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Noncontractual Liability: Torts and Crimes

Noncontractual Liability: Torts and Crimes. “Noncontractual” Liability:. Organizing tort theories of liability : Fault-based rationales for imposing tort liability Intentional wrongdoing Negligent or reckless wrongdoing Strict liability. Organizing tort theories of liability :

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Noncontractual Liability: Torts and Crimes

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  1. Noncontractual Liability: Torts and Crimes

  2. “Noncontractual” Liability:

  3. Organizing tort theories of liability: • Fault-based rationales for imposing tort liability • Intentional wrongdoing • Negligent or reckless wrongdoing • Strict liability

  4. Organizing tort theories of liability: • Action causing physical injury – individual wrongdoer • E.g., Battery, trespass, false imprisonment, etc. • Negligence  car accident • Dangerous activities • Action causing economic injury – business wrongdoer • E.g., False advertising, Inducing breach of contract • Negligence • Products Liability, dangerous activities

  5. Intentional Torts against Persons: Assault and Battery • Assaultis an action that causes the victim to fear (reasonably) an imminent offensive contact. • Battery is a touching of another person in a way that is unwanted or offensive.

  6. Intentional Torts Against Persons False Imprisonment False imprisonment is the restraint of someone against their will and without reasonable cause. • In general, a store may detain a person suspected of shoplifting if there is a reasonable basis for the charge and the detention is done reasonably (in private and for a reasonable time). • Adams v. Zayre

  7. Intentional Infliction of Emotional Distress • Roach v. Stern • Historically, no recovery was allowed if the injury was only emotional instead of physical. • Outrageousness • Intent

  8. Intentional Torts Against Persons: Defamation • Sigal Construction v. Stanbury • Defamation is irresponsible speech to harm another’s reputation. • Written defamation is libel. • Verbal defamation is slander. • Elements of claim

  9. Defamation (cont’d) “Mr. Smith is a jerk. He is insufferable. I think he is the stupidest, meanest person I have ever met.” • Opinion • Public figures and actual malice • Defenses  privilege

  10. Privacy and Publicity • Intrusion • Disclosure of Embarrassing Private Facts • False Light • Flynt v. Falwell • Appropriation of Likeness • Ford v. Midler • Waits v. Frito-Lay

  11. False Advertising: Fraud • False statement of fact • Intentionalormaterial • On which plaintiff relies • To his/her detriment or injury “The Maytag XG-70 trash compactor is the greatest machine ever invented. Owning it will change your life.”

  12. False Advertising: The Lanham Act(passed in 1946, amended in 1988) • This statute prohibits -- and provides punishment for -- false statements made by a business intended to hurt another business.

  13. Product Defamation • State Statutes outlawing “defamation” of products • Oprah and Texas beef • Honda and emu ranchers

  14. Duty of due care -- there must be a duty owed to the plaintiff. Breach-- duty must be breached. Proximate cause-- it must have been foreseeable that the action would cause this kind of harm, AND action was actual cause of harm Injury -- the plaintiff must have been hurt. Negligence Plaintiff must prove:

  15. Duty owed • Lanier vs. Walmart Stores Breach of Duty • A defendant breaches his duty of due care by failing to behave the way a reasonable person would under similar circumstances. • Negligence per se

  16. Factual Cause + Foreseeable Harm = “Proximate Cause” • Hairston v. Alexander Tank • Palsgraf v. Long Island RR • Ozzie Osbourne suicide case

  17. Injury & Damages • Injury -- plaintiff must show genuine injury • Future injury may be compensated, but must be determined at the time of trial. • Damages -- are usually compensatory, designed to restore what was lost. In unusual cases, they may be punitive.

  18. Compensatory Damages • The Single Recovery Principle • Damages may include money for three purposes: • to restore any loss (such as medical expenses) caused by the illegal action • to restore lost wages if the injury kept the defendant from working • to compensate for pain and suffering

  19. Punitive Damages • While the purpose of compensatory damages is to help the victim recover what was lost, punitive damages are intended to punish the guilty party. • Intended for conduct that is outrageous and extreme • Designed to “make an example” out of the defendant and to deter others • Sometimes punitive damage awards are huge, but in most cases they are close to or less than the amount of compensatory damages awarded. • BMW v. Gore

  20. Defenses to Negligence • Contributory Negligence • Assumption of Risk • Comparative Negligence

  21. Strict Liability • Unreasonably dangerous or ultrahazardous Activities -- defendants are virtually always heldliable for harm. • State DEP v. Ventron • Defective Products-- may incur strict liability. • Design / Manufacture / Seller • Defenses • Misuse

  22. Small group exercise: Civil vs. Criminal liability

  23. Classifications of Crimes • Violent / Nonviolent • Vs. person / Vs. property • Public welfare offenses • White collar offenses

  24. Essential Elements of Criminal Liability • Actus reus = guilty act • Act or omission • “act”  attempt / conspiracy crimes • Mens rea = guilty mind • Felonies vs. misdemeanors

  25. What is criminal intent? • Knowing that what you are doing is illegal? Wrong? I know I am supposed to have a permit for this gun, but I don’t get one. • Knowingly doing something that the law defines as illegal? I bought a gun without getting the required permit. • Defenses to criminal liability are based upon the defendant’s intent: • Insanity justification (self defense)

  26. Can businesses be held criminally liable as legal persons? If so, for whose acts is the organization responsible? Can businesses have a guilty state of mind? How? Can businesses be punished criminally? How?

  27. Businesses and Criminal Liability 1. If business organizations be criminally liable, for whose acts is the organization responsible? • Arthur Andersen case – partnership (not corporation): • Should entire firm be prosecuted for the criminal behavior (i.e., criminal violation of SEC rules) of a small subset of partners? • Judge’s jury instructions • Is this typical? Were these partners acting on behalf of the firm? Would Andersen have been criminally prosecuted in other countries?

  28. Businesses and Criminal Liability Hilton Hotels case: Co. policy and manager directed purchasing agent not to participate in illegal boycott. Court: Better rule is strict vicarious liability because violations (and individual violator) are hard to determine, and violations benefit company. Is this typical? Was this employee acting on behalf of the firm? Would Hilton have been criminally prosecuted in other countries?

  29. Businesses and Criminal Liability • Can individual managers within a business be held criminally liable for acts committed by subordinates or contractors? • U.S. v. Hanousek

  30. Capacity defenses Insanity Defense / justification entrapment Procedural defenses Statute of limitations 4th amendment (exclusionary rule) 5th amendment (Miranda rule) Defenses to Criminal Liability

  31. “Noncontractual” Liability:

  32. What can/should managers do to protect themselves and the company from criminal liability?

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