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CHAPTER 9

CHAPTER 9 . TORTS. INTRODUCTION .

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CHAPTER 9

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  1. CHAPTER 9 TORTS

  2. INTRODUCTION This chapter examines in detail the area of torts as applied to both the individual and businesses. The essence of this chapter is responsibility for actions and their consequences. The student should gain a greater appreciation for accountability, both personally and professionally. 2

  3. ELEMENTS OF AN INTENTIONAL TORT Intentional torts require the plaintiff to prove: Intent - actual or implied. Voluntary act by the defendant. Causation. Injury or harm. 3

  4. DEFENSES • Consent – If the plaintiff consented to the act of the defendant, there is no tort. Even if the plaintiff did not explicitly consent, the law may imply consent. • Self-defense or defense of others – may also absolve the defendant of liability. 4

  5. TYPES OF INTENTIONAL TORTS Suits for Intentional Torts: • Protect individuals from physical and intangible injuries. • Protect interests in property. • Protect certain economic interests and business relationships. 5

  6. INTENTIONAL TORTS TO PROTECT PERSONS • Battery - the intentional, nonconsensual, harmful or offensive contact with the plaintiff’s person. • Assault - intentional, nonconsensual act that gives rise to the apprehension (fear not required) that a harmful or offensive act is imminent. • False Imprisonment - intentional, nonconsensual confinement by physical barriers or by physical force or threats of force; the plaintiff must have been aware of and have suffered harm as the result of the confinement. 6

  7. INTENTIONAL TORTS TO PROTECT PERSONS • Intentional Infliction of Emotional Distress • Outrageous conduct by the defendant. • Intent to cause, or reckless disregard of the probability of causing, emotional distress. • Severe emotional suffering. • Actual and proximate causation of the emotional distress. 7

  8. INTENTIONAL TORTS TO PROTECT PERSONS • Defamation - the communication (or publication) to a third party of an untrue statement of fact that injures the plaintiff’s reputation by exposing him or her to hatred, ridicule or contempt. • Defenses: • Truth • Absolute privilege • Qualified privilege 8

  9. INTENTIONAL TORTS TO PROTECT PERSONS Case 9.1 Synopsis. Lunney v. Prodigy Services Co. (S.Ct. 2000). An imposter opened a number of accounts with Prodigy using several variations of the false name Alexander Lunney, a teenage Boy Scout. The imposter transmitted an e-mail message containing threatening and vulgar language to a local scoutmaster; he also posted two obscene messages on electronic bulletin boards. The scoutmaster who received the offensive e-mail alerted the police. The police investigating the story accepted the real Lunney’s denial of authorship. During the investigation, Prodigy notified Lunney that it was terminating one of his accounts due to the transmission of obscene and threatening material through the Prodigy service. Lunney informed Prodigy that an imposter had opened the account using his name. The company apologized and informed him that it had located four additional accounts under his name and closed all of those. Lunney sued Prodigy for negligence and defamation. The trial court denied Prodigy’s motions for summary judgment. Lunney appealed. CONTINUTED 9

  10. INTENTIONAL TORTS TO PROTECT PERSONS • Case 9.1 Synopsis. Lunney v. Prodigy Services Co. (S.Ct. 2000). ISSUE: Is an Internet service provider, like the telephone and telegraph companies, entitled to a common law qualified privilege with respect to defamation claims? HELD: The appeals court reversed, holding that Prodigy was entitled to the common-law qualified privilege accorded to telephone and telegraph companies. The court found that Prodigy’s role in transmitting e-mail was similar to that of a telephone company’s role in transmitting messages over telephone lines; it was merely a conduit for the message.

  11. INTENTIONAL TORTS TO PROTECT PERSONS • Public Figures and Media Defendants • Media has 1st amendment right to “freedom of the press” when commenting on politics and news- worthy matters. • Plaintiff must show Defendant acted with “actual malice” (knowledge of falsity or reckless disregard for truth). 11

  12. INTENTIONAL TORTS TO PROTECT PERSONS • Invasion of Privacy - violation of the right to keep personal matters to oneself. • Intrusion - objectionable prying. • Public disclosure of private facts. • Appropriation of a person’s name or likeness. 12

