>\n caused an injury in fact. The plaintiff also must establish proximate causation.<\/p>\n Proximate cause is, perhaps, more accurately termed legal cause. It represents<\/p>\n the proposition that those engaged in activity are legally liable only<\/p>\n for the foreseeable risk that they cause.<\/p>\n Defining proximate causation in terms of foreseeable risk creates further<\/p>\n problems about the meaning of the word foreseeable. In its application, foreseeability<\/p>\n has come to mean that the plaintiff must have been one whom<\/p>\n the defendant could reasonably expect to be injured by a negligent act. For<\/p>\n example, it is reasonable to expect, thus foreseeable, that a collapsing hotel<\/p>\n walkway should injure those on or under it. But many courts would rule<\/p>\n as unforeseeable that someone a block away, startled upon hearing the loud<\/p>\n crash of the walkway, should trip and stumble into the path of an oncoming<\/p>\n car. The court would likely dismiss that person\u2019s complaint against the hotel<\/p>\n as failing to show proximate causation.<\/p>\n Another application of proximate cause doctrine requires the injury to be<\/p>\n caused directly by the defendant\u2019s negligence. Causes of injury that intervene<\/p>\n Many states are<\/p>\n currently modifying<\/p>\n the common law of<\/p>\n torts regarding rules<\/p>\n like that of joint and<\/p>\n several liability.<\/p>\n British Petroleum<\/p>\n promised $20 billion<\/p>\n to pay for claims<\/p>\n arising from its oil spill<\/p>\n in the Gulf. To date,<\/p>\n only about a fifth of<\/p>\n that amount has been<\/p>\n paid out by claims<\/p>\n adjusters. Part of the<\/p>\n problem relates to<\/p>\n proximate causation.<\/p>\n How do claimants<\/p>\n prove, for instance,<\/p>\n that a falloff in<\/p>\n business miles inland<\/p>\n is directly caused by<\/p>\n the oil spill instead<\/p>\n of poor business<\/p>\n practice, or for some<\/p>\n other reason?<\/p>\n CHAPTER 10 Torts Affecting Business 307<\/p>\n between the defendant\u2019s negligence and the plaintiff\u2019s injury can destroy the<\/p>\n necessary proximate causation. Some courts, for instance, would hold that it<\/p>\n is not foreseeable that an owner\u2019s negligence in leaving keys in a parked car<\/p>\n should result in an intoxicated thief who steals the car, crashing and injuring<\/p>\n another motorist. These courts would dismiss for lack of proximate cause<\/p>\n a case brought by the motorist against the car\u2019s owner. For one of the most<\/p>\n famous tort cases in history, see Sidebar 10.9 .<\/p>\n Helen Palsgraf stood on the loading platform on the<\/p>\n Long Island Railroad. Thirty feet away, two station<\/p>\n guards were pushing a man onto a departing train<\/p>\n when one guard dislodged an unmarked package<\/p>\n held by the man. The package, which contained fireworks,<\/p>\n fell to the ground with a loud explosion.<\/p>\n The explosion caused a heavy scale to fall on<\/p>\n Helen Palsgraf, injuring her. She sued the railroad<\/p>\n for the negligence of its guard and won at trial and<\/p>\n in the appellate court. Three justices of the Court of<\/p>\n Appeals (New York\u2019s supreme court) agreed with the<\/p>\n lower courts: \u201cThe act [of the guard] was negligent.<\/p>\n For its proximate consequences the defendant is<\/p>\n liable.\u201d<\/p>\n However, four justices of the Court of Appeals<\/p>\n decided that proximate causation was \u201cforeign to<\/p>\n the case before us.\u201d The majority ruled that what the<\/p>\n guard did could not be considered negligence at all<\/p>\n in relation to the plaintiff Palsgraf. The guard owed<\/p>\n no duty to someone 30 feet away not to push a passenger\u2014<\/p>\n even carelessly\u2014onto a train. The Court of<\/p>\n Appeals reversed the damage award to the plaintiff.<\/p>\n The famous Palsgraf case illustrates the complexity<\/p>\n of legal analysis. Question: Was it negligent for the<\/p>\n passenger to carry fireworks in a crowded railroad<\/p>\n station? Why didn\u2019t the plaintiff just recover damages<\/p>\n from the passenger?<\/p>\n Source: Palsgraf v. Long Island R.R., 162 N.E. 99 (1928).<\/p>\n >> sidebar 10.9<\/p>\n Explosion on the Long Island Railroad<\/p>\n 14. DEFENSES TO NEGLIGENCE<\/p>\n There are two principal defenses to an allegation of negligence: contributory<\/p>\n negligence and assumption of risk. Both these defenses are affirmative<\/p>\n defenses, which means that the defendant must specifically raise these defenses<\/p>\n to take advantage of them. When properly raised and proved, these defenses<\/p>\n limit or bar the plaintiff\u2019s recovery against the defendant. The defenses are<\/p>\n valid even though the defendant has actually been negligent.<\/p>\n Contributory Negligence As originally applied, the contributory<\/p>\n negligence defense absolutely barred the plaintiff from recovery if the<\/p>\n plaintiff\u2019s own fault contributed to the injury \u201cin any degree, however<\/p>\n slight.\u201d The trend today, however, in the great majority of states is to offset<\/p>\n the harsh rule of contributory negligence with the doctrine of comparative<\/p>\n responsibility (also called comparative negligence and comparative fault ).<\/p>\n Under comparative principles, the plaintiff\u2019s contributory negligence does<\/p>\n not bar recovery. It merely compares the plaintiff\u2019s fault with the defendant\u2019s<\/p>\n and reduces the damage award proportionally. For example, a jury<\/p>\n determined damages at $3.1 million for an Atlanta plaintiff who was run<\/p>\n over and dragged by a bus. But the jury then reduced the damage award<\/p>\n 308 PART 3 Legal Foundations for Business<\/p>\n by 20% ($620,000) on the basis that the plaintiff contributed to his own<\/p>\n injury by failing reasonably to look out for his own safety in an area where<\/p>\n buses come and go.<\/p>\n Adoption of the comparative negligence principle seems to lead to more<\/p>\n frequent and larger awards for plaintiffs. This was the conclusion of a study<\/p>\n by the Illinois Insurance Information Service for the year following that state\u2019s<\/p>\n adoption of comparative negligence.