The Law of Torts CHAPTER

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1 12 12 CHAPTER The Law of Torts It makes no difference whether a good man has defrauded a bad man or a bad man defrauded a good man, or whether a good or bad man has committed adultery: the law can look only to the amount of damage done. Aristotle If America is as some say a most litigious society, it is because Americans so often seek remedies in court instead of seeking mediation or yielding to societal pressures to compromise, as happens in so many traditional cultures. Chapter 12 considers our obligation to do no harm to others and discusses the consequences of breaching that legal obligation. Civil wrongs known as torts in the law result from intentional acts, unintentional accidents, and from failure to act when one is legally obligated to do something. The chapter compares the no harm no foul rule of tort law to the stricter standards of criminal law. The student who has carefully read this chapter should be prepared to answer these questions: What is a tort, and are torts crimes? What is negligence? What is strict liability? What are the most common intentional torts? What is the difference between actual and constructive fraud? Can one sue for intentional infliction of emotional distress? What is a nuisance? Can one sue for the invasion of privacy? What is malicious prosecution? How are new causes of action discovered by the courts? Does a cause of action survive the death of either the tortfeasor or the victim? Can one sue the government? 1

2 2 CHAPTER 12 SCENARIO A SLAPP suit is a lawsuit filed with the intent of silencing citizen complaints before a government agency. SLAPP stands for strategic litigation against public participation. The city hall chambers were crowded with a standing-room-only audience. Some of the spectators were holding placards bearing slogans such as Save Our Neighborhood, No More Development!! and STOP Corporate Greed. The seven council members were listening with varying expressions of boredom or annoyance as an elderly woman spoke into the microphone. We know that several of you have accepted large campaign contributions from this development company, and we will hold you accountable if you let that money sway your vote against the people, she concluded. She returned to her seat amid thunderous applause. The next speaker was to be Jonathan Merrill. Until six weeks ago, Jonathan had never been politically active and usually tried to avoid controversy. But when he learned that the city council was expected to approve development of a new shopping mall adjacent to his old, middle-class neighborhood, he became incensed. The proposed mall was to be located on a large parcel of land presently zoned for public parks. The proposed development had already received the city planning commission s recommendation for a zoning change, and the city council was deliberating approval of that change as well as final approval of the environmental impact reports. Jonathan began circulating a neighborhood petition opposing the shopping mall development. Neighborhood meetings were held in his living room until the crowd became too large. The meetings were then moved to the multipurpose room in the local elementary school. Jonathan found himself to be a somewhat reluctant, de facto leader and chief spokesperson for the loosely organized Citizens for Preserving North Park. As he approached the microphone, Jonathan fingered a few cards on which he had scrawled talking points for his statement to the city council. The Midland Mall Corporation has deceived this council, he began. Their figures for vehicular traffic and air pollution are grossly understated, and they know it. Beyond that, they outright lied to us when our citizens group met with their top management and architects to ask them to scale back this proposal. Someone in the crowd called out, You tell em, Johnnie! Jonathan was discovering a latent talent for making a stem-winder speech, and the cheering crowd was on its feet when he concluded with these words: There is no place for a Midland Mall in our neighborhood, and if you approve this proposal, we will recall every single council member who votes for it! Ten days later, Jonathan was approached by a stranger as he walked toward his car in his employer s parking lot. The stranger asked, Are you Jonathan Merrill? When Jonathan nodded, the stranger handed him a thick document. Unfolding the official-looking document, Jonathan saw that it was entitled COM- PLAINT FOR LIBEL, SLANDER, AND INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE. The plaintiff was MIDLAND MALL CORPORATION, a Delaware Corporation. Named as defendants were CITIZENS FOR PRESERVING NORTH PARK, an unincorporated association, JONATHAN MERRILL, an individual, and DOES 1 through 100. Folded inside the complaint was a summons giving Jonathan 30 days within which to respond to the lawsuit. Jonathan is being sued. He and his wife have few assets, other than their home, and little in savings. The Citizens for Preserving North Park has less than $1,000 in its bank account. It is unlikely that Midland Mall Corporation has any interest in the negligible assets of these defendants. In reality, Midland Mall doesn t want their money it simply wants their silence. Midland Mall s lawsuit against Jonathan and the neighborhood citizens group is known as a SLAPP suit. SLAPP is an acronym for strategic litigation

3 The Law of Torts 3 against public participation. Corporations sometimes file SLAPP suits against individuals who appear before government agencies to challenge their business activities. In the opening scenario, the developer has filed a SLAPP suit against citizens who have appeared before a city council to oppose a proposed development. The hapless defendants will find themselves besieged with legal maneuvers forcing them to pay substantial attorneys fees and go through considerable emotional stress. Of course, Midland Mall will gladly drop the lawsuit if Jonathan and the citizens group will sign an out-of-court settlement in which they promise to cease all opposition to the proposed development. The Midland Mall Corporation s complaint alleges the tort of interference with prospective economic advantage, a typical allegation in SLAPP lawsuits. Yet, on the rare occasions when they actually go to trial, SLAPP suits are seldom won by the corporate plaintiffs because the citizen defendants are usually protected by their First Amendment rights of petition and free speech. In fact, some SLAPP defendants have won substantial money damages in anti-slapp counter-suits for malicious prosecution. But the expense, stress, and inconvenience of litigation often forces SLAPP defendants to withdraw their objections to the proposed business activity in order to get the troublesome lawsuit dropped. TORTS: WRONGFUL ACTS AND OMISSIONS A tort is a civil wrong some act or omission that violates our duty to avoid harming others. It might be a public duty, such as our duty to drive safely and obey traffic laws. Or, it might be a private duty under the law, such as the duty of a trustee to a beneficiary. A tort is termed a civil wrong because it can occur without a corresponding criminal act. Although, as will be seen, some acts are both crimes and torts, a criminal act is not an essential element for most torts. But there must always be an injury to have a tort. The expression no harm no foul applies to the law of torts. The person who commits a tort is called a tortfeasor. Wrongful acts or omissions that harm another person account for the greatest number of lawsuits, by far, and personal injury cases account for the great bulk of these lawsuits. A typical personal injury case involves an automobile accident, and negligence is the most common allegation by the plaintiff. But personal injury cases come in a variety of other forms as well: slip-and-fall, medical malpractice, dog bite, injury caused by a defective product, and assault and battery. On-the-job injuries are in a special category handled under worker s compensation law, and employees generally cannot bring a tort action against their employer for job-related injuries or illness. Under the law, a personal injury can be defined much more broadly than just physical trauma. Libel and slander, malicious prosecution, false arrest, invasion of privacy, sexual harassment, and age discrimination are examples of personal injuries that might leave no physical marks (although physical ailments do often follow). A personal injury violates the person s right to be left in peace. Although personal injury especially physical injury predominates in lawsuits alleging wrongful acts by others, a small number of tort cases do not involve personal injury. These less frequent lawsuits might concern such things as fraud, embezzlement, vandalism, theft of trade secrets, or unfair business practices. A tort is a civil wrong a wrongful act or omission that harms another person. A tortfeasor is a person who commits a tort. A personal injury is damage to one s person. In a narrow sense, it is physical or emotional trauma, but in a broader sense it can be any invasion of one s personal right to be left in peace.