  13. Intentional Torts to Protect Persons Case 9.2 Synopsis. Alpha Therapeutic v. Nippon Hoso (9th Cir. 1999). McAuley was the medical director of Alpha, a California corporation that produces blood plasma derivatives. NHK of Japan, broadcast two television programs about Alpha and McAuley, claiming Alpha and McAuley knowingly shipped blood products to Japan that were contaminated with the AIDS virus, falsified documents about its investigation of a blood donor, and reported false information about the donor to the Food and Drug and Administration. Information was gathered at McAuley’s home by NHK reporter who was secretly recording the interview. Plaintiffs sued NHK for invasion of his privacy. The district court dismissed McAuley’s claim, and he appealed. ISSUE: Does a reporter violate an individual’s right of privacy when he secretly records an interview with an individual without that person’s knowledge or consent? HELD: Yes, trial decision reversed, holding McAuley had stated a claim for invasion of privacy and reversed the district court’s dismissal of his claim. 13

  14. INTENTIONAL TORTS THAT PROTECT PROPERTY • Trespass to Land - interference with a property right. • Nuisance - a non-trespassory interference with the use or enjoyment of the property. • Conversion - the exercise of dominion and control over the personal property of another. • Trespass to Personal Property - taking, destroying, or substantially altering personal property. 14

  15. INTENTIONAL TORTS THAT PROTECT PROPERTY Case 9.3 Synopsis. eBay, Inc. v. Bidder’s Edge, Inc. (N.D. Cal. 2000). eBay is the largest consumer-to-consumer online auction site. Users of eBay must agree to the eBay User Agreement which prohibits the use of “any robot, spider, other automatic device, or manual process to monitor or copy our web pages or the content contained therein without our prior expressed written permission.” Bidder’s Edge, Inc. (BE) is an auction aggregation site that allows on-line auction buyers to search for items across numerous on-line auctions without having to search each site individually. In April 1999, eBay agreed to permit BE to crawl the eBay site for ninety days, in order to collect information for the BE site, while the two companies negotiated a license. When those license negotiations failed, eBay requested that BE stop crawling the eBay site. BE initially complied. However, in November 1999, BE resumed accessing the eBay site, without authorization, to include eBay auction listings on its site. CONTINUED  15

  16. INTENTIONAL TORTS THAT PROTECT PROPERTY Case 9.3 Synopsis (Cont’d). Once again, the parties failed to agree on a license and eBay attempted, unsuccessfully, to block BE’s unauthorized entries onto its site. eBay sued to enjoin BE from accessing eBay’s computer systems based on nine causes of action including trespass to chattels. ISSUE: Is BE’s entry onto eBay’s web site with an automated querying program a trespass to chattels? HELD: The Court granted eBay’s request for an injunction preventing BE from using any automated query program to access eBay’s computer systems or networks for the purpose of copying any part of eBay’s auction database.

  17. INTENTIONAL TORTS THAT PROTECT CERTAIN ECONOMIC INTERESTS AND BUSINESS RELATIONSHIPS Disparagement - publication of statements derogatory to the quality of the Plaintiff’s business, to the business in general, or to the Plaintiff’s personal affairs in order to discourage others from dealing with her. 17

  18. INTENTIONAL TORTS THAT PROTECT CERTAIN ECONOMIC INTERESTS AND BUSINESS RELATIONSHIPS • Injurious Falsehood - false statements knowingly made that result in economic loss to the Plaintiff. • Defenses (same as those for defamation). 18

  19. INTENTIONAL TORTS THAT PROTECT CERTAIN ECONOMIC INTERESTS AND BUSINESS RELATIONSHIPS • Fraudulent Misrepresentation - Defendant intentionally misleads Plaintiff by making a material misrepresentation of fact upon which the Plaintiff relied and was injured by that reliance. • Malicious Prosecution and Defense - Plaintiff must show a prior proceeding was instituted against him or her maliciously and without probable cause of factual basis. 19

  20. INTENTIONAL TORTS THAT PROTECT CERTAIN ECONOMIC INTERESTS AND BUSINESS RELATIONSHIPS • Interference with Contractual Relations - Defendant intentionally induces another person to breach a contract with the Plaintiff. • Interference with Prospective Business Advantage - Plaintiff must prove that Defendant interfered with a relationship Plaintiff sought to develop, and the interference caused the Plaintiff’s loss. • Defense - good faith competition. • Bad Faith - separate from breach of contract action. 20