<\/p>\n Assumption of Risk If contributory negligence involves failure to use<\/p>\n proper care for one\u2019s own safety, the assumption-of-the-risk defense arises<\/p>\n from the plaintiff\u2019s knowing and willing undertaking of an activity made<\/p>\n dangerous by the negligence of another. When professional hockey first<\/p>\n came to this country, many spectators injured by flying hockey pucks sued<\/p>\n and recovered for negligence. But as time went on and spectators came to<\/p>\n realize that attending a hockey game meant that one might occasionally be<\/p>\n exposed to flying hockey pucks, courts began to allow the defendant owners<\/p>\n of hockey teams to assert that injured spectators had assumed the risk of<\/p>\n injury from a speeding puck. It is important to a successful assumption-ofthe-<\/p>\n risk defense that the assumption was voluntary. Entering a hockey arena<\/p>\n while knowing the risk of flying pucks is a voluntary assumption of the risk.<\/p>\n However, that the injured person has really understood the risk is also significant<\/p>\n to the assumption-of-the-risk defense. In one 2007 case, a University<\/p>\n softball coach smacked his player in the face with a bat while demonstrating<\/p>\n a batting grip to her. She required surgery for multiple fractures of her face<\/p>\n and sued the coach and his employer, the university. The court denied the<\/p>\n assumption-of-the-risk defense, asserting that it was up to the jury to determine<\/p>\n whether the coach had acted negligently in hitting his player. The court<\/p>\n observed that the player did not appreciate the risk of being hit by her coach<\/p>\n with the bat.<\/p>\n Courts have often ruled that people who imperil themselves while attem pting<\/p>\n to rescue their own or others\u2019 property from a risk created by the defendant<\/p>\n have not assumed the risk voluntarily. A plaintiff who is injured while<\/p>\n attempting to save his possessions from a fire negligently caused by the defendant<\/p>\n is not subject to the assumption-of-the-risk defense.<\/p>\n Assumption of the risk may be implied from the circumstances, or it<\/p>\n can arise from an express agreement. Many businesses attempt to relieve<\/p>\n themselves of potential liability by having employees or customers agree<\/p>\n contractually not to sue for negligence, that is, to assume the risk. Some<\/p>\n of these contractual agreements are legally enforceable, but many will be<\/p>\n struck down by the courts as being against public policy, especially where a<\/p>\n business possesses a vastly more powerful bargaining position than does its<\/p>\n employee or customer.<\/p>\n >> Strict Liability in Tort<\/p>\n Strict liability is a catchall phrase for the legal responsibility for injury-causing<\/p>\n behavior that is neither intentional nor negligent. There are various types of<\/p>\n strict liability torts, some of which are more \u201cstrict\u201d than others. What ties<\/p>\n Contractual notices<\/p>\n regarding assumption<\/p>\n of the risk are more<\/p>\n likely to be enforced<\/p>\n if they prominently<\/p>\n bring to attention the<\/p>\n risk involved.<\/p>\n People injured by a<\/p>\n baseball at a baseball<\/p>\n game or a golf ball<\/p>\n on the golf links also<\/p>\n usually assume the<\/p>\n risk. Does someone<\/p>\n assume the risk of a<\/p>\n racing car veering off<\/p>\n a race track and going<\/p>\n over a barrier and into<\/p>\n the crowd?<\/p>\n CHAPTER 10 Torts Affecting Business 309<\/p>\n them together is that they all impose legal liability, regardless of the intent or<\/p>\n fault of the defendant. The next sections discuss these torts and tort doctrines.<\/p>\n 15. STRICT PRODUCTS LIABILITY<\/p>\n A major type of strict tort liability is strict products liability, for the commercial<\/p>\n sale of defective products. In most states any retail, wholesale, or<\/p>\n manufacturing seller who sells an unreasonably dangerous defective product<\/p>\n that causes injury to a user of the product is strictly liable. For example, if a<\/p>\n forklift you are using at work malfunctions because of defective brakes and<\/p>\n you run off the edge of the loading dock and are injured, you can sue the<\/p>\n retailer, wholesaler, and manufacturer of the product for strict liability. The<\/p>\n fact that the retailer and wholesaler may have been perfectly careful in selling<\/p>\n the product does not matter. They are strictly liable.<\/p>\n Strict products liability applies only to \u201ccommercial\u201d sellers, those who<\/p>\n normally sell products like the one causing injury, or who place them in the<\/p>\n stream of commerce. Included as commercial sellers are the retailer, wholesaler,<\/p>\n and manufacturer of a product, but also included are suppliers of defective<\/p>\n parts and companies that assemble a defective product. Not included as<\/p>\n a commercial seller is your next door neighbor who sells you her defective<\/p>\n lawnmower. The neighbor may be negligent, for instance, if she knew of the<\/p>\n defect that caused you injury and forgot to warn you about it, but she cannot<\/p>\n be held strictly liable.<\/p>\n An important concept in strict products liability is that of \u201cdefect.\u201d Strict<\/p>\n liability only applies to the sale of unreasonably dangerous defective products.<\/p>\n There are two kinds of defects. Production defects arise when products<\/p>\n are not manufactured to a manufacturer\u2019s own standards. Defective brakes<\/p>\n on a new car are a good example of a production defect. Another example<\/p>\n involves the clam chowder in which a diner found a condom, which led<\/p>\n in 2005 to a rapid settlement between the diner and a seafood restaurant<\/p>\n chain. Design defects occur when a product is manufactured according to<\/p>\n the manufacturer\u2019s standards, but the product injures a user due to its unsafe<\/p>\n design. Lawsuits based on design defects are common but often very controversial.<\/p>\n Recent such lawsuits have included one against Ford that claimed<\/p>\n Ford should have designed its vans to have a heat-venting system so children<\/p>\n accidentally locked in the vans would be safe. Lack of adequate warnings<\/p>\n concerning inherently dangerous products can also be considered a design<\/p>\n defect. American Home Products settled a wrongful death lawsuit for an estimated<\/p>\n $10 million. The lawsuit alleged that the company had not adequately<\/p>\n warned users of its diet drug about the risks of hypertension, which had been<\/p>\n linked to diet-drug use.