RTA’s Tort Risk & insurance

RTA’s Tort Risk & insurance Some tort problems small/medium businesses confront

Some tort basics • What is a “tort”? • Where do tort duties come from? • Are tort duties identical/similar across the U.S.? • Two basic torts business must deal with on an ongoing basis: Negligence; fraud

Negligence • The bottom line: how much can it cost biz? Some recent examples • What is it? • -duty (First Fla Bank v. Max Mitchell) • -breach of standard of care (Munford v. Peterson) • -proximately causing (Palsgraf v. LI Railroad) • -damages

Negligence (cont’d.) • Defenses: • -Contributory negligence (dfn; effect) • -Comparative negligence (dfn; effect) • -Lack element of dfn • -Procedural (e.g., S/L; no jdx) • Big issue on business horizon: Negligent supervision

Fraud • What is it? How can it occur in business? • Elements of fraud • -misrepresentation • -of material fact • -knowledge • -intent • -damages • -reasonable reliance

Defenses to fraud • Lack of an element of the dfn • Procedural (S/L often NOT def.)

Invasion of right of privacy • Why is it important to business? Internet issues (tracking of site visitors; EU vs US restrictions on tracking visitors to a site) • Different sources of “right of privacy” • Const’l (4th Amendment) • Federal Privacy Act • Common law tort

Common law tort of right of privacy • Four separate categories of right of privacy • -public disclosure of private facts (Frank Davis is not paying his bills) • -unauthorized use of name/likeness • -placing someone in ‘false light’ • -unauthorized intrusion into person’s seclusion

Right of privacy (cont’d.) • Defenses • Case example: • Harkey v. Abate

Statutory privacy under Gramm-Leach-Bliley • GLB was enacted in 1999 • Creates privacy rts for consumers, duties for “financial institutions” • Title V of GLB: “It is the policy of Congress that each financial institution has an affirmative and continuing obligation to respect the privacy of its customers and to protect the security and confidentiality of those customers’ nonpublic personal information.”

GLB: more • Regs impose initial and annual privacy notification and disclosure requirements • Regs require that consumers be given opportunity to “opt out” info sharing w/ 3rd parties non-affiliated parties • Prohibition on sharing acct info for telemktg purposes • Privacy regs developed by: FTC, FRB, OTS, OCC, FDIC, NCUA, & SEC (privacy regs stdized for these)

GLB: still more • Other entities covered by GLB, such as ins cos & acctg firms regulated by states (some states have acted, others not) • Nine areas that MUST be in FTC privacy notice: 1) nonpublic info collected; 2) nonpub info shared; 3) affiliates/nonaffil w/ whom info shared; 4) above info re prior customers; 5) above info re 3rd Ikors w/ whom info shared; 6) rt to & how to opt out of info sharing w/ 3rd; 7) how “opt out” applies to FCrRptgA; 8) how security/confid’lity protected; 9) legal exceptions • Permitting info disclosure

GLB: the end! • GLB NOTICE must be “clear/conspicuous” • Delivery of privacy & “opt out” notice required so consumer reasonably assured of receiving the notice in WRITING (e.g. of “reasonable delivery”: hand delivery or mailing to last known address; • “unreasonable delivery”: mere posting at branch location or sending E-notice when consumer not use E service • Ways to opt out: w/in 30 days, mail addressed form, check-off box, call toll-free #; E notice if…

Insurance to deal with tort liability exposure • What is insurance? • How does it differ from gambling? • Types of insurance • -liability insurance (negligence; fraud); • -property (lessor/lessee); co-ins. • -life insurance

Some aspects of insurance contracts • Insurable interest (life ins vs prop ins) • Malpractice: Negligence vs fraud • Co-insurance clauses (fire • Insurer’s right of subrogation (applies to auto, fire policies) • Proof of loss • Lying on policy applications

RTA’s Tort Risk & insurance