  21. INTENTIONAL TORTS THAT PROTECT CERTAIN ECONOMIC INTERESTS AND BUSINESS RELATIONSHIPS Case 9.4 Synopsis. McEvoy v. Group Health Cooperative (Wis. 1997). In 1991, McEvoy, a thirteen-year-old girl, was diagnosed with anorexia nervosa (a potentially fatal eating disorder) by her primary physician, Dr. McFarlane of Group Health Cooperative of Eau Claire (GHC), an HMO that insured Angela as a dependent of her mother, Susan McEvoy, the health care benefits policyholder. GHC, unable to care adequately for McEvoy, referred her to UMH, an out-of-network provider, for six weeks. GHC decided to discontinue coverage of Angela’s care at UMH and to referred her to a newly-formed, in-network outpatient group therapy session for compulsive overeaters. Four weeks remained on the policy. After discharge, McEvoy relapsed. CONTINUED 21

  22. INTENTIONAL TORTS THAT PROTECT CERTAIN ECONOMIC INTERESTS AND BUSINESS RELATIONSHIPS Case 9.4 Synopsis. (Cont’d) McEvoy sued GHC claiming breach of contract and bad faith in denying Angela coverage for her treatment. ISSUE: Can HMOs be sued by subscribers under the common law tort of bad faith? HELD: Affirmed. McEvoys were permitted to sue the HMO for the common law tort of bad faith. That tort applies to all health maintenance organizations making out-of-network benefit decisions.

  23. NEGLIGENCE • Duty - person with legal duty to another is required to reasonably avoid harm. There is no general duty to rescue. • Defendant breached that duty • Causal connection between breach and injury • Actual causation • Proximate causation. • Plaintiff suffered actual loss or injury 23

  24. NEGLIGENCE: DUTY OF LANDOWNER OR TENANT • Traditional Approach to Liability for Injuries on Premises: • Duty to Trespassers • Duty to Licensees • Duty to Invitees • Reasonable Care Approach – courts require all landowners to act in a reasonable manner with respect to entrants on their land, with liability hinging on the foreseeability of harm. • Duty of Landlord to Tenant – landlord has a duty to take steps to provide adequate security to protect tenants from foreseeable criminal acts of a third party. 24

  25. NEGLIGENCE: DUTY OF ACCOUNTANTS AND OTHER PROFESSIONALS TO THIRD PARTIES Case 9.5 Synopsis. Securities Investor Protection v. BDO Seidman (2d Cir. 2000). SIPC is a private, nonprofit membership corporation formed pursuant to the Securities Investor Protection Act of 1970 (SIPA), to monitor the activities of broker-dealers and insure customer accounts in the case of a broker-dealer’s liquidation. SIPA requires broker-dealers to file annual audit reports with the SEC and one of the self-regulation bodies within the broker-dealer industry. Broker-dealers must employ an independent public accountant to file reports. A.R. Baron & Co., Inc., a registered securities broker-dealer, retained BDO Seidman to serve as its independent certified public accountant and auditor from 1992 through 1995, as required by SIPA. During that time, some of Baron’s management engaged in illegal activities including fraud in the sale of securities and manipulation of initial public offerings. Thirteen Baron employees pleaded guilty to or were convicted of crimes and Baron also pleaded guilty to enterprise corruption. Baron filed for bankruptcy in 1996. CONTINUED 25

  26. NEGLIGENCE: DUTY OF ACCOUNTANTS AND OTHER PROFESSIONALS TO THIRD PARTIES Case 9.5 Synopsis (Cont’d) . On July 11, 1996, the United States District Court of the Southern District of New York found that Baron’s customers were in need of the protection of SIPA and directed the appointment of a trustee to oversee Baron’s liquidation. The trustee and SIPC brought a claim against Seidman, alleging that Seidman was negligent as Baron’s certified public accountant by allowed Baron’s management’s misconduct to go undetected and ultimately to result in its precarious financial condition. SIPA sued Seidman but the court dismissed SIPA’s claim because they had not established the privity-like relationship between SIPA’s customers and Seidman required for a negligent misrepresentation claim. SIPA appealed. ISSUE: Does a broker-dealer’s accountant have a duty to the broker-dealer’s customers so that he can be held liable to them for negligent misrepresentation? HELD: No. Affirmed. Baron’s customers could not recover for negligent misrepresentation against Seidman. 26