<\/p>\n In practice, strict products liability is useful in protecting those who suffer<\/p>\n personal injury or property damage. It does not protect businesses that<\/p>\n have economic losses due to defective products. For instance, a warehouse<\/p>\n that loses profits because its defective forklift will not run cannot recover<\/p>\n those lost profits under strict products liability. The warehouse would have<\/p>\n to sue for breach of contract. However, if the forklift defect causes injury to<\/p>\n a worker, the worker can successfully sue the forklift manufacturer for strict<\/p>\n products liability.<\/p>\n Don\u2019t forget that<\/p>\n strict products liability<\/p>\n applies only against<\/p>\n commercial sellers.<\/p>\n In one case, a jury<\/p>\n found the defendant<\/p>\n liable when its<\/p>\n cleaning product<\/p>\n warned users to \u201cvent\u201d<\/p>\n rooms being cleaned<\/p>\n but failed to say \u201cvent<\/p>\n to outside.\u201d Vapors<\/p>\n from the product<\/p>\n injured several people<\/p>\n when it was used in<\/p>\n a room with a closed<\/p>\n circulation venting<\/p>\n system.<\/p>\n 310 PART 3 Legal Foundations for Business<\/p>\n Under strict products liability, contributory negligence is not a defense<\/p>\n but assumption of the risk is. The assumption-of-the-risk defense helped<\/p>\n protect tobacco manufacturers from health injury liability for many years.<\/p>\n Misuse is another defense that defendants commonly raise in product liability<\/p>\n cases. Removing safety guards from equipment is a common basis for the<\/p>\n misuse defense. Defendants have also argued that if a product meets some<\/p>\n federally required standard, it cannot be considered defective. Most courts,<\/p>\n however, have ruled that federal standards only set a minimum requirement<\/p>\n for safe design and that meeting federal standards does not automatically<\/p>\n keep a manufacturer from being sued for strict products liability.<\/p>\n In recent years many states have changed or modified the rules of product<\/p>\n liability. See Sidebar 10.10 . These changes to the rules of products liability<\/p>\n (and modifications to the rules of medical malpractice) are often known generally<\/p>\n as \u201ctort reform.\u201d The federal government has also enacted tort reform<\/p>\n that applies to product liability. As of 2005, federal courts can decide any<\/p>\n class-action lawsuit involving over $5 million and involving persons from<\/p>\n different states. Federal plaintiffs in such class-action lawsuits need no longer<\/p>\n claim the usual $75,000 jurisdictional amount.<\/p>\n The rapid growth of products litigation during the past<\/p>\n two decades has brought forth many calls for \u201ctort<\/p>\n reform.\u201d Numerous states have changed their laws<\/p>\n to modify the tort doctrines discussed in this section<\/p>\n and chapter. At the federal level, comprehensive tort<\/p>\n reform has been strongly advocated although it has<\/p>\n not passed as of this writing. Some of the tort reforms<\/p>\n proposed or passed by the states include:<\/p>\n \u2022 Permitting only negligence actions against retailers<\/p>\n and wholesalers unless the product manufacturer<\/p>\n is insolvent.<\/p>\n \u2022 Eliminating strict liability recovery for defective<\/p>\n product design.<\/p>\n \u2022 Barring products liability claims against sellers if<\/p>\n products have been altered or modified by a user.<\/p>\n \u2022 Providing for the presumption of reasonableness<\/p>\n defense in product design cases in which<\/p>\n the product meets the state-of-the-art; that is,<\/p>\n the prevailing industry standards at the time of<\/p>\n product manufacture.<\/p>\n \u2022 Creating a statute of repose that would specify<\/p>\n a period (such as 25 years) following product<\/p>\n sale after which plaintiffs would lose their rights<\/p>\n to bring suits for product-related injuries.<\/p>\n \u2022 Reducing or eliminating punitive damage awards<\/p>\n in most product liability cases.<\/p>\n Importantly, note that not all, or even most, of these<\/p>\n reforms have been adopted by every state.<\/p>\n >> sidebar 10.10<\/p>\n Tort Reform<\/p>\n Another important development in products liability is that in nearly<\/p>\n every state product liability case based on design defects, failures to warn<\/p>\n adequately and testing inadequacies are now decided according to \u201creasonableness\u201d<\/p>\n standards, making these product liability cases based on the negligence.<\/p>\n Consider the following case involving Ford Motor Company\u2019s failure<\/p>\n to test a seatbelt sleeve.<\/p>\n 311<\/p>\n case 10.3 >><\/p>\n BRANHAM v. FORD MOTOR CO.<\/p>\n 701 S.E.2d 5 (S.C. Sup. Ct. 2010)<\/p>\n Hale was driving several children to her house in her<\/p>\n Ford Bronco. No one was wearing a seatbelt. Hale<\/p>\n admittedly took her eyes off the road and turned to the<\/p>\n backseat to ask the children to quiet down. When she<\/p>\n took her eyes off the road, the Bronco veered towards<\/p>\n the shoulder of the road, and the rear right wheel left<\/p>\n the roadway. She responded by overcorrecting to the<\/p>\n left. Her overcorrection caused the Bronco to roll over.<\/p>\n One of the children, Jesse Branham, was thrown from<\/p>\n the vehicle, was severely injured, and sued Ford Motor<\/p>\n Company and Hale. At trial, Branham did not seriously<\/p>\n pursue the claim against Hale. The case against<\/p>\n Ford was based on two product liability claims, one<\/p>\n for failing to test the seatbelt sleeve, and the other a<\/p>\n design defect claim related to the vehicle\u2019s tendency to<\/p>\n rollover. Both of these claims were pursued in negligence<\/p>\n and strict liability. The jury found both Ford and<\/p>\n Hale responsible and awarded Branham $16 million<\/p>\n in actual damages. Only Ford appeals.<\/p>\n KITTREDGE, J.: . . . Branham alleged Ford was negligent<\/p>\n \u201cin selling the Bronco II with a defective rear<\/p>\n occupant restraint system.