Fink Remedies Fall 2013

I. Compensatory Damages
A. The basic principle
1.
All remedies can be thought of as either:
a) Substitutionary Remedies
(1)
Give the plaintiff something other than what they lost,
generally money damages
(2)
You do not get the widgets you ordered, you get money
instead
b) Specific Remedies
(1)
Give you what you wanted
(2)
You get the widgets you wanted in the first place
2.
All remedies can be thought of as either being
a) Equitable Remedies; or
(1)
Generally something other than damages
b) Legal Remedies
(1)
Generally money damages
3.
United States v. Hatahley
a) Issue:
(1)
How to calculate some damages; where the goods are
unique, there is pain & suffering to be accounted for, and a
large class of plaintiffs.
b) Reasoning:
(1)
The horses are specially trained and not available on the
market, so the lower court based the cost on what it would take
to breed and train a new batch of horses.
(a)
The higher court thinks that there is enough
testimony in the case to base a value.
(2)
The lower court thought the loss of use could be broadly
set, covering all plaintiffs.
(a)
Higher court thinks the loss of use amount must be
based on each individual plaintiffs loss.
c) Rule(s):
(1)
One standard for damages: restore the plaintiff to the
position that they would have been in but for the wrongful
conduct of the defendant.
(2)
You cannot assume equal hardship between several

plaintiffs

4.

The general problem from Hatahley

a) Trying to make the award individualized, but not speculative,
across multiple plaintiffs.
b) Possible solutions to Hatahley-like scenarios
(1)
Could group them into different categories and award each
category a different amount

(2)
Could develop some kind of formula and then develop an
average
B. Value as the measure of the rightful position
1.
In re September 11th Litigation
a) Issue:
(1)
The owners of the leasehold at the WTC want to sue the
airlines for not providing better security
(2)
They want the full value of the structures they lost as a
unique building plus all the rent they lost when the WTC was
destroyed
b) Holding:
(1)
The building
(a)
At one time the WTC was a unique property, but by
the time it was destroyed it was used as a fairly typical
(though prime) commercial property
(b)
WTCP can only recover the destroyed market value
as it would cost far more to build another one
(2)
The rent
(a)
The airlines are not responsible for contracts that
WTCP is stuck with, and therefore will not have to pay them
for lost rent.
(b)
WTCP cannot recover lost rent in addition to the
value of the building, since this would allow WTCP to
recover twice what is essentially the same thing.
2.
The law of economic waste
a) Fundamental principle: P is entitled to be made whole, but D is
entitled to have P made whole in the least expensive way. Options
include:
(1)
Fair market value
(2)
Cost of repair
(3)
Cost of replacement
b) The court will take whichever is less.
c) This has the problem of under-valuing property where the
plaintiff holds some sentimental attachment to the property.
Perhaps they value it at a much higher level than the market ever
would.
d) Fair Market Value
(1)
Measure market value at time of loss.
(2)
Assumption: Functioning markets, with a well-functioning
market, cost to replace should be the same as Fair Market
Value.
(3)
Strong preference for objective value
e) Net Present Value
(1)
Chesapeake & Ohio Rail v. Kelly held that the damage
award for future damages must be reduced to the net present
value.

f) Repair or replacement cost for Special Purpose property

(1)
Trinity Church v. John Hancock Mutual Life Ins. Co.
(a)
Issue
i)Whether the church can seek damages under a
takedown theory. The harm has not occurred yet in
such a way that they will do anything to repair the wall,
but it has been contributed to by the defendant.
(b)
Holding
i)Yes, the church qualifies as a special purpose property,
removing it from the general analysis of fair market
value and repair or replacement cost.
ii) Because the church has no fair market value, and
because there is no real way to replace it, even this
somewhat speculative damage, they proved with some
specificity what the damage will be in the future.
3.
Limits on the rightful position rule
a) Permanent disability
(1)
Per diem judgements
(a)
Take the suffering suffered per day, and put a dollar
amount on that.
(b)
Then multiply by the expected lifetime (actuary
tables)
(c)
Problem: Its not evidence, its argument. The jury
may treat it as evidence and be prejudiced by it.
(d)
Even if theyre trying to be diplomatic, it gives them
an anchor amount, an arbitrary starting point.
(2)
Courts think that the per diem analysis is dubious because
of the above concerns.
(a)
BUT, they hope that the adversarial process will
prevent any prejudice.
(3)
Dont forget that this will all be on top of compensatory
damages analysis as well.
b) Wrongful death
(1)
Putting survivors into their rightful position.
(a)
Were not putting the decedent in their rightful
position.
(b)
Will include things like
i)Funeral expenses
ii) Compensation for the financial support decedent
would have provided.
iii) Loss of society - loss of companionship, love, etc. AS
OPPOSED TO compensation for grief.

(c)
People like minors and retired people - providing less
support to others, are, under the law, worth less to
surviving loved ones.
(2)
Factors in determining outcomes (on similar facts)
(a)
Socio-economic
(b)
Jurisdiction
(c)
Quality of lawyering
C. Expectancy and reliance as the measures of the rightful position
1.
Neri v. Retail Matine Corp.
a) Issue:
(1)
Whether Retail Marine Corps subsequent sale of the boat
they had agreed to Neri negates the harm and precludes
damages
b) Holding:
(1)
No, because RMC was going to sell the boat to Neri, AND
another party. Because they stock the boat generally, they may
recover for the lost sale with Neri.
c) Rule(s):
(1)
Lost volume merchants can get two measures of profit
from D if they stock good in inventory.
2.
Chatlos systems v. National Cash Register Corp.
a) Issue:
(1)
Wether the buyer who receives inferior goods is entitled
to the amount it would cost to procure better quality goods that
conform to the goods as warranted.
b) Rule(s):
(1)
The proper calculations of damages under 2-714(2) is the
difference between the fair market value of the goods accepted
and the value they would have had if they had been as
warranted.
(2)
Evidence of K price may be relevant to the issue of fair
market value but is not controlling.
c) Holding:
(1)
Affirmed. The amount is thought to be dubious, but the
appellate court finds the trial courts calculations sound, and
differs to their discretion.
d) Dissent:
(1)
Takes issue with the notion that they are getting a lot more
than they bargained for, or a sudden windfall.
(a)
The purpose of 2-714 is to put the plaintiff in its
rightful position
(b)
You shouldnt get any more than was warranted
(c)
All that was warranted was really a $46,000 machine.
You cannot imagine a hypothetical computer, you have to
stick with the numbers you have.

3.

Smith v. Bolles
a) Issue:
(1)
Whether a party may recover all they were promised,
where the defendant made fraudulent claims about the
investment the plaintiff was making.
b) Rule(s):
(1)
Recovery is generally the difference between the contract
price and the reasonable market value, if the property had been
as represented to be, or if the property is worthless stock, then
its value is what it would have been worth if it had been as
represented by the defendant.
c) Holding:
(1)
The plaintiff is entitled to the money he paid out based on
those false representations plus interest, plus any incidental
costs that naturally and proximately follow from the fraud.
(2)
He is not entitled to the value he expected from the stock.
There was no contract, therefore the amount he expected was
mere speculation and he does not earn the expected fruits of
unrealized speculation.
D. Consequential damages
1.
Buck v. Morrow
a) Rule(s): General damages incident to the breach of a covenant
for quiet enjoyment in a lease:
(1)
In addition to the difference between the rent to be pad
and the actual value of the unexpired term, the tenant may
also recover as special damages such extra expense and
damge, if any, as are the natural and proximate result of the
breach.
b) Issue: whether the limitation on damages to the difference
between the value of the rent and the stipulated rent applies here.
c) Holding: No the usual rule does no apply here because the
plaintiff exercised due diligence in finding a new pasture. The
plaintiff is entitled to all damages that follow naturally from the
breach, including the difference between the mkt value and the K
value of the rent, the wages for additional employees to watch the
cattle, and the cost of pasturing the cattle elsewhere. The plaintiff
may also be entitled to recover the value of the lost cattle if he
can show that they were lost because of the brach and not lost
because they were mismanaged.
d) Comment:
(1)
The test for natural proximate cause of consequential
damages is whether the parties reasonably could have
contemplated at the time of K, or in tort language, was it
foreseeable?