4 4 CHAPTER 12 INTENTIONAL AND ACCIDENTAL TORTS An intentional tort is a civil wrong intended by the tortfeasor to harm another person. The intent relates to the resulting harm, not to the act that causes the harm. A tort can be either intentional or accidental. Assault, fraud, and arson are examples of intentional torts; the perpetrator of these tortious acts intends to harm his victim. In the law of torts, intent refers to the injury, not to the conduct causing the injury. Therefore, the intentional tort of arson is distinguished from the negligent tort of reckless driving even though either tort can result in someone s death from burns. The negligent driver might have intended to drive carelessly, but unlike the arsonist, did not intend to cause property damage or personal injury. Intentional and negligent torts are discussed in more detail later in this chapter. TORTS AND CRIMES An assault is an unlawful attempt or credible threat to physically injure another person. Battery is unlawful and intentional physical contact that produces trauma or offensive touching of another person. It is possible for the same act to be both a tort and a crime as are the four examples mentioned in the preceding paragraph: assault, fraud, arson, and reckless driving. But most tortious acts and omissions do not violate criminal laws. Slander and medical malpractice are examples of noncriminal acts that are actionable as torts. But statutes make some acts of negligence such as the failure to maintain a hotel sprinkler system in good operating condition criminal offenses, as well. Note that the violation of law (having defective sprinklers) might be a crime even if no injury results, but a tort does not occur until someone has been harmed. It also is a criminal offense to operate automobiles with serious mechanical deficiencies inoperative headlights or a suspension system with illegal modifications, for example but again, no tort exists until someone is harmed. The law regarding assault provides an interesting illustration of several legal principles under the law of torts and also criminal law. By definition, assault is an unlawful attempt or a credible threat to physically injure another person. To constitute a tort, the aggressor must harm the victim either physically or emotionally. Physical harm can be either a physical trauma something a doctor could diagnose as such or simply offensive physical contact. The unwanted physical contact is known as a battery whether physical injury results or not. Because battery cannot be accidental, one cannot commit battery without also committing assault. To harm the victim emotionally, but without physical contact, the aggressor must appear to have the ability to injure her victim and must display sufficient force (or threatening behavior) to provoke fear or apprehension in the victim. Thus, the tort of assault requires either physical contact or the victim s fear and apprehension. In many jurisdictions, however, the crime of assault does not require that the victim actually be in fear or apprehension, so long as the behavior of the assailant is threatening and she intends to harm the victim. Thus, an average person without special skills in physical combat who unwittingly takes a swing at the world s heavyweight boxing champion, but misses, nonetheless commits a crime but probably not a tort unless the champ is easily frightened. The reason for this difference in criminal and tort law is found in the different objectives underlying the law of torts and the law of crimes. The law of torts is designed to compensate people for their actual injuries (including apprehension or fright) caused by the wrongful acts or omissions of others. If the victim of an assault is neither struck nor even frightened, there might be no civil injury requiring compensation. In criminal law, however, deterrence is the primary objective. For reasons of peace and public order, society has a strong interest in discouraging even the unsuccessful assaults that fail to injure or frighten the in-

5 The Law of Torts 5 tended victims. The incompetence of the assailant and the fearlessness of the intended victim are not relevant to the deterrent purpose of criminal law. The same principle of deterrence underlies criminal penalties for violations of traffic laws and building codes, even in the absence of actual injury to others. The law regarding assault illustrates yet another principle of tort law: the right to live in peace. Although the assailant might swing and miss, a frightened victim has been deprived of her right to peace and security. Tort law recognizes this right to be left alone, and it is an area of law that is developing rapidly. We now see courts awarding damages and issuing injunctions against obsessive persons who stalk and harass others who do not want their attentions. Some jurisdictions now recognize the intentional infliction of emotional distress as a separate cause of action in tort. BREACH OF CONTRACT AND THE LAW OF TORTS A breach of contract is not, by itself, a tort although in some circumstances both a tort and a breach might result from the same act or omission. For example, a shopkeeper who is in a dispute with his landlord could commit a tort, a crime, and a breach of contract in one fell stroke by setting fire to the building. The difference between a breach of contract and a tort is the source of the duty that is violated. Torts result from violating the duties that are imposed by law upon us all. A breach of contract results from violating duties created by a particular contract. Whereas tort law imposes duties upon everyone, a contract imposes duties only upon those persons who become willing parties to that contract. Because contracts can be made so casually, without even a spoken or written word, someone might innocently and in good faith deny that he has made a contract at all. Does a good faith denial demonstrate that a mutual intent to form a contract that is, a meeting of the minds never existed? If so, there is no contract; and, if there is no contract, there can be no breach. However, a bad faith denial that a contract exists is both a breach of the contract and a tort. Bad faith is the conscious intent to evade one s legal or ethical responsibilities. THE LAW OF NEGLIGENT TORTS The vehicle owner who allows her car s brake pads to wear down to nothing has committed a negligent tort if the faulty brakes cause an accident, even if someone else was driving the vehicle at the time. Although the vehicle owner might have made a conscious decision to postpone repairing the brakes, she probably did not actually intend that the vehicle be driven unsafely. She certainly did not intend that an accident result. This is an example of a tort of negligence. If the vehicle owner postponed the brake repairs with actual knowledge that the vehicle would be unsafe, she has committed gross negligence. In all negligence, the tort lies in the failure to use the necessary care in doing what is otherwise permissible owning and operating a car, for example. Most traffic accidents involve negligent torts. The example of the postponed brake repairs illustrates a potential tort of omission that is, the failure to do what the owner had a duty to do. The earlier example of a hotel sprinkler system not being properly maintained is a similar tort of omission. Recall, however, that injury must result for either omission to constitute a tort. Otherwise, these examples are simply violations of the motor vehicle and building codes, respectively. A negligent tort is the unintentional and avoidable harming of another person when a duty exists to avoid or prevent such harm. Negligence is the failure to use reasonable care to avoid injury to others. Gross negligence is more than carelessness; it is the intentional and callous disregard for the injury that the tortfeasor s act or omission is likely to cause to other persons.