\u201d At trial, Branham claimed<\/p>\n Ford was negligent and also strictly liable in failing to<\/p>\n adequately test the seatbelt sleeve. The trial court dismissed<\/p>\n the strict liability claim on the ground that the<\/p>\n seatbelt sleeve was not as a matter of law in a defective<\/p>\n condition unreasonably dangerous to the user at the<\/p>\n time of manufacture. Based on this premise, Ford contends<\/p>\n the companion negligence claim must fail, for<\/p>\n all products liability actions, regardless of the stated<\/p>\n theory, have common elements. \u201cIn a products liability<\/p>\n action the plaintiff must establish three things, regardless<\/p>\n of the theory on which he seeks recovery: (1) that<\/p>\n he was injured by the product; (2) that the product, at<\/p>\n the time of the accident, was in essentially the same<\/p>\n condition as when it left the hands of the defendant;<\/p>\n and (3) that the injury occurred because the product<\/p>\n was in a defective condition unreasonably dangerous<\/p>\n to the user.\u201d Ford, therefore, concludes that the negligence<\/p>\n claim (which required Branham to prove that<\/p>\n the seatbelt sleeve was in a defective condition unreasonably<\/p>\n dangerous to the user) should have been dismissed.<\/p>\n We agree.<\/p>\n The trial court determined as a matter of law that<\/p>\n the seatbelt sleeve was not in a defective condition<\/p>\n unreasonably dangerous to the user. Consequently,<\/p>\n the absence of this common, shared element required<\/p>\n the dismissal of the strict liability claim and the companion<\/p>\n negligence claim. The trial court erred in failing<\/p>\n to direct a verdict as to the negligent seatbelt<\/p>\n sleeve claim.<\/p>\n We next consider the \u201chandling and stability\u201d<\/p>\n design defect claim in strict liability and negligence. We<\/p>\n address Ford\u2019s two-fold argument that: (1) Branham<\/p>\n failed to prove a reasonable alternative design pursuant<\/p>\n to the risk-utility test; and (2) South Carolina<\/p>\n law requires a risk-utility test in design defect cases to<\/p>\n the exclusion of the consumer expectations test. For a<\/p>\n plaintiff to successfully advance a design defect claim,<\/p>\n he must show that the design of the product caused<\/p>\n it to be \u201cunreasonably dangerous.\u201d In South Carolina,<\/p>\n we have traditionally employed two tests to determine<\/p>\n whether a product was unreasonably dangerous as a<\/p>\n result of a design defect: (1) the consumer expectations<\/p>\n test and (2) the risk-utility test.<\/p>\n In Claytor v. General Motors Corp., this Court<\/p>\n phrased the consumer expectations test as follows:<\/p>\n \u201cThe test of whether a product is or is not defective<\/p>\n is whether the product is unreasonably dangerous to<\/p>\n the consumer or user given the conditions and circumstances<\/p>\n that foreseeably attend use of the product.\u201d<\/p>\n The Claytor Court articulated the risk-utility test in<\/p>\n the following manner: \u201c[N]umerous factors must be<\/p>\n considered when determining whether a product is<\/p>\n unreasonably dangerous, including the usefulness<\/p>\n and desirability of the product, the cost involved for<\/p>\n added safety, the likelihood and potential seriousness<\/p>\n of injury, and the obviousness of danger.\u201d In Bragg<\/p>\n v. Hi-Ranger, Inc., our court of appeals phrased the<\/p>\n risk-utility test as follows: \u201c[A] product is unreasonably<\/p>\n dangerous and defective if the danger associated<\/p>\n with the use of the product outweighs the utility of the<\/p>\n product.\u201d<\/p>\n Ford contends Branham failed to present evidence<\/p>\n of a feasible alternative design. Implicit in Ford\u2019s<\/p>\n argument is the contention that a product may only<\/p>\n be shown to be defective and unreasonably dangerous<\/p>\n by way of a risk-utility test, for by its very nature,<\/p>\n the risk-utility test requires a showing of a reasonable<\/p>\n alternative design. Branham counters, arguing that<\/p>\n under Claytor he may prove a design defect by resort<\/p>\n to the consumer expectations test or the risk-utility<\/p>\n test. Branham also argues that regardless of which test<\/p>\n is required, he has met both, including evidence of a<\/p>\n feasible alternative design. We agree with Branham\u2019s<\/p>\n 312<\/p>\n contention that he produced evidence of a feasible<\/p>\n alternative design. Branham additionally points out<\/p>\n that the jury was charged on the consumer expectations<\/p>\n test and the risk-utility test.<\/p>\n As discussed above, Branham challenged the design<\/p>\n of the Ford Bronco II by pointing to the MacPherson<\/p>\n suspension as a reasonable alternative design. A former<\/p>\n Ford vice president, Thomas Feaheny, testified<\/p>\n that the MacPherson suspension system would have<\/p>\n significantly increased the handling and stability of the<\/p>\n Bronco II, making it less prone to rollovers. Branham\u2019s<\/p>\n expert, Dr. Richardson, also noted that the MacPherson<\/p>\n suspension system would have enhanced vehicle stability<\/p>\n by lowering the vehicle center of gravity. There was<\/p>\n further evidence that the desired sport utility features<\/p>\n of the Bronco II would not have been compromised by<\/p>\n using the MacPherson suspension. Moreover, there is<\/p>\n evidence that use of the MacPherson suspension would<\/p>\n not have increased costs. Whether this evidence satisfies<\/p>\n the risk-utility test is ultimately a jury question. But it<\/p>\n is evidence of a feasible alternative design, sufficient to<\/p>\n survive a directed verdict motion.<\/p>\n While the consumer expectations test fits well in<\/p>\n manufacturing defect cases, we do agree with Ford<\/p>\n that the test is ill-suited in design defect cases. We hold<\/p>\n today that the exclusive test in a products liability<\/p>\n design case is the risk-utility test with its requirement<\/p>\n of showing a feasible alternative design. Some form<\/p>\n of a risk-utility test is employed by an overwhelming<\/p>\n majority of the jurisdictions in this country. States<\/p>\n that exclusively employ the consumer expectations<\/p>\n test are a decided minority. By our count 35 of the<\/p>\n 46 states that recognize strict products liability use<\/p>\n some form of risk-utility analysis in their approach<\/p>\n to determine whether a product is to effectively<\/p>\n design. Four states do not recognize strict liability at<\/p>\n all. Those four states are Delaware, Massachusetts,<\/p>\n North Carolina, and Virginia.