(2)
The court will limit the damages to proximate, if the
defendant had to pay for all consequences, they could be liable
for all the problems in the persons lif.
2.
Meinrath v. Singer Co.
a) Issue: whether, where a defendant has advance notice that the
plaintiff will suffer especially should the payments be overdue or
withheld, the plaintiff will be entitled to consequential damages in
addition to the lost interest on the money owed.
b) Holding: No, the damages will be limited to the lost interest on
the overdue payments, no consequential damages will be allowed.
c) Rules: Any damages for delay in the payment of money owing
upon contract are provided for in the allowance of interest
(generally), which is in the nature of damages for withholding
money that is due.
E. Limits on damages
1.
The parties power to specify the remedy
a) Liquidated Damages
(1)
Reasons for LD clauses
(a)
Used to coerce performance of a contract
(b)
And to punish for late performance
(c)
Also removes uncertainty about how jurors are going
to value the benefits of a contract.
(2)
Explanation from the restatement of contracts
(a)
Damages for breach by either party may be
liquidated in the agreement but only at an amount that is
reasonable in the light of the anticipated or actual loss
caused by the breach and the difficulties of proof of loss. A
term fixing unreasonably large liquidated damages is
unenforceable on grounds of public policy as a penalty.
(3)
Must not be a penalty
(a)
Must be reasonably calculated; AND
(b)
It must be hard to figure out the actual damages
(4)
Arias/Root Engineering Ar. V. Cincinnati Milacron Marketing
Company
(a)
Issue:
i)Whether a liquidated damages provision can fail of its
essential purpose even where there is an option to
refund on top of a standard replace-or-repair option.
ii) Whether the exclusion of consequential damages
remains enforceable even where the replace or repair
provision failed.
(b)
Holding:
i)Yes. If the refund was not offered in a reasonable
amount of time.

ii) No. If the limit on remedy fails of its essential

purpose, the exclusion of consequential damages does
not bar A/R from recovery
(c)
Rule(s):
i)Where a seller is unable to fulfill its warranted
obligation to effectively repair or replace defects, the
buyer is deprived of the benefits of the limited remedy
and it therefore fails its essential purpose.
(5)
In Re Trans World
(a)
Issue: whether the provision is grossly
disproportionate and therefore a penalty, not enforceable
under new york law.
(b)
Holding:Yes. Because the calculation is (1) not
related to the anticipated actual loss. And (2) because the
actual damages would not have been that hard to calculate.
It is irrelevant that both parties expressly agreed to the
provision, since the provision violated public policy.
b) Underliquidated Damages
(1)
Provision must be a good approximation of actual
damages, and the acutal damages have to be hard to figure
out.
(2)
For it to be a good approximation, the amount has to have
some basis in fact, cannot be unrelated.
(3)
Northern Illinois Gas Co v. Energy Cooperative
(a)
Issue: Whether ECI can pass on the liquidated
damages and pursue actual damages instead.
(b)
Holding: No, LD clause is the only option.
(c)
Rule(s): Failure to demand a contractual right does
not create rights greater than those that were bargained
for. A liquidated damages clause is the agreement for the
parties as to the amount of damages which must be paid.
2.
Avoidable consequences Offsetting Benefits, and Collateral
Sources
a) Works like contributory/comparative fault.
b) EX: Plaintiff not at fault, but plaintiff seeks no medical care.
(1)
Plaintiff may not be able to recover for the additional
damage to their body.
c) Focusses on the period after the harmful conduct.
d) Typically only works to minimize consequential damages - not
general damages.
e) GENERAL DAMAGES
(1)
Nothing the plaintiff could have done to minimize their
damage;
(a)
Since the damage is based on harmful conduct,
plaintiff would have had to foresee the harm to have
mitigated their damages.

f)CONSEQUENTIAL DAMAGES
(1)
Plaintiff suffered the initial damage, and then naturally
flowing from that damage, there were other damages as well.
(2)
Plaintiff has a duty to mitigate, or lose those
consequentials
(3)
Its still limited to consequentials that were proximate and
foreseeable.
(a)
If a contract action, itll have to be foreseeable to
both parties @ execution.
(b)
If its a special damage that the defendant couldnt
have foreseen, the Baxendale rule will apply; he needs to
be given notice about the special damages
g) DAMAGE MITIGATION/CONSEQUENTIAL COMPENSATION
(1)
Defendant (post liability) has to compensate for whatever
was a reasonable cost of mitigating the damages.
3.
S.J. Groves & Sons Co. V. Warner Co.
a) Issue: Where plaintiff might have chosen an alternative method
to mitigate their damage, are they precluded from recovering
consequential damages for not taking the other option?
b) Holding(Trial): After plaintiff could have used the competition as a
supplier (thus mitigating their damages) they cannot recover for
losses because of their poor choice.
c) Holding(Appellate):
(1)
Rule(s):
(a)
If there are multiple options it only matters that the
plaintiff selects a reasonable choice. Defendant cannot
argue that it was not the best choice in their view.
(b)
When the defendant is equally positioned to reduce
the harm, we will not fault the plaintiff for failing to take
steps. (*general policy point*)
4.
GENERAL MITIGATION OF DAMAGES OUTLINE (employment law)
a) When fired/demoted;
(1)
You are not required to go into some substantially different
line of work.
(2)
You are not required to take a demotion.
(3)
You MUST take a job that is substantially equivalent.
(a)
During discovery - Questions to ask a former
employee
i)How many hours did they spend looking?
ii) How many resumes have they sent out?
iii) How long did they wait before looking?
iv) Are they getting unemployment benefits?
v) Are they registered with any job-search sites?
vi) Have they spoken to any recruiters?
b) PERSONAL INJURY

(1)
Should they get medical costs when she ends up a cripple?
(makes the surgery quasi-elective)
(a)
How risky was the surgery?
(b)
Religious beliefs?
(c)
What is the success rate of the surgery?
(d)
Do they have insurance that will cover the costs of
the surger?
(e)
How much research did the plaintiff do before
making their decision?
5.
THE OFFSETTING BENEFITS RULE
a) Fact pattern: plaintiff is harmed, but also benefits somewhat from
the wrongful conduct; plaintiff acquires some benefit they might
not otherwise have. (New job is a benefit that the plaintiff would
not have gotten if they hadnt been fired.
(1)
The value of the benefit offsets the recovery they can get.
(2)
If getting a new job allows you to recoup your lost wages,
that goes a long way towards putting you back in your rightful
position.
(3)
RULE: offset only like against like. Wages not weighed
against pain&suffering etc.
(4)
Also does NOT apply to volume sellers, since we will
assume that they would have made the sale anyway, and that
their rightful position is selling 2 and not just 1
b) Oden v. Chemung County Industrial Development Agency
(1)
Issue: whether disability benefits offset lost wages
(2)
Holding: Benefits not paid in lieu of lost wages, but as
pension. Economic damages should be broken down into
categories, and each damage related back to what it will offset.
6.
COLLATERAL SOURCE RULE
a) Plaintiff can recover damages that will include amounts he has
already been compensated for if that comes from a source
collateral to the defendant.
(1)
Generally insurance.
(2)
If applied, you get to keep insurance plus what the
defendant owes. *Could mean double recovery*
(3)
Rationale: shouldnt reward defendant just because the
plaintiff was prepared. Plaintiff may have to reimburse the
insurance company when they get the damages. (common
contract provision: subrogation clause)
(4)
Many Jx have done away with the collateral source rule,
along with other tort reforms.
7.
The Scope of Liability
a) GENERALLY:
(1)
We may know that the defendant did something wrong

(2)
We may also know that the plaintiff was harmed as a
result.
(3)
But this defendant, or this harm is precluded from liability.
(4)
Pruitt - the liability has to be limited somewhere or it will
snowball
(a)
Those consequences are foreseeable (generally) but
without specific foreseeability its precluded.
(5)
Intuitive certainty
(a)
Amount of harm to reasonable certainty
b) Pruitt v. Allied Chemical Corp.
(1)
Issue:
(a)
when do Ps harms become so attenuated that they
cannot recover?
(2)
Holding:
(a)
Liability will end at the waters edge, only fishermen
can recover, and no one else.
(3)
Rule(s):
(a)
B < PL Judge Learned Hands statement on
negligence: principal purpose of tort law is to maximize
social utility. At some point, consequences are too remote
for D to foresee and take precautions about, and so we
shouldnt hold D liable.
(b)
Running against that here, the court notes that
polluting the lake should not be a costless activity.
(c)
Tort economic Harm Rule
i)Serves a contract purpose: no bypassing contract terms
- If D is negligent, tort claims are limited to physical
impact of his person or property other than damages
recoverable under the K terms.
ii) Rule:
(1)
No recovery for purely economic harm; or, no
recovery without physical impact (physical injury
rule). Cuts off even foreseeable losses.
(2)
Doesnt apply to legal malpractice, antitrust, or
interference with contract claims - all intentional
torts.
c) Evra Corp v. Swiss bank Corp.
(1)
Issue: Where defendants failure to transfer funds in a
timely fashion causes the plaintiff to lose a $2 Mil K, should the
defendant be liable for the consequential damages?
(2)
Holding: Applies Hadley v. Baxendale; No consequential
damages unless notice given. Here, Palsgraf doctrine cuts off
liability because there was no way for defendant to foresee the
damage on their own.