6 6 CHAPTER 12 THE DUTY OF CARE The duty of care is the affirmative obligation to avoid negligent conduct that might result in harm to others. Negligence law is based upon the idea that every person owes a duty of care to others who might be affected by his conduct. In some situations, the duty of care requires us to refrain from doing something: firing a pistol into the sky to celebrate July 4th, for example. In other circumstances, the duty requires us to take positive action: reporting our pet animal to public authorities or a licensed veterinarian if it displays obvious symptoms of rabies. As explained in Chapter 3, a duty requiring us to take positive action at our own initiative is known as an affirmative duty. Our general duty of care is found mostly in the common law, but some specific duties are imposed by statute. For example, most states have a statute that requires that swimming pools be fenced so that children will not fall in. Some jurisdictions have statutes that impose a duty to keep firearms and ammunition in separate locations in a home. A statutory duty is not necessarily greater than a common law duty, but it might be easier to establish that the statutory duty exists. ESTABLISHING A BREACH OF THE DUTY OF CARE Negligence is the violation of our duty of care. To be a tort, that violation must be the cause of someone s injury or loss. The tort of negligence has four elements: a duty of care a violation of that duty a cause-and-effect relationship between the violation of that duty and some injury to another person or to the property of another actual damage that can be compensated The greatest difficulty in negligence litigation is often defining the duty owed by the defendant to the plaintiff and showing an actual violation of that duty. A duty to the general public does not depend upon any particular relationship: If we accidentally run down a pedestrian in a crosswalk, it makes no difference under the law whether he is our employee or a stranger. Our relationship to that victim would be significant only if it presented a motive for intentional injury. There are many duties that do arise from particular relationships. Teachers have duties to their students that they do not have toward strangers: an obligation to report evidence of possible child abuse, for example. Bus drivers and ship captains, medical doctors and accountants, employers and partners, bartenders and butchers, all have special duties that derive from their relationships with particular persons: passengers, clients, employees, partners, and customers. Some of these relationships are unique in that the duty of care is elevated to that of a fiduciary. Bartenders and butchers, however, owe particular duties to their patrons even though they are not in a fiduciary relationship. The bartender offers an example of a special duty to the general public that arises from one s occupation or business: The bartender might be liable to strangers if she continues to serve an intoxicated patron who later causes a traffic accident. Some states have particular statutes imposing that liability ( dram shop acts ), but the courts of other jurisdictions have found that liability to already exist under common law. The same principle can apply to other professions: A garage mechanic might be liable under common law for injuries to strangers that result from defective repairs to an automobile brake system. In the latter examples, the duty to the general public as opposed to a duty strictly to the patron is associated with a particular occupation or business. The duty might be heightened by the professional experience and expertise of the bartender and the garage mechanic. But what about the duty of a social host

7 The Law of Torts 7 serving drinks to his cocktail party guests or an amateur mechanic who fixes the neighbor s car s brakes for free? Depending upon state law, the social host might have a liability similar to that of the bartender lessened perhaps by his less extensive experience in recognizing the signs of intoxication. The amateur mechanic might be in a more difficult situation because he has assumed a task fixing braking systems that is inherently technical and, in every instance, requires expertise. The social host does not need to be concerned that each drink he serves might cause an accident, but the amateur mechanic must realize that every brake job offers the opportunity for disaster. The general rule is that a person owes a duty of care to every person who foreseeably could be injured by his negligence. Determining which injuries are foreseeable, and which are not, can be a daunting task, but it is a question of fact for the jury to decide. The rule followed in a minority of the states is that a person owes the duty of care to everyone who is actually injured by his negligence. That rule makes the duty of care universal to all humankind because it is impossible to foresee every injury that could result from our negligence. The Standard of Due Care Everyone has a duty to act as a reasonably prudent person would act under the same or similar circumstances. That standard of care is known as due care. It is a question of fact for the jury or judge to determine whether someone s conduct in particular circumstances was reasonably prudent. Conduct that violates a statute (e.g., reckless driving) creates a presumption of negligence. The latter conduct is known as negligence per se (or automatic negligence ). Because circumstances influence the degree of care owed, it can range from minimal to extraordinary. If the situation is fraught with risk to others a bungee cord jumping business or sky diving school, for example a greater degree of care is owed. Disregarding for a moment the understandable view, held by some, that almost any adult on a skateboard is acting with gross negligence at least to his own physical jeopardy he is not required to exercise the same degree of care toward pedestrians that he would be required to use if he were driving a car. This is because the potential for death and injury to pedestrians is much less in collisions with skateboarders. Any special training and expertise that one has can increase the degree of care owed. Someone who claims to be an expert or professional will be held to the higher standard of skill and expertise usually possessed by such persons, even though the tortfeasor is not, in fact, a person with such skill or expertise. He cannot use his dishonesty and actual lack of expertise to escape the greater liability because those injured by his conduct might have relied upon his false claims of expertise and were harmed by his deception. A trained beach lifeguard might be held liable for extraordinary injuries incurred by a victim during a rescue for example, a skull fracture resulting from a collision with rocks. An untrained bystander, however, would not have been liable for those same injuries had he attempted the rescue. One reason for this difference is that the untrained bystander even an expert swimmer might be unaware of the additional danger occasioned by ocean currents or waves along his chosen rescue route. The trained lifeguard should be aware of the special risks posed by surf and rocks and should be better able to avoid or mitigate those dangers. Under the common law, the Good Samaritan doctrine shields the intervening bystander from liability unless he acts with reckless disregard for the victim and actually increases the danger to that victim. Most states have enacted statutes incorporating this doctrine. Due care is the degree of prudence a reasonable person is expected to exercise so as to avoid harm to others. It is the standard for measuring one s duty of care under any given circumstances. Negligence per se is dangerous conduct that is prohibited by statute. In establishing negligence, statutory prohibitions make it unnecessary to show that a reasonable person would not engage in the same conduct under the circumstances. The Good Samaritan doctrine shields from liability a bystander who voluntarily comes to the aid of a person in danger of life or limb unless that volunteer substantially worsens the victim s situation by some reckless action.

8 8 CHAPTER 12 Medical personnel are in a similar position, in that they are expected under the law to use the skill of a person with their level of training and expertise. Because licensed medical doctors are more highly trained than are registered nurses, the doctor is held to a higher standard of care than is the nurse. Some states have enacted special Medical Good Samaritan statutes to limit the liability of qualified medical personnel who come forward as volunteers to assist in emergency situations that arise outside of the scope of their employment (e.g., automobile accidents or in-flight emergencies). The proximate cause, or legal cause, of an injury is the event that produces an injury that, absent that event, would not have occurred. To be the proximate cause, the effect of that event must not have been unforeseeably altered by some other intervening force or event. An intervening force is an unforeseen event that alters the effect of the defendant s action, thereby resulting in the plaintiff s injury. NEGLIGENCE AS THE CAUSE OF AN INJURY The third required element of negligence is causation. Once the legal duty owed to the plaintiff has been established and the court has determined that the defendant violated that duty by some act or omission, the court must next decide whether that negligence was the proximate cause of the plaintiff s injury. It is entirely possible for a person to be negligent, yet not be the cause of a particular injury. Under the law of negligence, there can be no recovery unless the defendant s negligence is shown to be the cause of the plaintiff s injury. A proximate cause is the legal cause of the injury, as opposed to some other intervening event. (In some jurisdictions, the term proximate cause is losing favor, and legal cause, is used instead.) An intervening force is an independent cause that interrupts the natural cause-and-effect chain of events that followed from the defendant s wrongful act. Proximate cause can be one of the most difficult concepts in tort law, but two illustrative examples should convey the basic idea of this principle. At an amateur baseball game, dozens of spectators crowd along the baselines. Ignoring this dangerous situation, the pitcher delivers his fastball and the batter s line drive hits a spectator in the head. The pitcher might later argue that the batter s action was the only proximate cause of the injury if the batter had not swung, no one would have been injured. But the batter s decision to swing was provoked or induced by the pitcher s fastball both players were playing a game of baseball. In fact, under the rules of baseball, the pitcher s fastball was tantamount to a challenge for the batter to hit the ball. The batter s swing is not an intervening force in the legal sense because it was clearly foreseeable to the pitcher. In this situation, the pitcher and batter are acting in concert to create the proximate cause of the bystander s injury. Under the facts of this situation, the actions of both players (i.e., the pitch and the swing) were indispensable elements to create the injury. Although the batter s swing was an intervening force under the laws of physics, it was not an intervening force under the law of torts. The batter s action and the potential injury were both clearly foreseeable to the pitcher, and the batter did not interrupt the natural cause-and-effect chain of events. Both the pitcher and the batter (and perhaps the volunteer umpire, if any) might be liable for negligently proceeding with the game under those dangerous conditions. The concept of proximate or legal cause, then, does not always require that there be a sole cause for the injury. The most common example of multiple causes is an automobile accident in which the negligent conduct of several drivers contributes to the accident and the resulting injuries (for example, two drivers colliding when they simultaneously attempt unsafe lane changes). If the negligence of a particular driver does not contribute directly to the accident, is that driver s negligence nonetheless a legal cause? Consider the following case. Two intoxicated friends leave a bar at midnight, both in the same car. Although drunk, the driver is able to maintain his lane and remains below the speed limit. In fact, other than driving while in his state of intoxication, he does not violate any traffic law. As his car is proceeding with the green light through