<\/p>\n We believe that in design defect cases the riskutility<\/p>\n test provides the best means for analyzing<\/p>\n whether a product is designed defectively. Unlike the<\/p>\n consumer expectations test, the focus of a risk-utility<\/p>\n test centers upon the alleged defectively designed<\/p>\n product. The risk-utility test provides objective factors<\/p>\n for a trier of fact to analyze when presented with a<\/p>\n challenge to a manufacturer\u2019s design. Conversely, we<\/p>\n find the consumer expectations test and its focus on<\/p>\n the consumer ill-suited to determine whether a product\u2019s<\/p>\n design is unreasonably dangerous.<\/p>\n Most any product can be made more safe. Automobiles<\/p>\n would be safer with disc brakes and steelbelted<\/p>\n radial tires than with ordinary brakes and<\/p>\n ordinary tires, but this does not mean that an automobile<\/p>\n dealer would be held to have sold a defective<\/p>\n product merely because the most safe equipment is not<\/p>\n installed. By a like token, a bicycle is safer if equipped<\/p>\n with lights and a bell, but the fact that one is not so<\/p>\n equipped does not create the inference that the bicycle<\/p>\n is defective and unreasonably dangerous. There is, of<\/p>\n course, some danger incident to the use of any product.<\/p>\n In a product liability design defect action, the<\/p>\n plaintiff must present evidence of a reasonable alternative<\/p>\n design. The plaintiff will be required to point<\/p>\n to a design flaw in the product and show how his<\/p>\n alternative design would have prevented the product<\/p>\n from being unreasonably dangerous. This presentation<\/p>\n of an alternative design must include consideration of<\/p>\n the costs, safety and functionality associated with the<\/p>\n alternative design. On retrial, Branham\u2019s design defect<\/p>\n claim will proceed under to the risk-utility test and not<\/p>\n the consumer expectations test.<\/p>\n [ Reversed and remanded ]<\/p>\n >> CASE QUESTIONS<\/p>\n 1. Since the injured plaintiff was not wearing a seatbelt, why is Ford being sued for failing<\/p>\n to test the seatbelt sleeve?<\/p>\n 2. It is often said that product liability causes of action, especially negligence and<\/p>\n strict liability, are coming together or merging. Discuss this idea in light of the<\/p>\n South Carolina Supreme Court\u2019s decision.<\/p>\n 3. Is the consumer expectations test or the risk utility test more favorable to manufacturers?<\/p>\n Explain.<\/p>\n 4. Can Branham still win this case? Explain.<\/p>\n [continued]<\/p>\n CHAPTER 10 Torts Affecting Business 313<\/p>\n 16. ULTRAHAZARDOUS ACTIVITY<\/p>\n In most states, the courts impose strict liability in tort for types of activities<\/p>\n they call ultrahazardous . Transporting and using explosives and poisons fall<\/p>\n under this category, as does keeping dangerous wild animals. Injuries caused<\/p>\n from artificial storage of large quantities of liquid can also bring strict liability<\/p>\n on the one who stores. For an example of the unusual dangers of ultrahazardous<\/p>\n activity, see Sidebar 10.11 .<\/p>\n Some states have<\/p>\n analyzed fireworksrelated<\/p>\n explosions that<\/p>\n cause accidental injury<\/p>\n by the standard of<\/p>\n ultrahazardous activity.<\/p>\n The Purity Distilling Co. had filled the enormous<\/p>\n steel tank on the Boston hillside with two million<\/p>\n gallons of molasses to be turned into rum. Unusually<\/p>\n warm weather caused the molasses to expand.<\/p>\n On January 15, 1919, with sounds like gunfire as<\/p>\n the restraining bolts sheared, the tank exploded.<\/p>\n A wave of hot molasses 30-feet high raced down<\/p>\n the street toward Boston Harbor, faster than people<\/p>\n could run, engulfing entire buildings. Before it<\/p>\n subsided, 150 people were injured and 21 drowned.<\/p>\n \u201cThe dead,\u201d reported the Boston Herald, \u201cwere like<\/p>\n candy statues.\u201d<\/p>\n It took months to clean up the harbor. It took six<\/p>\n years to resolve the 125 lawsuits that followed. The<\/p>\n artificial storage of large quantities of liquid can be a<\/p>\n sticky matter indeed.<\/p>\n Source: Anthony V. Riccio, Portrait of an Italian-American Neighborhood<\/p>\n (1998).<\/p>\n >> sidebar 10.11<\/p>\n The Great Molasses Flood<\/p>\n 17. OTHER STRICT LIABILITY TORTS<\/p>\n The majority of states impose strict liability upon tavern owners for injuries<\/p>\n to third parties caused by their intoxicated patrons. The acts imposing this<\/p>\n liability are called dram shop acts. Because of the public attention given in<\/p>\n recent years to intoxicated drivers, there has been a tremendous increase in<\/p>\n dram shop act cases.<\/p>\n Common carriers, transportation companies licensed to serve the public,<\/p>\n are also strictly liable for damage to goods being transported by them. Common<\/p>\n carriers, however, can limit their liability in certain instances through<\/p>\n contractual agreement, and they are not liable for (1) acts of God, such as<\/p>\n natural catastrophes; (2) action of an alien enemy; (3) order of public authority,<\/p>\n such as authorities of one state barring potentially diseased fruit shipments<\/p>\n from another state from entering their state; (4) the inherent nature of<\/p>\n the goods, such as perishable vegetables; and (5) misconduct of the shipper,<\/p>\n such as improper packaging.<\/p>\n >> Damages<\/p>\n One legal scholar concludes that \u201cthe crucial controversy in personal injury<\/p>\n torts today\u201d is in the area of damages. For dramatic examples of the size of<\/p>\n recent awards, refer to Sidebar 10.12 . Juries determine the size of damage<\/p>\n LO 10-4<\/p>\n 314 PART 3 Legal Foundations for Business<\/p>\n >> sidebar 10.12<\/p>\n Highest Jury Tort Awards of 2010<\/p>\n EVENT CAUSING INJURY JURY AWARD IN MILLIONS OF DOLLARS<\/p>\n 1. Pharmaceutical products liability causing hepatitis<\/p>\n C outbreak.<\/p>\n $505.1<\/p>\n 2. Products liability for secondhand asbestos exposure<\/p>\n to worker\u2019s laundry.<\/p>\n $208.8<\/p>\n 3. Verdict against a cigarette company for providing<\/p>\n deceased woman free cigarettes when she was a child.<\/p>\n $152<\/p>\n 4. Products liability for design defect in a Ford Bronco<\/p>\n rollover accident.<\/p>\n $132.5<\/p>\n 5. Negligence verdict against a bus company to seven<\/p>\n passengers injured or killed while riding in an<\/p>\n unlicensed commercial van.