(3)
Policy: Costs should be borne by the party able to avert
consequences at the least cost, and who failed to do so.
d) Bigelow v. Rko Radio Pictures
(1)
Issue: Whether the theater can really prove what they
would have made on the movie over time.
(2)
Holding: The estimation is reasonably accurate, and the
only reason the damages are so murky is because of the
defendants wrongful conduct. You need substantial certainty,
but defendant cannot be allowed to stymy the plaintiffs case
like this.
(3)
Dissent: Franfurter definitely wants a more sophisticated
argument from the plaintiff in terms of certain damages.
(a)
There are 2 aspects
i)Intuitive damages - prove the amount of loss to a
reasonable degree.
ii) Connection with the defendants wrongful conduct can you connect the receipts or w/e you have to the
wrong done by the defendant.
8.
The certainty requirement
a) In Bigelow, we know theyre liable and that the plaintiff was hurt.
b) But the court said it wasnt enough information, because you
have to prove your damages.
(1)
P must prove to a reasonable degree of certainty that Ds
conduct was the cause of damages
(a)
Expert testimony
(2)
How much of the harm was attributable to the defendants
conduct?
(a)
Even if you can prove cause - you must also PROVE
the amount of the loss
i)Expert testimony.
F.Damages where Value Cannot be Measured in Dollars
1.
Personal injuries and Death
a) Measuring Pain and Suffering
(1)
Per diem
(a)
Calculate the suffering suffered each day, then
multiply by life expectancy. (actuary table)
(b)
Hinges on the argument rather than on laws and
facts, so the court is dubious about the practice
(c)
However, courts generally trust the adversarial
system to ensure just outcomes.
b) Debus v. Grand Union Stores
(1)
Issue
(2)
Hoding
c) Measuring Wrongful Death

(1)

Putting the survivors into their rightful position

(a)
Funeral expenses
(b)
Compensation for the financial support decedent
would have provided - lost compensation
(c)
Most Jx - Monetary value of the services the
decedent would have provided.
(d)
Loss of society - loss of companionship, love, etc. AS
OPPOSED TO compensation for grief.
(2)
Terrorist Attacks of 9/11 - Victim Compensation Fund
d) The controversy over Tort Reform
(1)
Every Jx has had some kind of tort reform
(2)
Most Jx have put a cap on non-economic damages
(3)
Many Jx have done away with the collateral source rule.
(4)
These huge awards are driving business away
(a)
The contngenct fee you collect may be effected
(b)
What does this mean about the rightful position rule?
i)Redefines the rightful position rule,
(1)
With non-economic damages we dont care
what your rightful position is.
2.
Dignitary and Constitutional Harms.
a) Levka v. City of Chicago
b) Carey v. Piphus
G. Taxes, Time, and the Value of money
1.
Jones & Laughlin Steel Corp. V. Pfierfer
a) Wage inflation
(1)
What rate of increase? (individual/ group)
(2)
How may more years would the P have worked?
(3)
Should fringe benefits be taken into account?
b) Appropriate discount Rate (i.e., reduce to present value)
c) Price inflation
II.
Punitive Remedies
A. Punitive Damages
1.
Common Law Statutes
a) Civil Code 32940 In an action for the breach of an obligation
not arising from contract, where the defendant has been guilty of
oppression, fraud, or malice, express or implied, the plaintiff, in
addition to the actual damages, may recover damages for the
sake of example and by way of punishing the defendant.
b) Grimshaw v. Ford motor Co.
(1)
Issue: Whether malice requires an evil motive, an
intention to harm the plaintiff; OR whether malice might also
include a conscious disregard of the probability that the actors
conduct will result in injury to others. (Dawes Rule)
(2)
Holding: Malice may be shown by reckless disregard for the
probable harm caused to others.

(3)

Rule(s):
(a)
Restatement Rule:
i)Imputation of malicious conuct to a corporate
defendant requires:
(1)
The principal authorized the doing and the
manner of the act, OR
(2)
The agent was unfit and the principal was
reckless in employing him, OR
(3)
The agent was employed in a managerial
capacity and was acting in the scope of employment,
OR
(4)
The principal or a managerial agent of the
principal ratified or approved the act.
(b)
Dawes Rule
i)Malicious may include not only conduct that is targeted
at harming another person, but also a conscious
disregard of the probability that the actors conduct will
result in injury to others.
(c)
Egan v. Mutual rule
i)Corporation may be found liable for its
malicious/reckless decisions where:
(1)
The decision was made by managerial
employees with the authority to make decisions that
will ultimately determine corporate policy.
(d)
Toole Rule
i)Malice in fact, sufficient to support award of punitive
damages, may be established by showing that
defendants wrongful conduct was willful, intentional,
and done in reckless disregard of its possible results
(1)
Grimshaw court believes this should read as
probable not possible results.
(2)
But in the Grimshaw case, they didnt feel the
wordage prejudiced the defendant.
(e)
FACTORS IN CONSIDERING A PUNITIVE DAMAGE
AWARD ON APPEAL
i)Ratio to compensatory
ii) Aggravating circumstances
(1)
The degree of reprehensibility
iii) Wealth of the defendant
iv) Profit making ability of the defendant
v) Magnitude of the punitive award
(1)
Including the amount it exceeded the
compensatory

(f)
CONSTITUTIONAL GUIDEPOSTS FOR PUNITIVE
DAMAGE AWARDS
i)Reprehensibleness
(1)
Factors:
(a) The harm caused was physical as opposed to
economic
(b) The tortious conduct evinced an indifference to
or a reckless disregard for the health or safety of
others;
(c) The target of the conduct had financial
vulnerability;
(d) The conduct involved repeated actions or was
an isolated incident;
(e) And the harm was the result of intentional
malice, trickery, or deceit, and not mere
accident.
ii) Ratio
(1)
Generally stated as a single digit ratio between
the punitive award and the compensatory award.
iii) Availability of civil and criminal penalties.
(1)
If there are criminal penalties that might have
covered this conduct, what were the punishments
they imposed?
(2)
If its similar to the amount of punitive
damages, then it puts the defendant on notice of the
kind of liability this conduct might incur.
c) Philip Morris
(1)
Issue: when is it permissible to break with the normal
rules?
(2)
Holding: Cannot use the punitive damages to punish the
defendant for conduct harming strangers to the litigation; can
use conduct towards third parties in assessing the
reprehensibleness of the defendants conduct. Cannot use
ratios over single digit, even when there are a lot of people that
have been harmed.
(3)
Comment: Court lays down a bewildering rule here. They
say that harm done to other parties not participating in the suit
cannot be used to calculate the punitive damage award. If it
were so, it would violate due process because there was no
notice to the defendant that this was the liability defendant
faced. However, they also think that harm done to nonparticipating parties can be used in determining the
reprehensibleness of the conduct, which is one of the relevant
factors in considering a punitive damage award. So theres an
inconsistency.
d) Exxon Shipping Co. V. Baker

(1)
Issue: whether a ratio of 1:10 compensatory to punitive is
allowable
(2)
Holding: Nope, and there is some serious concern about
the enormous punitive damage awards, ct. Lowers the punitive
to a 1:1 ratio
2.
The Constitution
a) State Farm Mutual Automobile Ins. Co. V. Campbell
(1)
Issue
(2)
Holding
III.
Preventing Harm: the measure of injunctive relief
A. Getting an Injunction: the analysis
1.
Plaintiff has to show that money damages wont be an adequate
remedy
2.
Plaintiff has to show that there is a ripe threat of harm
a) That the defendant has some propensity to take an action that
will, without an injunction cause a
3.
Irreparable injury
a) A legal remedy, such as damages, is not as good a remedy for
plaintiff as an injunction.
b) Something like damage to property that cannot be replaced or
repaired with money.
B. The scope of injunctions
1.
Injunctions that prevent Wrongful Acts
a) What is an injunction?
(1)
Order from the court to do something or refrain from doing
something. It is enforceable with a contempt of court if you
break the order.
(2)
Why not issue an injunction ordering everyone to abide the
law?
(a)
Too difficult to enforce
(b)
Waters down an injunction to be basically the same
as a statute
(c)
The power of the injunction is that it is individualized
b) What to consider before ordering an injunction
(1)
Alternative remedies that might be available
(2)
Timing
(3)
Are they likely to do this again? Have they done it before?
(a)
Its important to understand how big a deal the
injunction is supposed to be.
(b)
Its an extraordinary measure to restrict someones
freedom in advance.
(c)
Before going that far, and harnessing this huge
power of the court, they want to know that its necessary.
(4)
Is there a ripe threat of harm?