9 The Law of Torts 9 a blind intersection, a truck runs the red light and broadsides the car, injuring the intoxicated driver and his passenger. Although he was illegally driving under the influence, the first driver s wrongful act was not the proximate cause of his passenger s injuries. There was an unforeseen independent, intervening cause: the wrongful act of the truck driver who ran the red light. In analyzing such cases, courts often use the but for test: Would the accident not have happened but for the first driver s decision to drive while intoxicated? Clearly, our case fails the but for test: The first driver s intoxication did not cause the accident. It would have occurred even if he had been sober but had driven the same route at the same time and at the same lawful speed. The truck driver s negligent and illegal act was not a foreseeable and natural event arising from the first driver s decision to drive while intoxicated. Of course, the intoxicated driver is subject to criminal penalties even in the absence of any tort liability. Unfortunately, questions of proximate or legal cause are not often so distinct as they are in the preceding examples. RESPONSIBILITY FOR THE ACTS OF AGENTS AND EMPLOYEES The doctrine of respondeat superior sometimes makes employers and principals responsible and legally liable for the wrongful actions and omissions of their employees and agents, respectively. That is because employers and principals have a duty to control the actions of employees and agents so that others will not be injured. Because employers often have insurance and much greater assets than does an employee, the doctrine of respondeat superior has encouraged the filing of lawsuits that otherwise might not be pursued against the employee alone. However, the doctrine of respondeat superior is limited to events that occur in the course of the tortfeasor s employment or agency. This limitation has led to numerous lawsuits in which the critical issue has been whether an employee s temporary detour for personal business, while driving from point A to point B on his employer s business, took him far enough and long enough from the shorter, straight-line route so that he was no longer acting in the course of his employment when he negligently caused an auto accident during the detour. Ethics Watch The legal relationship between employer and employee is very similar to that between principal and agent. When the legal assistant is performing his usual duties and responsibilities on behalf of the supervising attorney, that attorney can be liable for any tortious conduct by the legal assistant. Potentially, a client could be liable also if the tortious conduct is directly related to the attorney s representation of that client for example, making a libelous statement about an opposing party in correspondence written by the legal assistant to a third party. The doctrine of respondeat superior holds one responsible for the tortious actions of his agents or employees who are acting on his behalf. A principal is one who authorizes another to act on his behalf (i.e., to serve as his agent). An agent is one who is authorized to act on behalf of another (the principal). Agency is the legal relationship between a principal and her agent. It is also the scope of authority granted to the agent by the principal. STRICT LIABILITY IN TORT LAW Most torts are either intentional or the result of negligence. However, there is one class of torts that does not require either intent or negligence. These are the torts of strict liability. Strict liability is a doctrine that imposes liability for The doctrine of strict liability holds one liable for certain types of unintentional injuries even if no negligence is shown.

10 10 CHAPTER 12 Under the doctrine of strict products liability, manufacturers are liable for any injuries caused by defective products, without the requirement to show negligence in the design or manufacturing processes. The liability extends to bystanders as well as to subsequent purchasers of used products. personal injury or property damage even though the defendant was not negligent and did not intend to harm anyone. It is termed strict because the defendant cannot escape liability by showing that he used reasonable care and prudence in his conduct. Because this doctrine is so severe, its application is limited to particular types of activity. Traditionally, strict liability was limited to inherently dangerous activities: using dynamite, keeping wild animals or vicious domesticated animals, using poisonous gases, and so forth. In recent times, however, strict liability has been imposed by statute on toxic waste contamination (e.g., leakage from underground gasoline storage tanks) and under common law to the manufacturing and sale of all consumer products. The latter is known as strict products liability. In recent decades, strict products liability has become an important area of litigation law. Manufacturers and retailers have faced enormous numbers of lawsuits that claim a defective product caused personal injury. The unique feature of strict products liability is that the plaintiff need not prove that the manufacturer or seller is at fault (by reason of negligence or breach of warranty, for example), but only that: the product is defective the defect caused the plaintiff s injury The legal theory is that strict liability compensates the injured person, encourages product safety, and spreads the financial burdens of product improvement and compensation for the victim across the marketplace through higher prices for that product. Strict liability also recognizes the great difficulty and expense in proving negligence of the manufacturer in the design or manufacture of a product. The imposition of strict liability has also caused the insurance industry to encourage defensive engineering by manufacturers, so that injuries and therefore liability exposure will be reduced. STRICT LIABILITY AND THE IMPLIED WARRANTY OF FITNESS In the commercial sale of goods, there is an implied warranty that the goods are fit for the purposes for which they are commonly purchased. The warranty (i.e., the seller s guarantee) is implied by operation of law, even if it is not expressed in the words of the contract. Prior to strict products liability, injured consumers brought actions against a manufacturer for negligence or for breach of implied warranty of fitness for a particular purpose. Under the doctrine of implied warranty, every product is presumed to be fit for the uses for which consumers are known to purchase it. If the product is not fit for those uses, the manufacturer or seller has breached that implied warranty. The warranty is not limited to the purposes for which the product is marketed. If the manufacturer or seller is aware that the product is commonly purchased for other purposes, it must be fit for those purposes as well. Thus, a bicycle marketed for riding on paved streets must be fit also for motocross competition if the manufacturer or seller knows that it commonly is purchased for that use as well. Unfortunately, the implied warranty is found in the contract among the manufacturer, the retailer, and the consumer. It generally protects only the purchaser not bystanders nor any nonpurchasers who might use that product. The manufacturer and seller also owe a duty under implied warranty only to the original purchaser of a new product, not subsequent purchasers who buy it as a used product. In contrast, the doctrine of strict liability makes the manufacturer and seller liable for injury even to bystanders and subsequent purchasers. The duty owed does not arise from a particular contract with a particular customer, but from the decision to place that product in the marketplace where, eventually, it might endanger nonpurchasers as well as purchasers. Thus, passengers in automo-