<\/p>\n $124.5<\/p>\n 6. Verdict against the world\u2019s largest law firm involving<\/p>\n malpractice and intentional interference with business<\/p>\n (contractual) relationships.<\/p>\n $103<\/p>\n 7. Products liability against a cigarette company involving<\/p>\n lung cancer death.<\/p>\n $ 90.8<\/p>\n 8. Products liability for production defect of a carburetor<\/p>\n in an airplane crash.<\/p>\n $ 89<\/p>\n 9. Negligence in a natural gas explosion causing death<\/p>\n at a plant.<\/p>\n $ 82.5<\/p>\n 10. Cigarette products liability for lung cancer death. $ 80<\/p>\n Note: Although virtually ignored in news media headlines, the damages in almost all of these large jury verdicts were reduced significantly. In some<\/p>\n instances the judge reduced the damages as a matter of law. In other cases, appeals courts reduced damages or reversed the trial court. In many cases,<\/p>\n however, the parties simply negotiated a reduced settlement to avoid the risk of an appeal that upheld or reversed the damages entirely. In reading<\/p>\n about large jury verdicts, this final outcome is an important point for you to remember.<\/p>\n awards in most cases, but judges also play a role in damages, especially in<\/p>\n damage instructions to the jury and in deciding whether to approve substantial<\/p>\n damage awards.<\/p>\n 18. COMPENSATORY DAMAGES<\/p>\n Most damages awarded in tort cases compensate the plaintiff for injuries suffered.<\/p>\n The purpose of damages is to make the plaintiff whole again, at least<\/p>\n financially. There are three major types of loss that potentially follow tort<\/p>\n injury and are called compensatory damages. They are:<\/p>\n \u2022 Past and future medical expenses.<\/p>\n \u2022 Past and future economic loss (including property damage and loss of<\/p>\n earning power).<\/p>\n \u2022 Past and future pain and suffering.<\/p>\n CHAPTER 10 Torts Affecting Business 315<\/p>\n Compensatory damages may also be awarded for loss of limb, loss of<\/p>\n consortium (the marriage relationship), and mental distress.<\/p>\n Calculation of damage awards creates significant problems. Juries frequently<\/p>\n use state-adopted life expectancy tables and present-value discount<\/p>\n tables to help them determine the amount of damages to award. But uncertainty<\/p>\n about the life expectancy of injured plaintiffs and the impact of inflation<\/p>\n often makes these tables misleading. Also, awarding damages for pain<\/p>\n and suffering is an art rather than a science. These awards measure jury sympathy<\/p>\n as much as they calculate compensation for any financial loss. The<\/p>\n recent dramatic increases in the size of damage awards helps underline the<\/p>\n problems in their calculation. One result is that many individuals and businesses<\/p>\n are underinsured for major tort liability.<\/p>\n Currently, compensatory damage awards for pain and suffering are very<\/p>\n controversial. How do you compensate injured plaintiffs for something like<\/p>\n pain which has no market value? Many plaintiffs suffer lifelong pain or the<\/p>\n permanent loss of vision, hearing, or mobility. No amount of damages seems<\/p>\n large enough to compensate them, yet no amount of damages, however high,<\/p>\n will cause their pain and suffering to stop. In 2003, President Bush called for<\/p>\n the limitation of tort damages for pain and suffering in a case to $250,000<\/p>\n per person. Do you agree or disagree?<\/p>\n 19. PUNITIVE DAMAGES<\/p>\n Compensatory damages are not the only kind of damages. There are also<\/p>\n punitive damages. By awarding punitive damages, courts or juries punish<\/p>\n defendants for committing intentional torts and for negligent behavior considered<\/p>\n \u201cgross\u201d or \u201cwillful and wanton.\u201d The key to the award of punitive damages<\/p>\n is the defendant\u2019s motive. Usually the motive must be \u201cmalicious,\u201d \u201cfraudulent,\u201d<\/p>\n or \u201cevil.\u201d Increasingly, punitive damages are also awarded for dangerously<\/p>\n negligent conduct that shows a conscious disregard for the interests of others.<\/p>\n These damages punish those who commit aggravated torts and act to deter<\/p>\n future wrongdoing. Because they make an example out of the defendant, punitive<\/p>\n damages are sometimes called exemplary damages.<\/p>\n Presently, there is much controversy about how appropriate it is to award<\/p>\n punitive damages against corporations for their economic activities. Especially<\/p>\n when companies fail to warn of known danger created by their activities,<\/p>\n or when cost-benefit decisions are made at the risk of substantial human<\/p>\n injury, courts are upholding substantial punitive damage awards against companies.<\/p>\n Yet consider that these damages are a windfall to the injured plaintiff<\/p>\n who has already received compensatory damages. And instead of punishing<\/p>\n guilty management for wrongdoing, punitive damages may end up punishing<\/p>\n innocent shareholders by reducing their dividends.<\/p>\n Many court decisions also overlook a very important consideration<\/p>\n about punitive damages. Most companies carry liability insurance policies<\/p>\n that reimburse them for \u201call sums which the insured might become legally<\/p>\n obligated to pay.\u201d This includes reimbursement for punitive damages. Instead<\/p>\n of punishing guilty companies, punitive damages may punish other companies,<\/p>\n which have to pay increased insurance premiums, and may punish<\/p>\n consumers, who ultimately pay higher prices. As a matter of public policy,<\/p>\n several states prohibit insurance from covering punitive damages, but the<\/p>\n Punitive or<\/p>\n exemplary damages<\/p>\n arise from intentional<\/p>\n torts or extreme<\/p>\n \u201cwillful and wanton\u201d<\/p>\n negligence.<\/p>\n \u201cIf you were to talk<\/p>\n to foreign businesses<\/p>\n about what scares<\/p>\n them the most about<\/p>\n the U.S. judicial process,<\/p>\n they would say<\/p>\n class actions and<\/p>\n punitive damages.\u201d<\/p>\n \u2013Carter G. Phillips ,<\/p>\n Sidney Austin Brown<\/p>\n & Wood (law firm)<\/p>\n 316 PART 3 Legal Foundations for Business<\/p>\n In 2003 the Supreme Court determined that $145<\/p>\n million in punitive damages in a case was unconstitutional.