(a)
Court wont issue an injunction where there is only
speculation that the harm might occur.
(5)
Scope of the harm?
(a)
Injunction must be tailored to fit the harm that is
anticipated.
(b)
Marshall v. Goodyear Tire & Rubber
i) Issue; where the harm is isolated, is it an abuse of
discretion for a court to issue an injunction nation-wide?
ii) Holding: Yes, this is to broad, and needs to e
narrowed. This could crate problems for Goodyear (1)
problems with hiring (2) strategic tying your hands
problems (3) this court order could make them uber
paranoid about hiring young people, firing old people.
(4) its hard to coordinate that across so many
employees. Essentially, this is too burdensome on the
defendant.
c) United States v. W.T. Grant Co.
(1)
Issue: Can plaintiff get an injunction where the harm has
ceased?
(2)
Holding: Trial court held the point moot, but the appellate
court revered saying that it was not moot yet. It will only be
moot where there is no likelihood at all of the conduct being
repeated. (or no cognizable danger of recurrence.)
(a)
He wouldnt agree to not violate them again
(b)
He wouldnt promise not to do it again
(c)
Court will consider as evidence
i)Bona fide intent not to return to the conduct
(1)
Basically, do they believe him?
ii) Was the violation intentional or accidental?
(1)
Obviously an intentional violation indicates an
indifference to the law.
C. Injunctions and Discovery
1.
Simply
a) One side asks for documents, other side gives them
b) On one side, bunch of considerations like confidentiality, ethics,
how much to give.
c) On the other side you can never be certain of what you havent
been given, could be missing something really important.
d) Adverse inference
(1)
Only copy of some material document disappears
(a)
Jury may assume that the plaintiff is telling the truth
about the documents the defense supposedly lost.
(2)
Humble Oil & Refining Co. Vs. Harang

(a)
Issue: Whether a defendant who is accused of fraud
and unethical conduct should be enjoined from destroying
any discoverable documentation.
(b)
Holding: No, all defendants would be in a similar
position. If it were allowed here, itll happen all the time,
and it will be difficult to enforce, and it will water-down the
injunction as a power of the court.
D. Injunctions that Prevent Lawful acts which Might Have Wrongful
Consequences
1.
Court will look to the future and see if the lawful conduct results
in harm to the plaintiff and enjoin the defendant from such
a) so long as the argument isnt speculative;
b) and the harm is inevitable.
2.
Nicholson v. Connecticut Half-Way House
a) Issue: Where none of the harm has occurred, can the court enjoin
conduct based on plaintiffs fears?
b) Holding: The plaintiff is fearful, but the argument as to damages
is speculative. There is no ripe harm here.
3.
Pepsico, Inc. V. Redmond
a) Issue: Where an executive has company secrets, can he be
enjoined from taking a job for the competition, regardless of his
promises not to use any company secrets.
b) Holding: Yes, the court finds that there will be an inevitable
disclosure if he joins the other firm. He cannot help but
occasionally use this secret information to give his new bosses a
slight advantage.
4.
Injunctions that Repair the Consequences of Past Wrongful
Conduct
a) The goal is still to put parties in their rightful position.
(1)
The court will order defendant to take action to remedy
harm.
(a)
So long as it is not a double recovery;
i)Damages may simply cover the period between
purchase and compliance (therefore not double
recovery)
b) Forster v. Boss
(1)
Issue: Where the defendant made promises about goods
and services that were not kept, can a plaintiff receive both
damages and an injunction requiring the plaintiff to uphold the
promise.
(2)
Holding: Yes. This is not double recovery because the
damage amount covers the period where the goods and
services didnt conform to the agreement, and the injunction
seeks to repair that damage going forward.

c) Winston Research Corp. V. Minnesota Mining and manufacturing

Co.
(1)
Issue: Whether a permanent injunction is proper where the
defendant has stolen technical designs in violation of unfair
competition law.
(2)
Holding: No, because it would have only been a few years
for any competitor to copy the basic design. He will be enjoined
from releasing it any earlier than he should have been able to
without his illicit access to plaintiffs designs. This will put both
parties into their rightful position.
d) Baily v. Proctor
(1)
Issue: Whether the court should grant a so-called
prophylactic injunction, (one that enjoins lawful conduct for fear
of the consequences)
(2)
Holding: Yes. The court takes a broad view of its equitable
power of ordering injunctions.
(3)
Comments: Court applies very broad view of injunction
power:
(a)
Once the court is brought in to do equity, it has a
roving license to do good, and may do whatever is
necessary.
(b)
This seems to go beyond the rightful position rule in
the interest of fairness, this is a lot like what the judge tried
to do in Hatahley.
(c)
Courts of last resort often say that:
i)Equitable discretion is discretion to consider all relevant
facts,
(1)
Not to do whatever the trial judge wants
(d)
Supp Ct says the trial court must be guided by sound
legal principles.
IV.
Structural Injunctions
A. Ordered where the legislature has failed to act to remedy unlawful
conduct.
B. What they are is just a bundle of smaller injunctions
1.
All the typical concerns about injunctions apply here as well.
C. The scope of the injunction has to meet the harm,
1.
In the example of school desegregation, who is harmed?
a) Possibilities include
(1)
Black students only
(2)
All students
(3)
Future students
D. Swann v. Char. Meck. Bd. Of Educ.
1.
Issue: Whether the court has the equitable power to setup a
complex busing system to integrate Detroit schools.

2.
Holding: Mandatory quotas are terrible, but its a starting point.
One-race schools in mixed race districts will be subject to strict
scrutiny.
3.
Comment(s):
a) De Facto discrimination is constitutional
b) Dejure segregation by state law / policy is unconstitutional.
c) Structural injunction: restructure institutions that are
systematically violating the law or whose structure is unlawful.
(1)
Really just a long series of preventive and reparative
injunctions in a complex case.
E. Notes on structural injunctions and school desegregation
1.
De Jure segregation is deliberately cause by state authorities it
violates the constitution and must be remedied.
2.
De facto segregation is from all other causes except deliberate
conduct of the state; it does not violate the constitution. If school
segregation results from housing segregation, & if housing
segregation results from the preferences of home buyers and renters,
or from discrimination by landlords, real estate brokers, etc., the
resulting school segregation does not violate the constitution and
need not be remedied
3.
Swan ct. Gives a directive to achieve the greatest possible
degree of actual desegregation
F. Rightful position approach to remedy
1.
Miliken v. Bradley
a) Issue: whether the school busing routes may be adjusted by
court injunction to create the greatest degree of actual
desegregation possible, even where the plan calls for adjustments
across multiple school districts.
b) Holding: The scope of the remedy is determined by the nature &
extent of the constitutional violation. Violation involved Detroit
only. Without an inter-district violation & inter-district effect, there
can be no inter-district remedy. The courts opinion was based on
fundamental limitations on the remedial powers of the federal
courts to restructure the operation of local and state governmental
entities.
2.
Milliken II
a) Issue: Whether the court has sufficient jurisdiction to order a
state to pay for half of an educational program to assist in
desegregation efforts.
b) Holding: yes because the need for the education arose out of the
violation of the constitution.
c) Comment: Miliken & Miliken II have a generous view of causation:
(1)
Federal remedies must be related to the condition alleged
to offend the constitution.