  27. NEGLIGENT HIRING AND LIABILITY FOR LETTERS OF RECOMMENDATION • Negligent Hiring – the proximate cause of the plaintiff’s injury is the employer’s negligence in hiring the employee, rather than the employee’s wrongful act. • Duty of Employers to Third Parties Based on Letters of Recommendation: • “too much” information • “too little” information 27

  28. NEGLIGENT HIRING AND LIABILITY FOR LETTERS OF RECOMMENDATION Case 9.4 Synopsis. Randi W. v. Muroc School District (Cal. 1997).  Gadams was a school administrator at Livingston Middle School. Randi was a thirteen-year-old student at that school. Gadams allegedly molested Randi. Gadams was hired based on the strength of letters of recommen-dation that failed to mention accusations of similar conduct at Gadams’ previous schools of employment. Randi sued, claiming the letters of recommendation were negligent misrepresentations, and that the letter writers should have foreseen this type of harm. Therefore, a duty was owed to the school children as well as the school district hiring Gadams. CONTINUED 28

  29. NEGLIGENT HIRING AND LIABILITY FOR LETTERS OF RECOMMENDATION The trial court dismissed Randi’s claim stating no duty was owed to Randi. ISSUE: Can an employer who writes a favorable recommendation letter that omits known, material, negative information be held liable to a third party who suffered physical injury as a result of the employer’s omission? HELD: Defendant is liable for negligence because the Defendant omitted material facts from the recommendation letters, resulting in “half-truths” about Gadams.

  30. NEGLIGENCE: BREACH OF DUTY, CAUSATION AND INJURY Standard of Conduct • Negligence per se – once the plaintiff shows that the defendant violated a statute and the violation caused the injury, the burden shifts to the defendant to prove that he or she was not negligent. • Res Ipsa Loquiter – allows the plaintiff to prove breach of duty and causation indirectly. • Causal Connection: • Actual Cause • Proximate Cause (Zone of Danger or Foreseeable Consequences) 30

  31. NEGLIGENCE: BREACH OF DUTY, CAUSATION AND INJURY Case 9.7 Synopsis. Gaines-Tabb v. ICI Explosives (10th Cir. 1998). On April 19, 1995, a bomb exploded in a federal building in Oklahoma City killing 168 people and injuring hundreds of others. Individuals injured by the bomb filed a suit for negligence against ICI because ICI manufacturers ammonium nitrate that can be either “explosive grade” or “fertilizer grade” that was ultimately purchased by either Timothy McVeigh or Terry Nicholas to make the bomb. The plaintiffs claimed, among other things, that ICI was negligent in making explosive grade ammonium nitrate available to the men who bombed the federal building. The district court dismissed the plaintiffs’ claims against ICI, finding that ICI did not have a duty to protect the plaintiffs and that ICI’s actions were not the proximate cause of their injuries. The plaintiffs appealed. CONTINUED 31

  32. NEGLIGENCE: BREACH OF DUTY, CAUSATION AND INJURY Case 9.7 Synopsis.(Cont’d). ISSUE: Was ICI’s sale of explosive-grade ammonium nitrate mislabeled as fertilizer-grade ammonium nitrate the proximate cause of injuries to the Oklahoma bombing victims? HELD: Affirmed. As a matter of law it was not foreseeable that ICI’s ammonium nitrate would be used to blow up the federal building. The criminal activities of the bombers were a supervening cause of plaintiffs’ injuries. Because ICI’s negligence was not the proximate cause of the victims’ injuries, the case was dismissed.

  33. NEGLIGENCE: BREACH OF DUTY, CAUSATION AND INJURY • Injury – plaintiff must prove that she or her property was injured. • Negligent infliction of emotional distress – the traditional rule is that a plaintiff cannot recover for negligent infliction of emotional distress unless he or she can show some form of physical injury. But… • Recent cases involving HIV have permitted plaintiffs to recover from emotional distress without requiring that they actually have contracted the virus. 33

  34. DEFENSES TO NEGLIGENCE • Contributory Negligence - If Plaintiff is negligent at all, he recovers nothing. • Comparative Negligence - Plaintiff recovers in proportion of his loss attributable to his negligence. • Ordinary comparative negligence • Pure comparative negligence 34

  35. DEFENSES TO NEGLIGENCE • Assumption of the Risk defense requires: • Plaintiff knew of the risk. • Plaintiff voluntarily incurred the risk. • Countervailing Federal Imperatives 35