11 The Law of Torts 11 biles and neighbors who borrow lawn mowers have standing to sue a manufacturer or seller under strict products liability if they are injured as a result of a defect in that product. By contrast, under the doctrine of implied warranty, the passengers and neighbors would have no standing to sue. ASSUMPTION OF RISK A major issue in products liability litigation is the duty of the manufacturer and seller to warn the consumer and other users of the product about the risks associated with that product. This issue arose in part because defendant manufacturers and retailers claimed that the user or purchaser had assumed the risk by knowingly using a potentially dangerous product (e.g., an electric hedge trimmer). Assumption of risk is an affirmative defense against liability based upon the principle that the person who agrees to risk a known injury should not be able to recover damages when that foreseeable injury does, in fact, occur. The assumption of risk defense is ineffective, however, if the manufacturer has intentionally or negligently introduced risks that a reasonable person cannot foresee. Plaintiffs have countered the assumption of risk defense by arguing that the risk is not fully known to the ordinary user if the better informed seller or manufacturer has not adequately disclosed it. Other defenses to strict liability include misuse of the product (e.g., using a hedge trimmer to shorten a picket fence) and an unauthorized modification to the product that increases the risk of injury (e.g., removing a safety guard). Until recently, tobacco manufacturers defeated every lawsuit based in strict liability doctrine, often by successfully raising the defense of an assumption of risk by the smoker. Ironically, that defense has been strengthened by the Surgeon General s warning that federal law requires on each cigarette package and in all tobacco advertising the very federal law that the tobacco industry itself fought furiously to defeat in Congress. Recent evidence suggests, however, that the tobacco industry concealed from consumers and from Congress the industry s own research results that demonstrated that nicotine is addictive a characteristic that the tobacco industry had long denied. (See the Case in Point, The Tobacco Papers, in Chapter 3.) If that allegation proves to be true, the assumption of risk defense might be overcome by the industry s failure to disclose known addictive properties of tobacco. One unintended result of strict products liability has been the near extinction of light aircraft production in the United States. Piper and Cessna, for example, both suspended production of small aircraft for the American general aviation market due to the enormous costs of insurance and litigation defense. It is ironic that both manufacturers had a large backlog of unfilled orders when they stopped production. Critics of strict products liability argue that countless other, less obvious economic harms have resulted from the burdens imposed on business by that doctrine. Defenders of the doctrine argue that countless consumer products have been made far safer by the economic incentive to avoid lawsuits for strict liability thereby preventing countless injuries and deaths. The decision by a person to engage in clearly dangerous activities creates an assumption of risk by that participant. He cannot recover from others for the foreseeable injuries that result from his participation. By voluntarily participating, he accepts ( assumes ) the usual risks of injury inherent in that activity. SCENARIO Louis Fridel is a paralegal specializing in aviation accident litigation. His Atlanta law firm represents the manufacturers of the aircraft or aircraft parts that are alleged to be the cause of personal injuries or deaths. In most such lawsuits, the

12 12 CHAPTER 12 plaintiff alleges that the aircraft or part in question was defective and that the defect resulted in the plaintiff s injuries. The defect can be in the design of the product or it can be a result of defective manufacture or assembly. Louis began his litigation practice in a personal injury firm where he worked on a number of automobile accident cases, including some involving tread separation of Firestone tires mounted on Ford Explorer SUVs. We represented the injured consumers, or their surviving family members, Louis explains. I spent a lot of time in the late 1990s trying to track down other cases in which tread separation led to rollovers of the SUV. We began to develop data that suggested the original equipment tires might be an improper match for the SUVs on which they were mounted. That s when I developed a real interest in product liability law. Louis joined his present firm when he moved to Georgia. I had assumed that I would join another plaintiff s PI firm here, but my current employer offered a better salary and benefits package. Actually, I haven t found it that difficult to transition from working for plaintiffs to working for the defendant manufacturer. I ve seen the same kind of litigation from both sides of the fence, now. It s interesting I used to think that manufacturers were rather callous and irresponsible. Now I see that some consumers are unreasonable as well. Perhaps it is the natural result of our adversarial litigation process. It causes both plaintiff and defendant to raise allegations and defenses that are, at times, far-fetched. COMMON INTENTIONAL TORTS Intentional and negligent torts are distinguished from each other by the tortfeasor s state of mind. In a negligent tort, it does not matter what the offender intended to do the result of his negligent conduct is what counts. An intentional tort, on the other hand, requires that the tortfeasor actually intended to harm the plaintiff or his property. Many lawsuits over intentional torts involve an assault. Other intentional torts that frequently find their way into a courtroom include libel, slander, fraud, and infliction of emotional distress. Actions for intentional breach of contract are also common, but a breach alone is not a tort because the duty violated is created by the contract and not by common law or statute. Defamation of character occurs when one makes false statements that damage the reputation of another person. Libel is the publication of defamatory statements in some enduring form (e.g., print, film, recording, drawing, etc.). Slander is the oral publication of defamatory statements without putting them into some enduring form. DEFAMATION OF CHARACTER Defamation was not even mentioned in the preceding paragraph, but the two general forms of defamation were mentioned: libel and slander. The essence of defamation of character is an intentional false statement that tends to injure a person s reputation. Libel is defamation by recorded sound or picture, painting, printed word, drawing, sculpture, or effigy. Slander is oral defamation. The key difference is that slander is an instantaneous occurrence, gone in the moment after it has been uttered, while libelous publications can remain for future generations to read, view, or hear. The elements of defamation are: the defendant made a false statement about the plaintiff the statement was published communicated to others the plaintiff s identity was recognizable from the statement the statement, if believed, would damage the plaintiff s reputation It is not necessary to show that anyone actually believed the defamatory statement because that would require the plaintiff to suffer a second humiliation

13 The Law of Torts 13 when those who believed the false statement were called to testify. Additionally, belief is not required because it would be unjust to permit disgraceful lies to be circulated about a good person on the basis that because of the plaintiff s good character no one would believe such lies. The result would protect from defamation only those persons of questionable character about whom false statements are readily believed. Finally, witnesses who actually believed the false statements might be reluctant to acknowledge their gullibility. The jury (or the judge, in a trial by court) may evaluate the damaging impact that the statement would have if believed. If a statement has alternative interpretations, it is only necessary that one reasonable interpretation of that statement would defame the plaintiff. Defenses to Defamation Truth is an absolute defense against a suit for defamation. It is not necessary that a statement be true in every detail, so long as the statement is both generally true and is true in its assertions about all material facts. Thus, the following statement probably would not be defamatory if the italicized portions were true: The alleged child molester had been a resident of the North Park area and a scout leader for some years. He was previously convicted of child molestation before coming to this city. However, it could be argued that a false statement that the accused had been a scout leader, when made in connection with a true report about the current charge against him, implies a breach of that special trust placed in adult leaders of young people, thereby unjustly exacerbating the damage to his reputation resulting from the criminal charges against him. Although truth would be an absolute defense for the accused defamer, the defamer s own good faith belief that the statement is true might not be a sufficient defense if the statement is actually false. The reason is that the person defamed has been harmed (or at least exposed to potential harm) in spite of the defamer s good intentions. Thus, defamation can be a negligent tort in some circumstances. The innocence of the defamer s intention might become an issue in determining the appropriate damages to be awarded to the plaintiff. Defamation and the News Media The news media face special problems with regard to defamation. The media s acknowledged responsibility is to inform the public of matters of general interest. However, the news media can be liable if their false reports defame an individual, even when the media are quoting or paraphrasing the statements of others. In the latter situation, the media have a duty to avoid spreading libelous statements. In the days of weekly newspapers and no electronic media, life was much slower and editors had ample time to check their facts before publishing. Today, the media are under enormous pressure to beat the competition. In the age of Cable News Network and satellite transmissions, the electronic media have a new deadline every 10 minutes. One protection against liability is the common practice of reporting about the reputed Mafia chief and the alleged bank robber. A landmark Supreme Court case, New York Times v. Sullivan, 376 U.S. 254 (1964), concerned false statements made in a full-page newspaper advertisement. It was in Sullivan that the Supreme Court first applied the First Amendment to the law of libel. The most obvious problems arise in the arena of political debate and in what the U.S. Supreme Court has termed subjects of general public interest. The potential chilling effect on the news media and political partisans, if held strictly liable for false statements, could be very damaging to