(2)
They must be designed as nearly as possible to restore the
P to the position they would have had but for the discriminatory
conduct.
(3)
They must take into account the interests of state & local
authorities in managing their own affairs.
V.
Choosing Remedies
A. Substitutionary or Specific Relief?
1.
Irreplaceable losses
a) Where money cannot buy a replacement good.
(1)
This may sometime mean, when linked to land, that the
uniqueness is inherent to the nature of the god.
(a)
Replacement wood can be bought to cover the loss
of a forest,
(b)
But old trees once cut down cannot be replaced
outside of planting new ones and waiting.
(2)
For a corporation, ingredients in a good may be unique if
tailored to the purpose.
(3)
In a shortage, there is a scarcity of a good that means
money damages are useless to the plaintiff.
b) Pardee v. Camden Lumber Co.
(1)
Issue: Whether the defendant should be enjoined from
removing trees from plaintiffs land where the defendant has
already done so repeatedly
(2)
Holding: The previous court thought that money damages
would be adequate since the trees are not all that special,
however, this court holds that the trees are unique enough that
they cannot be equated with money. Therefore there is a ripe
irreparable harm.
c) Campbell Soup v. Wentz
(1)
Issue: whether the plaintiff can claim carrots as a unique
and irreplaceable good in the midst of a shortage.
(2)
Holding: YES. The carrots are unique from the perspective
of the plaintiff, because they are the only variety they use in
their soup. Because there is a shortage, the same carrots
cannot be purchased elsewhere.
(3)
Rule(s): Items no longer available become unique for the
purpose of injunctive relief, and damages are made inadequate.
d) Van Wagner Advertising Corp. V. S&M Enterprises
(1)
Issue: Whether plaintiffs can get specific performance on a
lease agreement they have for advertising signage on a
building about to be torn down.
(2)
Holding: No, For 2 main reasons. (1) a leasehold is not like
a fee simple, your rights are more fleeting as a lessor. (2)
because the contract specified the price and duration that the
lease was supposed to last, it is in fact very easy to calculate
damages.

(3)

Test: Where the uniqueness of land is being considered:

(a)
Its more than just physical uniqueness; you need to
consider:
i)Can we really value this property with some accuracy?
(b)
Specific performance is for where the economic
uniqueness is so extreme that they cannot be certain how
to compensate with damages. Its about economic
interchangeability.
2.
Burdens on Defendant or the Court
a) Generally, the burdens on the defendant will be weighed against
the benefit to the plaintiff in deciding whether to grant injunctive
relief
(1)
However, if the defendant is an intentional wrongdoer, the
court may ignore the burden to the defendant and require that
he set matters strait even at great personal cost.
b) Whitlock v. Hilander Foods, Inc.
(1)
Issue: Whether an intentional wrongdoer may be enjoined
to remove a wall of his building at great expense from
defendants property.
(2)
Holding: Yes. Because the defendant knew exactly what he
was doing when he encroached on the plaintiffs property, he is
an intentional wrongdoer. Normally, the court would weigh the
balance of the burdens between the two, but not where the
defendant deliberately encroached.
(3)
Rule(s):
(a)
Unintentional wrongdoer: Court will weigh the burden
on D against the benefit to P
(b)
Intentional wrongdoer: Court will grant the injunction
so long as there was harm done to P and the court can
remedy some of it by ordering an injunction.
c) Co-Operative Insurance Society Ltd. V. Agyll Stores (Holdings)
Ltd.
(1)
Issue: Can a court order a specific performance injunction
to enforce a 35 year lease where defendant is not making a
profit?
(2)
Holding: No, for a few reasons:
(a)
It would be too hard to enforce.
i)The court would have to constantly check and see if
theyre doing the thing theyre required to do.
ii) Its also a little subjective
(1)
There could be all kinds of disputes over how
much they have to do to comply with the injunction.
iii) Court also doesnt want to punish someone for
closing an unprofitable business.

iv) You also cannot require someone to work for another

person, thats hostile under the 13th amendment.
3.
Other reasons for Choosing Damages or Injunctive Relief
a) Ebay inc. V. Mercexchange, L.L.C.
(1)
Issue: Whether a patent holder may be granted permanent
injunction where the patent holder does not practice the
patent, and where this is essentially all they do, license and
sue.
(2)
Holding: Both lower courts develop categorical rules, trial
court reasoned that plaintiff could not get an injunction
because of how willing plaintiff is generally to license, and how
rarely they do something themselves. Appeal court held that
such plaintiff should only be denied such an injunction. Supp
Court thinks both lower courts are wrong, finding that the
traditional 4 factor test is what should apply, even though the
court has discretion, it does not go so far as developing
categorical rules that limit their own discretion going forward.
(3)
Rule(s): to get an on a permanent basis, the scope of the
harm must be perpetual. Look for things in the facts to suggest
that the harm will be continuously ripe or that D will repeat the
harmful conduct.
b) Willing v. Mazzocone
(1)
Issue:
(a)
Whether the permanent injunction is prohibited by
the states right to free speech
(b)
Whether the permanent injunction qualifies as a prior
restraint on free speech.
(2)
Holding:
(a)
Reversed and remanded on constitutional grounds
(3)
Comment:
(a)
The superior court modified the injunction to make it
fit the scope of the harm
(b)
The lower court reasoned that damages are not
adequate because the woman had no money to pay
damages anyway.
(c)
The majority of courts adhere to the view that with
an insolvent defendant, money damages may be viewed as
inadequate remedy at law.
(d)
Prior restraint - prevents speech in advance, courts
are pretty skeptical that these kinds of injunctions are going
to violate first amendment rights.
B. Preliminary or Permanent Relief
1.
The substantive standards for Preliminary Injunctions
a) 4 FACTOR TEST FOR PRELIMINARY INJUNCTIONS
(1)
That the party is likely to succeed on the merits

(2)
That the party is likely to suffer irreparable harm in the
absence of preliminary relief.
(a)
This is all harm that occurs before trial on the merits
(b)
This is different from the irreparable damage rule
generally applied.
(3)
That the balance of equities tips in the partys favor
(a)
Equities Posner: P x Hp > (1-P) x Hd
i)Harm to the plaintiff if it is erroneously denied
ii) Harm to the defendant if it is erroneously granted
(4)
An injunction is in the public interest.
b) Winter v. Natural Resources Defense Council, Inc.
(1)
Issue: Whether the navy should be enjoined before a trial
on the merits on a cause of action alleging only that they must
produce an environmental impact report before continuing their
radar training.
(2)
Holding: No. The lower court understated the burden on
the defendant, and shouldnt have granted a preliminary
injunction. Further, the injunction is outside of the scope of
harm because it goes to the practice, and not the production of
the report.
2.
Obtaining a TRO ex parte (without notice)
a) There will be some immediate harm if there is notice
(1)
Immediate as in between now and the court date for the
injunction
b) Lawyer must certify that an attempt was made, or there is good
reason why not to attempt to give notice
c) They are only short term
d) Coyne-Delany Co. V. Capital Development Board
(1)
Issue: Whether a contractor may receive a TRO halting a
contract bidding period, where their underlying action concerns
participation in that bidding. (they were blackballed)
(2)
Holding: The TRO is granted, but a bond must be posted to
cover the costs if the TRO was erroneously granted to the
plaintiff
3.
The Procedure for Obtaining Preliminary Relief
a) Carroll v. President of Princess Anne
(1)
Issue: Whether a city may be granted a TRO where the
underlying case regards barring the defendant from holding a
public event.
(2)
Holding: Yes.
(3)
Rule(s): TRO itself is not appealable, the preliminary
injunction that issues after is what is appealable.
b) Sampson v. Murray

(1)
Issue: Whether a TRO can be appealed where it has been
extended indefinitely and there have been some adversarial
hearings.
(2)
Holding: Generally you cannot appeal a TRO, but here
there is no time limit, and there have been some hearings so its
effectively become a preliminary injunction, therefore you can
appeal.
(3)
Rule(s): you can appeal a TRO where the time limit is
indefinite and there have been some adversarial hearings.
C. Prospective or Retrospective Relief
1.
Suits Against Officers in Their Official Capacities.
a) Edelman v. Jordan
(1)
Issue: whether plaintiff may obtain an injunction barring
the state from withholding benefits he is due.
(2)
Holding: No. Generally, this should fit under the ex parte
Young exception, but here the injunction would require the
payment of money to the plaintiff making it de facto damages.
(3)
Rule(s):
(a)
the 11th amendment provides immunity from suits
for all states
i)From its own citizens
ii) Or by citizens of some other state.
(b)
You can, as a private citizen, get an injunction
against a state officer, so long as it is a constitutional claim.
i)We dont want the state hit with constant law suits
(1)
But we also dont want a government that cant
be held accountable. EX PARTE YOUNG EXCEPTION
(c)
States can also waive their immunity.
i)But fat chance thatll happen.
VI.
Preventing Harm without Coercion Declaratory Remedies.
A. Declaratory Judgements
Injunction
What must P prove?