  36. DEFENSES TO NEGLIGENCE Case 9.8 Synopsis. Malik v. Carrier Corp. (2d Cir. 2000). Malik joined Carrier as an associate in its executive training program, which was administrated by Regina Kramer, Carrier’s Manager of Professional Recruitment. The program provided associates with the opportunity to work in different divisions of the company, after which they could be expected to be offered an executive position in one of these divisions. Several female workers complained that he made inappropriate sexual comments to them. Carrier investigated the sexual harassment claims. Although Malik was not disciplined, a Letter of Record regarding the complaints was placed in his personnel file. Malik’s employment with Carrier was eventually terminated after Malik failed to secure a final placement at the conclusion of the program. After his termination, Malik sued Carrier for negligent infliction of emotional distress as a result of the sexual harassment investigation. The jury returned a verdict for Malik. Carrier appealed. CONTINUED 36

  37. DEFENSES TO NEGLIGENCE Case 9.8 Synopsis. (Cont’d). ISSUE: Can an employer investigating charges of sexual harassment against an employee be liable for negligent infliction of emotional distress resulting from the investigation? HELD: The U.S. Court of Appeals reversed the district court’s order denying judgment as a matter of law to Carrier noting that the placing of the Letter of Record in Malik’s file cannot be the basis for liability without undermining federal policy.

  38. VICARIOUS LIABILITY AND RESPONDENT SUPERIOR A master (the Employer) is vicariously responsible for the torts of the servant (the Employee) if the employee was acting within the course and scope of employment 38

  39. VICARIOUS LIABILITY AND RESPONDENT SUPERIOR CASE 9.9 Synopsis. Fearing v. Bucher (Or. 1998). From 1970 through 1972, Bucher, a priest employed by the Franciscan Friars of California, Inc. and the Archdiocese of Portland in Oregon, acted as youth pastor, friend, confessor, and priest to Fearing and his family. Bucher gained the trust and confidence of Fearing’s family and was a frequent guest in their home. Bucher began to spend substantial periods of time alone with Fearing, who was a minor, and committed a series of sexual assaults upon him. Many years later, Fearing filed claims against the Archdiocese on theories of vicarious liability through application of the doctrine of respondeat superior and of negligent retention, supervision and training of Bucher. The trial court dismissed the case and the court of appeals affirmed. Fearing appealed. CONTINUED  39

  40. VICARIOUS LIABILITY AND RESPONDENT SUPERIOR CASE 9.9 Synopsis (Cont’d). ISSUE: Can an employer be held vicariously liable for an employee’s sexual assault on a minor based on the doctrine of respondeat superior? HELD: Yes. The Supreme Court of Oregon reversed finding that the allegations of the amended complaint were sufficient to state a claim of vicarious liability against the Archdiocese based on the doctrine of respondeat superior. The plaintiff was permitted to proceed with his lawsuit.

  41. SUCCESSOR LIABILITY Individuals or entities who purchase a business or real property may be held liable for tortuous acts of the previous owner. 41

  42. LIABILITY OF MULTIPLE DEFENDANTS • Joint and Several Liability - Defendants are collectively and individually liable. • Contribution and Indemnification - allocates liability proportionately among the defendants. 42

  43. STRICT LIABILITY • Ultra hazardous Activities - Defendant’s activity is so dangerous that no amount of care could protect others from the risks of harm. 43

  44. DAMAGES • Actual Damages – measure the cost to repair or replace an item or the decrease in market value caused by the tortious act. Also known as compensatory damages. • Punitive Damages—exemplary damages (only awarded in cases of outrageous misconduct). 44

  45. TOXIC TORTS • Definition - a wrongful act that causes injury by exposure to a harmful, hazardous, or poisonous substance. • Expensive to Defend • Strict Liability • New Theories of Damages for Future Injuries 45

  46. THE RESPONSIBLE MANAGER Reducing Tort Risks Managers should implement ongoing programs of education and monitoring to reduce the risks of tort liability. Managers should also work to prevent their employees from committing acts of negligence, which can lead to large damage awards against the company. 46

  47. REVIEW Why is the tort of intentional infliction of emotional distress difficult to prove? Given the current state of the media, should torts such as defamation and invasion of privacy be liberalized? Discuss why large corporations want joint-and-several liability eliminated. 47

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