14 14 CHAPTER 12 In defamation law, actual malice exists when the defendant publishes the defamatory statement with knowledge that it is false or in reckless disregard of its possible falsity. Practice Tip The trial court in Gertz entered a judgment NOV in the defendant publisher s favor. This is remarkable in this situation because the jury had followed the court s instructions on the law and awarded damages based upon the court s earlier finding that the defendant had committed libel per se under Illinois law. Then the court changed its mind, deciding that the defendant enjoyed the publisher s immunity established in New York Times Co. v. Sullivan, supra. In effect, the U.S. District Court belatedly decided that the case should never have gone to the jury, and the defendant s pretrial motion for summary judgment should have been granted. Libel per se is a false statement so egregious that it is defamatory on its face, giving rise to a legal presumption that the plaintiff has been injured by that statement and, therefore, actionable without proof of actual injury. a democratic society. Because a free-ranging debate about political, philosophical, and artistic matters is so important to the public interest and so closely related to the very purpose of the First Amendment the Sullivan Court held that public officials cannot recover damages for libel unless they can prove that their defamers acted with actual malice. In this context, actual malice means that the defendant either knew that the statement was false, or that he made the statement in reckless disregard for the truth. The latter standard creates what could be called a tort of reckless defamation, which combines intent to make a damaging statement with negligence (i.e., the failure to check the facts before making that false statement). The law of defamation is state law, but it inevitably creates a conflict with the rights of free speech and press under the First Amendment, a matter of federal law. Because of the constitutional implications, a number of defamation lawsuits have reached the U.S. Supreme Court in recent decades, and the Court has laid down a variety of limitations on the ability of plaintiffs to pursue defamation suits. Public officials and other public figures are now deemed to have assumed the risk of harsh criticism by virtue of having voluntarily entered into political careers, movie stardom, professional sports, or other venues of public notoriety. The Supreme Court has said that public figures cannot claim the right to enjoy the benefits of their chosen pursuits without also accepting the hardships of that choice. In effect, the Supreme Court has adopted President Harry Truman s famous adage: If you can t take the heat, get out of the kitchen. In Gertz v. Robert Welch, Inc., 418 U.S. 323 (1974), the Supreme Court refused to apply the Sullivan standard of actual malice to cases in which private citizens are defamed. The Gertz case is an interesting one in several respects. The earlier Sullivan decision had created, in effect, a limited publisher s immunity from liability for libel so long as the defendant was publishing material about a public official and the false statements were not published in actual malice. In later cases, that limited immunity was extended to publications about public figures who do not hold public office. The Gertz Court reviewed these principles and made clear that they are a compromise between the rights of persons injured by defamatory statements, on the one hand, and the First Amendment rights of publishers, on the other. The Court stated that our protection against defamation must yield somewhat, so that the communication media will not engage in excessive self-censorship out of their reluctance to risk liability for defamation. The Court explicitly acknowledged in Gertz that this compromise will leave some wrongfully defamed persons with no available remedy at law. In Gertz, the Supreme Court resolved the issue by refusing to apply the actual malice standard of Sullivan to defamation of private individuals. But then, in dicta, the Court went beyond that central issue to state its views about appropriate damages in defamation cases. The Court stated that damage awards must be limited to actual damages and may not include punitive damages against the defaming tortfeasor. Apparently, any damages in excess of these limitations would be an unconstitutional infringement upon First Amendment rights. As dicta, these statements have no value as precedent and are not binding upon the lower courts. They might, however, signal how the Supreme Court would rule if those questions are presented in a later case. The Gertz case was decided by a 5 4 vote, with several dissenting opinions from both conservative and liberal justices. In the Court s opinion (excerpt follows), it refers to its prior decision in New York Times Co. v. Sullivan, supra, as New York Times, rather than as Sullivan. Perhaps this reflects the Court s self-proclaimed, overriding concern for the First Amendment rights of the newspaper.

15 The Law of Torts 15 A CASE IN POINT Gertz v. Robert Welch, Inc. 418 U.S. 323 (1974) Mr. Justice POWELL delivered the opinion of the Court. This Court has struggled for nearly a decade to define the proper accommodation between the law of defamation and the freedoms of speech and press protected by the First Amendment. With this decision we return to that effort. We granted certiorari to reconsider the extent of a publisher s constitutional privilege against liability for defamation of a private citizen. [Citation omitted.] I In 1968 a Chicago policeman named Nuccio shot and killed a youth named Nelson. The state authorities prosecuted Nuccio for the homicide and ultimately obtained a conviction for murder in the second degree. The Nelson family retained petitioner Elmer Gertz, a reputable attorney, to represent them in civil litigation against Nuccio. Respondent publishes American Opinion, a monthly outlet for the views of the John Birch Society. Early in the 1960 s the magazine began to warn of a nationwide conspiracy to discredit local law enforcement agencies and create in their stead a national police force capable of supporting a Communist dictatorship. As part of the continuing effort to alert the public to this assumed danger, the managing editor of American Opinion commissioned an article on the murder trial of Officer Nuccio. For this purpose he engaged a regular contributor to the magazine. In March 1969 respondent published the resulting article under the title FRAME-UP: Richard Nuccio And The War On Police. The article purports to demonstrate that the testimony against Nuccio at his criminal trial was false and that his prosecution was part of the Communist campaign against the police. In his capacity as counsel for the Nelson family in the civil litigation, petitioner attended the coroner s inquest into the boy s death and initiated actions for damages, but he neither discussed Officer Nuccio with the press nor played any part in the criminal proceeding. Notwithstanding petitioner s remote connection with the prosecution of Nuccio, respondent s magazine portrayed him as an architect of the frame-up. According to the article, the police file on petitioner took a big, Irish cop to lift. The article stated that petitioner had been an official of the Marxist League for Industrial Democracy, originally known as the Intercollegiate Socialist Society, which has advocated the violent seizure of our government. It labeled Gertz a Leninist and a Communist-fronter. It also stated that Gertz had been an officer of the National Lawyers Guild, described as a Communist organization that probably did more than any other outfit to plan the Communist attack on the Chicago police during the 1968 Democratic Convention. These statements contained serious inaccuracies. The implication that petitioner had a criminal record was false. Petitioner had been a member and officer of the National Lawyers Guild some 15 years earlier, but there was no evidence that he or that organization had taken any part in planning the 1968 demonstrations in Chicago. There was also no basis for the charge that petitioner was a Leninist or a Communist-fronter. And he had never been a member of the Marxist League for Industrial Democracy or the Intercollegiate Socialist Society. The managing editor of American Opinion made no effort to verify or substantiate the charges against petitioner. Instead, he appended an editorial introduction stating that the author had conducted extensive research into the