<\/p>\n In State Farm v. Campbell, the Court decided<\/p>\n that the large difference between punitive and compensatory<\/p>\n damages violated due process. The Court<\/p>\n suggested that a single-digit ratio of punitive to compensatory<\/p>\n damages (9\/1 or less) would be more constitutionally<\/p>\n appropriate than a 145\/1 ratio.<\/p>\n State Farm v. Campbell also reaffirmed general<\/p>\n punitive damage guidelines from an earlier case. The<\/p>\n Court stated, in evaluating the appropriateness of<\/p>\n punitive damages, that courts should consider:<\/p>\n \u2022 \u201cthe responsibility of the defendant\u2019s conduct<\/p>\n (how bad it was),<\/p>\n \u2022 the ratio of punitive to actual damages<\/p>\n \u2022 how the punitive damages compare with criminal<\/p>\n or civil penalties for the same conduct.\u201d<\/p>\n Note that juries award punitive damages in only about<\/p>\n 2% of litigated cases.<\/p>\n >> sidebar 10.13<\/p>\n Punitive Damage Guidelines<\/p>\n >> Key Terms<\/p>\n Assault 291<\/p>\n Assumption-of-the-risk 308<\/p>\n Battery 291<\/p>\n Cause in fact 306<\/p>\n Comparative<\/p>\n responsibility 307<\/p>\n Compensatory damages 314<\/p>\n Contributory negligence 307<\/p>\n Conversion 295<\/p>\n Defamation 295<\/p>\n Design defect 309<\/p>\n Dram shop act 313<\/p>\n Duty 301<\/p>\n False imprisonment 294<\/p>\n Fraud 297<\/p>\n Infliction of mental<\/p>\n distress 292<\/p>\n Injurious falsehood 300<\/p>\n Intent 290<\/p>\n Intentional interference with<\/p>\n contractual relations 300<\/p>\n great majority of states permit such coverage. This fact severely undermines<\/p>\n arguments for awarding punitive damages against companies for their economic<\/p>\n activities.<\/p>\n Consider also that an award of punitive damages greatly resembles a<\/p>\n criminal fine. Yet the defendant who is subject to these criminal-type damages<\/p>\n lacks the right to be indicted by a grand jury and cannot assert the right<\/p>\n against self-incrimination. In addition, the defendant is subject to a lower<\/p>\n standard of proof than in a criminal case. However, defendants in tort suits<\/p>\n have challenged awards of punitive damages on a constitutional basis. See<\/p>\n Sidebar 10.13 .<\/p>\n Finally, note that almost no other country in the world except the United<\/p>\n States permits civil juries to award punitive damages. For instance, in 2007 an<\/p>\n Italian court refused to enforce a $1 million award against an Italian helmet<\/p>\n maker whose defective helmet had caused the death of a 15-year-old motorcyclist<\/p>\n in Alabama because the award contained punitive damages. However,<\/p>\n a few courts in other countries have enforced U.S. punitive damage awards<\/p>\n even though courts in their own countries cannot award them.<\/p>\n 317<\/p>\n >> Review Questions and Problems<\/p>\n Intentional Torts<\/p>\n 1. Assault and Battery<\/p>\n Under what theory can an employee sue her employer for merely touching her? Explain.<\/p>\n 2. Intentional Infliction of Mental Distress<\/p>\n In business the intentional infliction of mental distress tort has most often involved what type<\/p>\n of situation?<\/p>\n 3. Invasion of Privacy<\/p>\n Explain the three principal invasions of personal interest that make up invasion of privacy.<\/p>\n 4. False Imprisonment and Malicious Prosecution<\/p>\n Explain the difference between false imprisonment and malicious prosecution. In what business<\/p>\n situation does false imprisonment most frequently arise?<\/p>\n 5. Trespass<\/p>\n In recent months, homeowners downwind from International Cement Company have had clouds<\/p>\n of cement dust settle on their property. Trees, shrubbery, and flowers have all been killed. The paint<\/p>\n on houses has also been affected. Explain what tort cause of action these homeowners might pursue<\/p>\n against International.<\/p>\n 6. Conversion<\/p>\n Bartley signs a storage contract with Universal Warehouses. The contract specifies that Bartley\u2019s<\/p>\n household goods will be stored at Universal\u2019s midtown storage facility while he is out of the<\/p>\n country on business. Later, without contacting Bartley, Universal transfers his goods to a suburban<\/p>\n warehouse. Two days after the move, a freak flood wipes out the suburban warehouse and<\/p>\n Bartley\u2019s goods. Is Universal liable to Bartley? Explain.<\/p>\n 7. Defamation<\/p>\n Acme Airlines attempts to get control of Free Fall Airways by making a public offer to buy its<\/p>\n stock from shareholders. Free Fall\u2019s president, Joan, advises the shareholders in a letter that<\/p>\n Acme\u2019s president, Richard, is \u201clittle better than a crook\u201d and \u201ccan\u2019t even control his own<\/p>\n company.\u201d Analyze the potential liability of Free Fall\u2019s president for these remarks.<\/p>\n 8. Fraud<\/p>\n Fraud can be used to void a contract and as a basis for intentional tort. What is the advantage<\/p>\n to a plaintiff of suing for the tort of fraud as opposed to using fraud merely as a contractual<\/p>\n defense?<\/p>\n 9. Common Law Business Torts<\/p>\n You are concerned because several of your employees have recently broken their employment<\/p>\n contracts and left town. Investigation reveals that Sly and Company, your competitor in a<\/p>\n nearby city, has paid bonuses to your former employees to persuade them to break their<\/p>\n contracts. Discuss what legal steps you can take against Sly.<\/p>\n Negligence<\/p>\n 10. Duty of Care<\/p>\n (a) Do you have a duty of care to warn a stranger on the street of the potential danger of<\/p>\n broken glass ahead?<\/p>\n Invasion of privacy 293<\/p>\n Libel 295<\/p>\n Malicious prosecution 294<\/p>\n Negligence 301<\/p>\n Production defect 309<\/p>\n Proximate cause 306<\/p>\n Punitive damages 315<\/p>\n Slander 295<\/p>\n State-of-the-art 310<\/p>\n Statute of repose 310<\/p>\n Strict liability 308<\/p>\n Strict products liability 309<\/p>\n Tort 289<\/p>\n Trespass 294<\/p>\n Willful and wanton<\/p>\n negligence 305<\/p>\n 318<\/p>\n (b) Do you have a duty to warn an employee of similar danger at a place of employment?<\/p>\n Explain.<\/p>\n 11. Unreasonable Behavior\u2014Breach of Duty<\/p>\n In litigation who usually determines if the defendant\u2019s behavior is unreasonable?<\/p>\n 12. Causation in Fact<\/p>\n (a) What does it mean to say that \u201cchains of causation stretch out endlessly\u201d?<\/p>\n (b) What is the standard used by the judge in instructing the jury about causation?