A. irreparable injury
B. ripe controversy real
threat to injure

What does order say? Personal order to D

Declaratory judgment
-Essentially the same requirements.A. Uncertainty; but P need not show
irreparable injury to get relief
B. ripe controversy: judgment must end
the controversy if issued; declaratory
judgments seeking to resolve
procedural disputes or to clarify
substantive rules for future suits are not
ripe.
General command

What if D ignores?

A. D is in contempt
B. Res judicata in
subsequent suit

A. in practice, declaratory judgment acts like

injunction.
B. In reality, D not in contempt; P must follow
on w/ request for injunction
C. Res judicata in subsequent suit

0.
1. Someone runs into court, and asks the court to grant an injunction
a) If theyre found to be in the right, the other party is required to
comply
2. Either party may, however, Ask the court for some declaratory relief.
a) That is to say, it may be used by the accused wrongdoer to quickly
clear their name.
3. Declaratory relief v. Injunctions
a) Either way its after a trial on the merits
b) For an injunction
(1)Have to show that damages are not enough
(2)Not undue burden on the defendant
(3)Not undue burden on the court
c) For declaratory Judgement
(1)You dont have to show irreparable injury
(2)Court doesnt care about the burden on the defendant.
(3)And its hard to imagine how the declaration would burden the
court
(4)Be careful to note that there must be an actual dispute for the
court to rule, otherwise it wont have jurisdiction under the
constitution.
d) Impact of these two remedies
(1)If it was an injunction - something like dont tax the railway
something that directs the state to not take some specific
action
(2)If it was a declaratory judgement - something like this tax is
unconstitutional as a matter of law if the state decides to
ignore the declaration, theres no real recourse. BUT the railway
can take the declaration back to the court and ask for that
injunction again.
(3)TL;DR: Declaratory judgements are easier to get because they
arent coercive, however they may still effect the defendants
conduct going forward because now they know their rights
according to the court.
4. Nashville, Chattanooga & Saint Louis Railway v. Wallace
a) Issue: Whether a case or controversy under article 3 2 includes
declaratory judgment under the declaratory judgement act.

b) Holding: Changes in form are not enough to preclude the court

from ruling. So long as the essentials of an adversarial proceeding
it meets to requirements of Article 2 3
B. Quiet Title and the Like
1. Asks the court to resolve title to disputed property
a) Traditionally only applies to real property
b) But also can apply to personal property, as in Newman.
2. Newman Machine Co. V. Newman
a) Issue: Whether quiet title actions may be used to settle disputes
as to the ownership of property other than real.
b) Holding: Yes, because there is no real difference between real and
personal property anyway, and if they precluded that action hed
be left without recourse.
C. Reformation
1. When parties come to an agreement, but by fraud or mistake write it
down in some fashion that does not truly reflect their contract, equity
will reform the writing to make it reflect the parties true intention.
2. Hand v. Dayton-Hudson
a) Issue: Plaintiff wants the original contract plaintiff authored (and
thought it executed) reformed, because the fraudulent one is
going to be enforceable anyway.
b) Holding: There is no problem reforming the contract here since the
court knows he tricked them, and they know what was in the
original.
c) Rule(s):
(1)MUTUAL Mistake: you are responsible to know whats in the
contract before you sign. In general, when the court steps in to
reform it has to be a mistake on BOTH sides
(a) EXCEPTION
i) Where the reason you dont know what youre signing
is some trickery by the other party to the contract.
VII. Benefit to the Defendant as the Measure of Relief: RESTITUTION
Restitution Mechanism

Distinguishing Characteristic

Accounting for profits

Its a money judgement, has problems with insolvency

Constructive Trust

Avoids problems with insolvency, may assign property to

plaintiff that plaintiff would rather not deal with.

Quasi-contract

Only where there is no contract, but work has been

done. Basically quantum meruit situations.

Restitution Mechanism
Equitable Lien

Distinguishing Characteristic
D has some connection to Ps property, but does not
want the property, or cannot have the property assigned.
P is given the right to force the sale of the property to
settle the debt.

0.
A. Its completely different from everything else
1. Its not all about how the plaintiff has been harmed
2. Its all about the benefit to the defendant
a) What unjust enrichment has the defendant received?
b) The idea of restitution
(1)Cannot let people profit from wrongdoing
(2)Its simply not fair to let the defendant keep what theyve
gained wrongfully.
(3)Theres also an opportunity cost to the plaintiff, that
opportunity, if not stolen away from them b the defendant
might have lead to even greater gains.
B. Restitution from Innocent Defendants - And Some Who are Treated as
Innocent
1. Mistake
a) Blue Cross Health Services, Inc. V. Sauer
(1) Issue: Can Blue Cross receive restitution where there was a
mistake on their end that was exploited by the other party. (No
real theory of fault)
(2) Holding: Yes, all Blue Cross has to show is that the defendant
unjustly acquired funds from Blue Cross, they do not have to
show that defendant meant to defraud the company. (unjust
enrichment)
b) Somerville v. Jacobs
(1) Issue: Whether the builders have to buy the land they
accidentally built on, or if the land owners have to buy the
building built on their land.
(2) Holding: Either way it will be the party who made the mistake
that will pay the price, the plaintiffs get to choose which they
prefer, even if that means a windfall, after all, they are not at
fault.
2. Measuring Restitution from the Innocent: Unenforceable Contracts
and Quantum Meruit
a) Anderson v. Schwegel
(1) Issue: Whether a party may recover money owed for services
already rendered where there was no real contract, under a
theory of quasi-contract.

(2) Holding: Yes. The defendant must pay the mechanic his fee
because to do otherwise would allow him to receive free
service, and he would be unjustly enriched.
(3) Rule(s): Quasi-Contract - Not applied where there was a real
contract; court will only imply a contract.
(a) Party is entitled to receive the reasonable value of the
services she provided
(b)Not the increased value of the property that was improved
(c) Distinguished from Sommerville.
C. Recovering More Than Plaintiff Lost
1. Disgorging from Conscious Wrongdoers
a) Olwell v. Nye & Nissan Co.
(1) Issue: Whether a plaintiff may receive a reasonable rental fee
for equipment used without the partys permission for
commerce, resulting in the unjust enrichment of the intentional
wrongdoer (these are also CONSEQUENTIAL GAINS)
(2) Holding: Restitution is complicated to apply in this case since
the machine was only part of a larger operation. Court implies a
contract under a quasi-contract theory. They give plaintiff the
amount of saved labor cost he gained by using the machine,
thereby disgorging his consequential gains in full.
2. CONSEQUENTIAL GAINS
a) If youre an unintentional wrongdoer - you dont have to pay
consequential gains
(1)Tie up your boat at someone elses dock - you dont owe them
the boat their dock saved.
b) If youre an intentional wrongdoer - you have to pay all
consequential gains.
(1)Tie up your boat at someone elses dock - you owe them the
boat, because you knew this was a trespass.
c) Maier Brewing Co. V. Fleishmann Distilling Corp.
(1) Issue: Whether a plaintiff can get a full accounting for profits
where they cannot show actual loss on a trademark
infringement claim.
(2) Holding: Yes. Because they where intentional wrongdoers and
the purpose of the Lanham act is deterrence.
3. Measuring the Profits
a) Sheldon v. Metro-Goldwyn Pictures Corp.
(1) Issue: How to divide the total to disgorge unjust gains while
leaving the just gains with the defendant who rightfully earned
them.
(2) Holding: Expert testimony to discover exactly how much of the
movies profits are attributable to the screenplay they stole.
DEFENDANTS CONTRIBUTION VS. UNJUST GAINS.