16 16 CHAPTER 12 Richard Nuccio Case. And he included in the article a photograph of petitioner and wrote the caption that appeared under it: Elmer Gertz of Red Guild harasses Nuccio. Respondent placed the issue of American Opinion containing the article on sale at newsstands throughout the country and distributed reprints of the article on the streets of Chicago. Petitioner filed a diversity action for libel in the United States District Court for the Northern District of Illinois. He claimed that the falsehoods published by respondent injured his reputation as a lawyer and a citizen.... After answering the complaint, respondent filed a pretrial motion for summary judgment, claiming a constitutional privilege against liability for defamation. [Footnote omitted.] It asserted that petitioner was a public official or a public figure and that the article concerned an issue of public interest and concern. For these reasons, respondent argued, it was entitled to invoke the privilege enunciated in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, ll L.Ed.2d 686 (1964). Under this rule respondent would escape liability unless petitioner could prove publication of defamatory falsehood with actual malice that is, with knowledge that it was false or with reckless disregard of whether it was false or not. [Citation omitted.]... The District Court denied respondent s motion for summary judgment in a memorandum opinion of September 16, After all the evidence had been presented but before submission of the case to the jury, the court ruled in effect that petitioner was neither a public official nor a public figure. It added that, if he were, the resulting application of the New York Times standard would require a directed verdict for respondent. Because some statements in the article constituted libel per se under Illinois law, the court submitted the case to the jury under instructions that withdrew from its consideration all issues save the measure of damages. The jury awarded $50,000 to petitioner. Following the jury verdict and on further reflection, the District Court concluded that the New York Times standard should govern this case even though petitioner was not a public official or public figure. It accepted respondent s contention that that privilege protected discussion of any public issue with regard to the status of a person defamed therein. Accordingly, the court entered judgment for respondent notwithstanding the jury s verdict. [Footnote omitted.]... Petitioner appealed to contest the applicability of the New York Times standard to this case.... [Footnotes omitted.]... After reviewing the record, the Court of Appeals endorsed the District Court s conclusion that petitioner had failed to show by clear and convincing evidence that respondent had acted with actual malice as defined by New York Times.... The Court of Appeals therefore affirmed, 471 F.2d 801 (1972). For the reasons stated below, we reverse. II The principal issue in this case is whether a newspaper or broadcaster that publishes defamatory falsehoods about an individual who is neither a public official nor a public figure may claim a constitutional privilege against liability for the injury inflicted by those statements.... * * * * III... Under the First Amendment there is no such thing as a false idea. However pernicious an opinion may seem, we depend for its correction not on the conscience of judges and juries but on the competition of other ideas. [Footnote omitted.] But there is no constitutional value in false statements of fact. Neither the intentional lie nor the careless error materially advances society s interest in uninhibited, robust, and wide-open debate on public issues. New York Times Co. v. Sullivan, 376 U.S., at 270, 84 S.Ct., at

17 The Law of Torts 17 Although the erroneous statement of fact is not worthy of constitutional protection, it is nevertheless inevitable in free debate. As James Madison pointed out in the Report on the Virginia Resolutions of 1798: Some degree of abuse is inseparable from the proper use of every thing; and in no instance is this more true than in that of the press. [Citation omitted.] And punishment of error runs the risk of inducing a cautious and restrictive exercise of the constitutionally guaranteed freedoms of speech and press.... Allowing the media to avoid liability only by proving the truth of all injurious statements does not accord adequate protection to First Amendment liberties Yet absolute protection for the communications media requires a total sacrifice of the competing value served by the law of defamation. The legitimate state interest underlying the law of libel is the compensation of individuals for the harm inflicted upon them by defamatory falsehood. We would not lightly require the State to abandon this purpose.... Some tension necessarily exists between the need for a vigorous and uninhibited press and the legitimate interest in redressing wrongful injury... In our continuing effort to define the proper accommodation between these competing concerns, we have been especially anxious to assure to the freedoms of speech and press that breathing space essential to their fruitful exercise. [Citation omitted.] To that end this Court has extended a measure of strategic protection to defamatory falsehood. The New York Times standard defines the level of constitutional protection appropriate to the context of defamation of a public person. Those who, by reason of the notoriety of their achievements or the vigor and success with which they seek the public s attention, are properly classed as public figures and those who hold government office may recover for injury to reputation only on clear and convincing proof that the defamatory falsehood was made with knowledge of its falsity or with reckless disregard for the truth. This standard administers an extremely powerful antidote to the inducement to media self-censorship....and it exacts a correspondingly high price from the victims of defamatory falsehood. Plainly many deserving plaintiffs, including some intentionally subjected to injury, will be unable to surmount the barrier of the New York Times test....forthereasons stated below, we conclude that the state interest in compensating injury to the reputation of private individuals requires that a different rule should obtain with respect to them. * * * *... The first remedy of any victim of defamation is self-help using available opportunities to contradict the lie or correct the error and thereby to minimize its adverse impact on reputation. Public officials and public figures usually enjoy significantly greater access to the channels of effective communication and hence have a more realistic opportunity to counteract false statements than private individuals normally enjoy. [Footnote omitted.] Private individuals are therefore more vulnerable to injury, and the state interest in protecting them is correspondingly greater.... An individual who decides to seek governmental office must accept certain necessary consequences of that involvement in public affairs. He runs the risk of closer public scrutiny than might otherwise be the case. And society s interest in the officers of government is not strictly limited to the formal discharge of official duties.... Those classed as public figures stand in a similar position.... For the most part those who attain this status have assumed roles of especial prominence in the affairs of society.... Even if the foregoing generalities do not obtain in every instance, the communications media are entitled to act on the assumption that public officials and public figures have voluntarily exposed themselves to increased risk of injury