<\/p>\n 13. Proximate Causation<\/p>\n Explain the difference between proximate causation and causation in fact.<\/p>\n 14. Defenses to Negligence<\/p>\n A jury finds Lee, the defendant, liable in a tort case. It determines that Jos\u00e9, the plaintiff, has<\/p>\n suffered $200,000 in damages. The jury also finds that Jos\u00e9\u2019s own fault contributed 25% to<\/p>\n his injuries. Under a comparative negligence instruction, what amount of damages will the jury<\/p>\n award the plaintiff?<\/p>\n Strict Liability in Tort<\/p>\n 15. Strict Products Liability<\/p>\n While driving under the influence of alcohol, Joe runs off the road and wrecks his car. As the<\/p>\n car turns over, the protruding door latch hits the ground and the door flies open. Joe, who is<\/p>\n not wearing his seat belt, is thrown from the car and badly hurt. Joe sues the car manufacturer,<\/p>\n asserting that the door latch was defectively designed. Discuss the legal issues raised by these<\/p>\n facts.<\/p>\n 16. Ultrahazardous Activity<\/p>\n Through no one\u2019s fault, a sludge dam of the Phillips Phosphate Company breaks. Millions of<\/p>\n gallons of sludge run off into a nearby river that empties into Pico Bay. The fishing industry in<\/p>\n the bay area is ruined. Is Phillips Phosphate liable to the fishing industry? Explain.<\/p>\n 17. Other Strict Liability Torts<\/p>\n Explain when common carriers are not strictly liable for damage to transported goods.<\/p>\n Damages<\/p>\n 18. Compensatory Damages<\/p>\n Explain the three types of loss that give rise to compensatory damages.<\/p>\n 19. Punitive Damages<\/p>\n During a business lunch, Bob eats salad dressing that contains almond extract. He is very allergic<\/p>\n to nuts and suffers a severe allergic reaction. There are complications and Bob becomes<\/p>\n almost totally paralyzed. Because Bob had instructed the restaurant waiter and the chef that he<\/p>\n might die if he ate any nuts, he sues the restaurant for negligence. Discuss the types of damages<\/p>\n Bob may recover.<\/p>\n 319<\/p>\n 1. You own University Heights Apartments, a business that rents primarily to students.<\/p>\n One evening, your tenant Sharon is attacked by an intruder who forces the<\/p>\n lock on the sliding glass door of her ground-floor apartment. Sharon\u2019s screams<\/p>\n attract the attention of Darryl, your resident manager, who comes to Sharon\u2019s aid.<\/p>\n Together, he and Sharon drive the intruder off, but not before they both are badly<\/p>\n cut by the intruder.<\/p>\n Is the intruder liable for what he has done?<\/p>\n Do you have legal responsibilities to Sharon and Darryl?<\/p>\n What should you consider doing at your apartments?<\/p>\n 2. You manufacture trunk locks and your major account is a large car company.<\/p>\n When an important piece of your equipment unexpectedly breaks, you contact<\/p>\n Mayfair, Inc., the only manufacturer of such equipment, and contract to replace it.<\/p>\n The Mayfair sales representative assures you orally and in writing that the prepaid<\/p>\n equipment will arrive by October 1, in time for you to complete your production for<\/p>\n the car company. Instead, there is a union strike in the Mayfair trucking division,<\/p>\n and the equipment does not arrive until December 1.<\/p>\n By December 1 the car company has made an agreement with another lock<\/p>\n manufacturer. You threaten to sue Mayfair for their failure to deliver on time, but<\/p>\n Mayfair reminds you of a contract term that relieves them of contractual liability<\/p>\n because of \u201clabor difficulties.\u201d Then you learn from a former secretary to the Mayfair<\/p>\n sales representative that Mayfair knew that its trucking division was likely to<\/p>\n strike. In fact the sales representative and the sales vice president had discussed<\/p>\n whether or not to tell you of this fact and decided not to out of concern that you<\/p>\n would not place your order.<\/p>\n Has Mayfair done anything legally wrong?<\/p>\n Is your legal remedy against Mayfair limited to breach of contract?<\/p>\n Will you be able to get damages from Mayfair other than a refund of your prepayment?<\/p>\n Explain.<\/p>\n business >> discussions<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Business Torts and Ethics Paper Due\u00a0May 02, 11:59 PM Not Submitted POINTS\u00a010 \u00a0Paper no new messages \u00a0 \u00a0 \u00a0 Instructions Assignment Files Grading \u00a0 \u00a0\u2026<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10601,10596,10882,479,537,172,478,10597,10599,10595],"tags":[10524,10522,10890,10561,10883,10889,10515,10521,10696,10518,10888,10887,10886,10885,10884,10525],"class_list":["post-124490","post","type-post","status-publish","format-standard","hentry","category-assignment-help-by-uks-no-1-writing-service","category-assignment-writers-canada-university-cost","category-free-ai-english-assignment-writers-china","category-nursing-course-hero","category-nursing-essay-pro","category-nursing-study-bay","category-nursing-study-pool","category-professional-assignment-writers-usa","category-uae-1-cheap-assignment-writing-service","category-write-a-word-essay","tag-apa-citation-format-assignment","tag-assignment-writers-australia-college-student","tag-best-nursing-case-study-writing-services","tag-buy-essay-usa","tag-case-study-nursing-writing-services-for-care-plans","tag-free-nursing-case-study-writing-services","tag-help-write-a-page-assignment","tag-i-need-someone-to-do-my-assignment-within-hours","tag-need-assistance-completing-the-assignment","tag-need-to-write-an-essay","tag-nursing-case-studies-with-answers","tag-nursing-case-study-paper-example","tag-nursing-case-study-template-examples-of-case-studies-nursing","tag-pharmacology-case-study","tag-soap-note-case-study","tag-write-pages"],"_links":{"self":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/124490","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/comments?post=124490"}],"version-history":[{"count":0,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/posts\/124490\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/media?parent=124490"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/categories?post=124490"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.studyproessays.com\/help\/wp-json\/wp\/v2\/tags?post=124490"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\n