(3) Rule(s): The only stuff of the defendants relevant to the

analysis is the kind of stuff that can be bought and sold.
Otherwise the argument it too speculative. Hiring famous
actors thus contributes to the overall profits, and profits
attributable to those actors are not unjust gains. But the
studios prestige? The argument is too speculative.
b) Hamil America, Inc. V. GFI
(1) Issue: How to account for defendants overhead costs while
selling a good that infringes on the plaintiffs copyright.
DEFENDANTS OVERHEAD COSTS VS. UNJUST GAINS
(2) Holding: Defendant may deduct from their gross profits things
like labor, utilities, marketing, and then there is an allocation:
what percentage of overhead is attributable to the infringing
property; and deduct that.
4. Breach of Contract
a) Disgorging the profits from an Opportunistic Breach
(1) Snepp v. United States
(a) Issue: Where the profits are not attributable to the theft of
anything, but the act that creates the profits is a breach of
faith with the plaintiff, what portion of the profits should be
disgorged, and what should be left to defendant?
(b) Holding: The court will treat 100% of the profits as wrongful
because defendant enjoyed a special degree of trust (w/
CIA) and his actions breached that trust. In theory at least,
he couldnt have written the book without breaching the
trust he shared with the CIA. WHERE 100% OF PROFITS ARE
WRONGFUL BECAUSE OF A BREACH OF TRUST
(2) May v. Muroff
(a) Issue: Where a deal is made, and the seller of land secretly
removes fill from the land thereby damaging the land to
be sold, should the plaintiff be due restitution?
(b) Holding: Yes. Here as in Snepp, the defendant is a conscious
wrongdoer attempting to gain at the expense of plaintiff. To
give damages would be inadequate because it would leave
defendant with a windfall profit he essentially stole from
plaintiff.
b) Rescission
(1)Contract is necessary
(a) The parties must have entered into a contract
(2)Recision is available for both void and voidable contracts
(a) Void Contracts
i) Those contracts that the court will not enforce
(1)Think contracts for the sale of illicit goods
(b)Voidable Contracts

i) Those contracts where one party has the option to

cancel the contract
(1)This includes:
(a) Unilateral mistake of fact
(b)Fraudulent conduct
(c) Duress
(d)Undue influence
(e) Lack of capacity
(f) Failure to comply with the state of frauds
(3)Also sometimes available where the contract is still enforceable
but there has been a significant breach of contract.
(4)Plaintiffs will, where the contract is voidable and not void have
the option of either standing on the contract and suing for
compensatory damages or voiding the contract and suing for
recision.
(5) Mutual Benefit Life Ins. Co. V. JMR Electronics Corp.
(a) Issue: Whether the misrepresentation was material and
allows the insurrer to cancel the contract
(b) Holding:The policy will be enforced, but only for the amount
that would have been purchased with the money ACTUALLY
paid for a smokers premium.
(c) Rule(s): the purpose of the materiality inquiry is not to
permit the jury to rewrite the terms of the insurance
agreement to conform to the newly disclosed facts but to
make certain that the risk insured was the risk coved by the
policy agreed upon.
(6)Losing Contracts where the Benefit Cannot be Returned
(a) Boomer v. Muir
i) Issue: Where the contract under-compensates plaintiff
for the work that has already been done under its
terms, can the court rescind the contract to prevent the
plaintiffs loss?
ii) Holding: Yes. Since the work has already been done,
and the defendant knew all along this was going to be
over the agreed upon amount, it would leave defendant
unjustly enriched to not give plaintiff restitution.
D. Restitionary Rights in Specific Property
1. CONSTRUCTIVE TRUSTS
a) A trust is imposed by the court on equitable grounds against
someone who has obtained some property by wrongdoing to
prevent the wrongdoer to be unjustly enriched by the wrong doing.
(1)Requires
(a) A specific piece of property linked (see tracing) to the
plaintiff

(b)A showing that the property was acquired through some

kind of fraud on the plaintiff.
b) Pauloni v. Goldstein
(1) Issue: whether to create some kind of constructive trust
purchased by the orchestrator of a Ponzi scheme.
(2) Holding: Yes. The money was obtained through fraud and that
fraudlent money was linked through the investment
presumption (see below) to the purchase of the condo. (guy
was completely insolvent at that point so a rightful withdrawal
presumption would have netted them zero dollars and zero
cents.)
c) Ruffin v. Ruffin
(1) Issue: Whether a constructive trust may be ordered where: a
deadbeat ex-husband wins the lottery. (bought a lottery ticket
even though he was delinquent on alimony payments)
(2) Holding: No. Because it alleged no fraud and because the
money spent on the ticket could not be linked to the purchase
of the ticket.
2. TRACING the Property
a) Presumptions
(1)Prevailing plaintiff picks either:
(a) Rightful Withdrawal Presumption
i) Any money that is spent out of the co-mingled account
is presumed to be the defendants before the plaintiffs.
(1)EX: D takes Ps $4 and co-mingles it with his own $1;
then finds some way to squander $1 from the comingled account. Under a Rightful Withdrawal
presumption, that dollar will be his before Ps. If he
had taken $2 and squandered it, it would have been
his $1 with $1 of Ps $4.
(b)Investment Presumption
i) Any money that is spent out of the account will be
presumed to have been the plaintiffs first, and then
defendants.
ii) If some profitable investment was made with the
money, this will ensure that the plaintiff gets whatever
share of that profit that they can.
(1)EX. D steals Ps $4; D co-mingles the $4 with his $1
making $5. D then takes the $5 and invests it in
something eventually valued @ $500. Ps stolen $4 is
traceable through the investment presumption to
$400 worth of the investment, the last dollar is still
the defendants so he keeps $100.
b) In re Erie Trust Co.

(1) Issue: Where money I left with defendant and co-mingled with
defendants funds, how should the court differentiate the
plaintiffs money from the defendants?
(2) Holding: Once liability is out of the way, the plaintiff will have
the power to choose which tracing presumptions to use,
maximizing the amount they may receive. (Investment
presumption v. Rightful withdrawal)
3. EQUITABLE LIENS
a) A lien is where money is owed, and a lien is given against property.
(1)If the lien is not repaid, the property with the lien will be sold off
to recover.
(2)The lien doesnt give you ANY ownership rights, the property
with the lien attached only acts as a security.
(3)The only right you obtain is to force the sale of the property if
the debt isnt paid.
b) In re: Mesa
(1) Issue: Where the defendant has stolen funds and used them to
renovate his house, should the house be granted to the plaintiff
to settle the debt?
(2) Holding: No, homesteads are exempt, therefore an equitable
lien will be affixed to the property to secure the defendants
debt to plaintiff.
(3) Rule(s):
(a) HOMESTEAD EXEMPTION
i) The court is forbidden from granting the primary
residence of a party to a prevailing plaintiff.
ii) Here, that meant they couldnt grant a constructive
trust, because that would grant ownership rights.
iii) They can grant an equitable lien.
c) How third parties who hold plaintiffs property are treated
(1)In general, a constructive trust can be used to transfer the
property from the ownership of the third party back to the
plaintiff, thus restoring the plaintiffs rightful position.
(2)Bona-Fide purchasers that get the property for value without
notice that is was acquired through wrongdoing will get to keep
property.
(a) Therefore cant get a lien or a constructive trust over
property that was obtained by good-faith purchasers.
(which you might think because restitution doesnt require
fault, but this is an exemption from that.)
VIII.
ANCILLARY REMEDIES: ENFORCING THE JUDGEMENT
A. Ancillary remedies are those remedies that help other remedies actually
function in the real world.