18 18 CHAPTER 12 from defamatory falsehood concerning them. No such assumption is justified with respect to a private individual.... He has relinquished no part of his interest in the protection of his own good name, and consequently he has a more compelling call on the courts for redress of injury inflicted by defamatory falsehood. Thus, private individuals are not only more vulnerable to injury than public officials and public figures; they are also more deserving of recovery. For these reasons we conclude that the States should retain substantial latitude in their efforts to enforce a legal remedy for defamatory falsehood injurious to the reputation of a private individual.... We hold that, so long as they do not impose liability without fault, the States may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual. [Footnote omitted.]... IV... For the reasons stated below, we hold that the States may not permit recovery of presumed or punitive damages, at least when liability is not based on a showing of the falsity or reckless disregard for the truth. The common law of defamation is an oddity of tort law, for it allows recovery of purportedly compensatory damages without evidence of actual loss. Under the traditional rules pertaining to actions for libel, the existence of the injury is presumed from the fact of publication. Juries may award substantial sums as compensation for supposed damage to reputation without any proof that such harm actually occurred....additionally, the doctrine of presumed damages invites juries to punish unpopular opinion rather than to compensate individuals for injury sustained by publication of a false fact It is therefore appropriate to require that state remedies for defamatory falsehood reach no farther than is necessary to protect the legitimate interest involved.... We need not define actual injury, as trial courts have wide experience in framing appropriate jury instructions in tort actions. Suffice it to say that actual injury is not limited to out-of-pocket loss. Indeed, the more customary types of actual harm inflicted by defamatory falsehood include impairment of reputation and standing in the community, personal humiliation, and mental anguish and suffering.... We also find no justification for allowing awards of punitive damages against publishers and broadcasters held liable under state-defined standards of liability for defamation. In most jurisdictions jury discretion over the amounts awarded is limited only by the general rule that they not be excessive. Consequently, juries assess punitive damages in wholly unpredictable amounts bearing no necessary relation to the actual harm caused. And they remain free to use their discretion selectively to punish expressions of unpopular views.... In short, the private defamation plaintiff who establishes liability under a less demanding standard than that stated by New York Times may recover only such damages as are sufficient to compensate him for actual injury. V * * * * We therefore conclude that the New York Times standard is inapplicable to this case and that the trial court erred in entering judgment for respondent. Because the jury was allowed to impose liability without fault and was permitted to presume damages without proof of injury, a new trial is necessary. We reverse and remand for further proceedings in accord with this opinion. It is ordered. Reversed and remanded.

19 The Law of Torts 19 As mentioned in Gertz, the Supreme Court has determined that statements of pure opinion cannot be defamatory because they express no statement of fact other than about what the accused defamer thinks about the plaintiff. Under this rule, literary critics and political columnists should have less worry about defamation suits. The potential problem, of course, is that statements of purported fact and statements of opinion are sometimes difficult to distinguish. Balancing Defamation Against Free Expression As in many areas of the law, defamation is a problem that requires a balancing of competing interests, such as: the individual s right to privacy the individual s right to be free of defamation the public s right to information about matters of public interest the individual s right to free expression the media s right to freedom of the press And all of these rights relate to the doctrine of public policy, which does not allow one right to totally extinguish another and favors free and open discourse in a democratic society. For constitutional and public policy reasons, individuals generally may not be sued for defamatory statements they make in official government proceedings. The U.S. Constitution, Article I, Section 6, states: [F]or any Speech or Debate in either House, [Senators and Representatives] shall not be questioned in any other Place. Most state constitutions grant similar immunity to members of the state legislature (and sometimes to other public officials) for statements made in their official capacities. Statutory or common law also exempts judges, attorneys, and witnesses from defamation suits for statements made in court proceedings or before legislative bodies, although they are still subject to criminal penalties for perjury if a false statement is knowingly made under oath. This immunity also does not shield attorneys, parties, and witnesses from contempt of court for statements made in court proceedings. The news media and the public are also immune from liability when reporting accurately what has been stated by participants in official government proceedings. Ethics Watch Although an attorney, party, or witness is absolutely immune for defamatory statements made in court, or in documents submitted to a court, that immunity does not apply to statements made outside of the court proceedings. Consequently, a paralegal could be liable for repeating outside the law firm information that has been shown to be false and defamatory. Although a paralegal as a private citizen is free to report what has already been stated in court, discretion should be the rule. FRAUDULENT MISREPRESENTATION Fraud is the intentional use of deceit to induce someone to give some benefit to the tortfeasor. In less precise terms, fraud is cheating. In litigation, fraud usually arises in the context of inducing someone to enter into a contract inducing a person to buy a used car by turning the odometer back, for example, or furnishing false information to a bank in order to obtain a loan. However, fraud sometimes occurs in the context of ongoing business relationships when a partner maintains two sets of books, for example, and keeps an unfair portion of the partnership s profits for himself. Fraud is the intentional use of deceit to induce someone to give some benefit to the tortfeasor.

20 20 CHAPTER 12 Fraud is also committed when: A fraudulent transfer is the conveyance of title in some property to another person so that a creditor is cheated or delayed in her efforts to gain possession of, or title to, that property. Conversion is the unauthorized possession and use of someone else s property so that the true owner is effectively deprived of his ownership rights permanently (or for an indefinite period). A Ponzi scheme is a fraudulent investment scam in which a small portion of the funds provided by subsequent investors is used to pay ostensible profits to the earlier investors in the scheme, while the tortfeasor actually diverts the great bulk of all invested funds to his own use. In most jurisdictions, all contracts include an implied covenant of good faith and fair dealing that is, an implied promise by all parties that each will implement the contract fairly and in good faith. The purpose of the covenant is to ensure that each party receives the benefit of the bargain he made. Actual fraud is the intentional deception of another person so that, induced by that deception, the victim will rely upon the misrepresentation and provide some benefit to the tortfeasor. a debtor transfers his assets to friends, relatives, or entities controlled by the debtor (e.g., trusts or corporations) in order to conceal those assets from his creditors (fraudulent transfers or conveyances ) a taxpayer conceals income from the Internal Revenue Service (tax fraud) a trustee uses property of the trust estate for her own benefit or transfers title to that property into her own name as an individual (conversion) an investment manager uses the funds contributed by subsequent investors to pay a promised return to earlier investors in the same enterprise (Ponzi scheme) a litigating party knowingly presents fabricated evidence to the court (fraud on court) election officials permit living persons to cast votes under the names of deceased persons (election fraud) Of course, the preceding is only a partial list among many forms of fraud. Ethics Watch A legal assistant commits fraud if he pads his time sheet or expense account, regardless of whether the client or the employing attorney is the one being cheated. A legal assistant could be an accessory to fraud if he knowingly facilitates fraud by his employer against the interest of a client or any other person. Fraud can also constitute a breach of contract either because it breaches the implied covenant of good faith and fair dealing, or because it is fraudulent conduct that violates explicit terms of the contract. In either case, the injured party would have two causes of action in a lawsuit: fraud and breach of contract. But a breach of contract is never fraud unless it is done deceitfully. Actual Fraud The required elements in a cause of action for actual fraud (also known as intentional misrepresentation ) are: a false representation by the defendant knowledge by the defendant that the representation is false intent to deceive the plaintiff reliance by the plaintiff upon the misrepresentation justifiable reliance by the plaintiff damages to the plaintiff resulting from that reliance The false representation must be of a past or present fact because no one can know the future. It must also be a misrepresentation of a material fact one that would influence the decision of the person being deceived. The false representation might be an affirmative one i.e., a false statement or it might be an intentional concealment of a material fact. If a seller places furniture over damaged areas in a hardwood floor so that the prospective buyer would not see that damage, that would be an example of intentional concealment. Turning a car s odometer back would be a false statement if the buyer s attention is drawn to the auto s low mileage.


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