1. A money damages award, for instance is just a piece of paper.

Without some action that could be taken to force payment, there
wouldnt be enough leverage for plaintiffs to actually get their money.
2. CONTEMPT is a power of the court, used to coerce compliance with
injunctions.
3. All ancillary remedies, by definition, come after a trial on the merits,
and after the initial remedies have all be decided and calculated.
B. Enforcing Coercive Orders: The Contempt Power
1. Types of Contempt
a) International Union, United Mine Workers v. Bagwell
(1) Issue: where the court has ordered an injunction and the
defendant has not complied, how much coercion is too much
coercion?
(2) Holding: Depends on what court youre in. You get greater
protection in criminal contempt hearings, so here it comes
down to whether the sanctions were criminal in nature. They
were, therefore it was an abuse of discretion.
b) Criminal v. Civil Contempt
(1) In civil sanction
(a) You have the ability to end the sanctions by just doing what
they told you to do.
(b)Fines are coercive (and not merely punitive) if:
i) Per diem: fine per day until you comply
ii) Purge clause: its going to be some specific amount per
violation but you can purge the amount (not have to
pay it) if the parties can settle the matter.
(2)In criminal sanctions
(a) Its all already happened and theres nothing you can do to
change your liability now.
(b)We afford greater protections here since you have no choice
ging forward that can help you.
2. Risk of Abuse vs. Overcoming Defiance
a) Anyanwu v. Anyanwu
(1) Issue: Whether the contempt, in this case jail time, should be
lifted because the defendant has not yet cracked.
(2) Holding: Yes. The relevant inquiry here is not whether its been
long enough but whether the continued incarceration will lead
to compliance. If the court doesnt feel there is a substantial
likelihood of defendant complying because of the jail time any
time soon, then the defendant must either be released, or the
sanction must become a criminal contempt sanction.
b) ISSUES RELATED TO THE USE OF CONTEMPT TO OVERCOME A
DEFIANT PARTY

(1)What if the party is telling the truth, and they cannot comply
with the courts order?
(2)What if no amount of jail time will change his mind?
(a) We dont want to give the impression that you can
negotiate your way out of contempt
(b)He might eventually give in and comply
(3)Were not just looking at the time youve been there
(a) We are asking if there is a substantial likelihood that
continued incarceration will lead to compliance.
i) If not, then its got to be stopped, or switched over to a
criminal sanction. (with all the extra protection that will
afford)
3. The Collateral Bar Rule
a) One who disobeys an injunctive order that is later reversed on
appeal for error may be held in criminal contempt for disobedience
in spite of the reversal.
(1)It prevents a litigant from attacking the validity of an injunction
in the collateral matter of a defense to criminal prosecution.
(2)You must make a direct appeal of the order granting the
injunction, and should not attack something like the
constitutionality of the law underly the injunction.
(3)Right or wrong, no man can be a judge in his own case.
(a) Note: this comes up where people disobey court orders
during an appeal of the order, even if youre in the right,
YOU MUST COMPLY.
(4)Exemptions
(a) Where the order is transparently invalid
(b)Where you try to appeal the injunction but are met with
some delay or frustration
(c) These exceptions almost NEVER apply
b) Walker v. City of Brimingham
(1) Issue: whether the defendant may ignore a court order while an
appeal is pending regarding the constitutionality of the law
underlying the injunction.
(2) Holding: No, the collateral bar rule applies here, and means you
cannot ignore an order pending a collateral appeal.
C. Collecting Money Judgements
1. It should be noted that many collections are hard to make because of
insolvency, and sometimes shady defendants. There is a whole area
of law just in pursuing judgements.
2. Execution, Garnishment and the Like
a) Credit Bureau, Inc. V. Moninger
(1) Issue: Who get the money from the sale of the truck? Original
judgement holders or the bank that never got the agreement
signed?

(2) Holding: The bank should have gotten that contract with
defendant sooner, because it was lawfully seized by the sheriff.
(3) Rule(s):
(a) To execute a levy against some tangible property all that is
generally required is
i) Physical possession isnt necessary
ii) Its valid as soon as its seized
(1)You must be present, and you must assert your
control in some express way. I LEVY UPON THIS
TRUCK is actually sufficient in the presence of the
truck.
iii) The rules of levying vary state to state
(b)A writ of execution is a writ that directs some official to
seize and sell some property to satisfy a judgement.
i) Rules generally vary state to state
ii) Every state also sets some exceptions
(1)Like primary residence
(2)Or car
(3)Varies hugely state to state
iii) Concerns with writs of execution
(1)We dont want to take away the necessities of life.
(2)Dont want to leave a debtor completely destitute.
(3)Running against that - buying a bunch of exempt
property to avoid paying a judgement.
(4)Example: OJ Simpson, huge settlement he has to
pay, still owes his wifes family a lot on the wrongful
death action. But he does live in a huge mansion.
(a) In Florida, primary residence is exempt from
execution.
b) Dixie National Bank v. Chase
(1) Issue: whether the bank is liable for the 13k they lost.
(2) Holding: Yes. Very Yes.
(3) Rule(s):
(a) With a writ of garnishment instead of having the plaintiff go
to the defendant and demand payment of the judgement
(because the defendant is destitute) the plaintiff can go to
someone who owes the defendant money.
(b)Once a writ of garnishment is served, you are liable for all
debts owed by the defendant under the judgement
(c) There are a bunch of state-specific exemptions
i) Something like no more than 25% of your take-home
pay, etc.
ii) Same basic reasoning as with writs of execution.
c) Reasons why a plaintiff might prefer garnishment over execution

(1) Its easier on the defendant

(2)Theres less uncertainty for the plaintiff
(3)Having it as an option is useful because its embarrassing: and
that induces the defendants to pay up.
IX. ANOTHER ANCILLARY REMEDY: ATTORNEYS FEES AND THE COSTS OF
LITIGATION
A. Fee-Shifting Statutes
1. Costs vs. Fees
a) With costs
(1)Either side can get costs from the opposing party when they
win.
(2)They will still generally have to pay their own fees, per the
American Rule.
b) With fees
(1)Either side can get fees if the court finds that the
complaint/defense was frivolous.
(a) Functions somewhat like a sanction in that case, and
remember that the likelihood of the court finding a claim or
defense actually FRIVOLOUS is actually very low, so long as
there is a thin chance of prevailing, its not frivolous,
frivolous claims and defenses are basically the result of an
ethical violation.
(2) Theres also statutory fee-shifting
(a) Where its written into the statute that the plaintiff has sued
under that they can get fees if they prevail.
(b)This means that the defendant will pay either way, in both
cases they will have to pay the fees for their own defense,
but if the plaintiff prevails they may also have to pay the
plaintiffs fees as well.
(c) This brings more actions enforcing specific policies that the
state has set.
(d)If applicable, the fee-shifting is always one way.
(e) Since these kinds of actions are generally brought on a
contingency fee agreement, they carry no out of pocket
cost to the plaintiff.
2. City of Riverside v. Rivera
a) Issue: Whether the defendant owes plaintiff attorneys fees where
they are really outrageously high.
b) Holding: The basic Lode-Star approach to proportionality is
preferred. But we cant be too strict, or these kinds of cases
(enforcing the constitution) will not be brought.
c) Rule(s):
(1) Lode-Star approach to proportionality
(a) Number of hours spent preparing (reasonable)

i) Thats the same as actual damages if youre doing it

right.
(b)Multiplied by a fee (also reasonable)
i) There may be huge fluctuations in what attorneys
charge
ii) The average may very depending on whether the
attorney is at a large firm, small firm, etc.
X. REMEDIAL DEFENSES
A. As opposed to liability defenses
1. In a liability defense, you attack some material element
a) You win, and you get to pay nothing.
2. In remedial defenses, you offer a defense that bars certain remedies
a) Equitable remedial defenses include
(1)Laches
(2)Unclean hands
b) Legal remedial defenses include
(1)Procedural unconscionability
(2)Substantive unconscionability
B. Laches
1. Have to show
a) Unreasonable delay
(1)Will be declared where based on the facts the plaintiff cannot
give a good explanation as to why its taken so long to bring the
case to trial. AND
b) Material prejudice caused by the delay
(1)You have to show you were harmed.
(2)That could cause defense prejudice
(a) Something like spoliation.
(3)OR Economic prejudice
(a) Waiting to sue for so long might mean really high costs to
the defense if there is an injunction
i) We will only say the plaintiff delayed in suing where the
plaintiff had notice or constructive knowledge
C. Unclean Hands
1. Where the plaintiff comes to the case having done something
wrongful. AND
a) If that wrongful conduct has something to do with the litigation.
(1)They may be barred from relief
2. Not a hard and fast rule, wont apply where wrongdoing was
unrelated to the claim
D. Unconscionability
1. Procedural
a) Was there something wrong with how the contract was created?
Too one-sided?

(1)May preclude contract damages where applicable, forcing

quasi-contract, restitution
(2)You win, it bars any such remedy - under the agreement
2. Substantive
a) Looks at whether the terms are unfair
b) Sort of a smell test, are the terms one sided, are there really
strong limitation of remedies clauses?
(1) If you win, it bars any such remedy - under the agreement