INTENTIONAL TORTS AND INTENTIONAL TORTS AND TORTS BASED ON TORTS BASED ON

NEGLIGENCENEGLIGENCE

Chapter 7Chapter 7

The Role of Tort LawThe Role of Tort Law

DefinitionDefinition Means “wrong” in FrenchMeans “wrong” in French Civil wrong, other than a breach of contract, for which the law Civil wrong, other than a breach of contract, for which the law

provides a remedyprovides a remedy Breach of a duty owed to another that causes harm Breach of a duty owed to another that causes harm

Compensation for injuries wrongfully inflicted by the defendant on the Compensation for injuries wrongfully inflicted by the defendant on the plaintiff plaintiff

Civil, not criminal lawCivil, not criminal law Law is determined in each state--rules varyLaw is determined in each state--rules vary However, the basic principles are similar among all statesHowever, the basic principles are similar among all states Remedies should place injured party in the position he/she would have Remedies should place injured party in the position he/she would have

been in prior to the tortbeen in prior to the tort Fear of tort action deters injurious behavior by othersFear of tort action deters injurious behavior by others Punitive damages punish malicious behaviorPunitive damages punish malicious behavior

Business and TortsBusiness and Torts

Lawsuits involving businesses often have large Lawsuits involving businesses often have large awards, i.e. Pennzoil-Texaco case: Jury awarded $10.5 awards, i.e. Pennzoil-Texaco case: Jury awarded $10.5 billion to the plaintiffbillion to the plaintiff

Plaintiffs think of businesses as “deep pockets”Plaintiffs think of businesses as “deep pockets” Business is liable under agency law if a tort results in Business is liable under agency law if a tort results in

an activity “within the scope of the worker’s an activity “within the scope of the worker’s employment”employment”

TypesTypes IntentionalIntentional Negligence (Unintentional)Negligence (Unintentional) Strict Liability (Without fault)Strict Liability (Without fault)

INTENTIONAL TORTSINTENTIONAL TORTS

IntentIntent Person knew what Person knew what

he/she was doinghe/she was doing Intent to do the act Intent to do the act

which which reasonablyreasonably would result in harm to would result in harm to the plaintiffthe plaintiff

Knew /should have Knew /should have known the possible known the possible consequences of an consequences of an actionaction

Willful misconductWillful misconduct

Intentional Torts Against Intentional Torts Against PersonsPersons

AssaultAssault Battery Battery False False

ImprisonmentImprisonment Infliction of Infliction of

Emotional DistressEmotional Distress Invasion of PrivacyInvasion of Privacy DefamationDefamation

ASSAULTASSAULT

Placing plaintiff in Placing plaintiff in fearfear of of immediate immediate bodily injurybodily injury Fear: if a reasonable person under the same or similar Fear: if a reasonable person under the same or similar

circumstances would have apprehension of bodily circumstances would have apprehension of bodily harm or offensive contactharm or offensive contact

Threats?Threats? Usually an assaultUsually an assault Pointing a gun?Pointing a gun? YesYes Point a gun while other person sleeps?Point a gun while other person sleeps? No assaultNo assault Letter threats?Letter threats? No assault (“immediate” requirement No assault (“immediate” requirement

not met)not met) Phone threats?Phone threats? Maybe. How close is the caller? On a Maybe. How close is the caller? On a

cell phone outside the door or window?cell phone outside the door or window?

BATTERYBATTERY

Unlawful “touching”Unlawful “touching” Intentional physical Intentional physical

contact without consentcontact without consent Use of fist, hand, or Use of fist, hand, or

kickingkicking Use of weapons, i.e. Use of weapons, i.e.

guns or stickguns or stick Unwanted kiss? Has Unwanted kiss? Has

been held in some been held in some states to constitute states to constitute batterybattery

Assault & Battery may or Assault & Battery may or may not be linked may not be linked together in a lawsuittogether in a lawsuit

DefensesDefenses ConsentConsent PrivilegePrivilege Self defenseSelf defense Defense of Defense of

others/Defense of others/Defense of propertyproperty

See See Nelson v. CarrollNelson v. Carroll

False Imprisonment False Imprisonment (False Arrest)(False Arrest)

Defense by businesses Defense by businesses regarding detention of regarding detention of shopliftersshoplifters Restraint was in a Restraint was in a

reasonable mannerreasonable manner Restraint was in a Restraint was in a

reasonable time reasonable time Basis for the Basis for the

detention was validdetention was valid See See Caldwell v. K-Mart Caldwell v. K-Mart

Corp.Corp.

Intentional holding or Intentional holding or detaining detaining

Freedom to come and go Freedom to come and go is restrainedis restrained

RestraintRestraint May be physicalMay be physical May be mental (i.e. May be mental (i.e.

through verbal threats)through verbal threats) Lawsuits often arise from Lawsuits often arise from

detention of suspected detention of suspected shopliftersshoplifters

Infliction of Emotional DistressInfliction of Emotional Distress

Intentional conductIntentional conduct So outrageous, it creates severe mental or So outrageous, it creates severe mental or

emotional distressemotional distress Petty insults, annoying behavior, bad language? Petty insults, annoying behavior, bad language?

Usually not actionable; we must have “tough skin”Usually not actionable; we must have “tough skin” Accompanying physical injury usually not requiredAccompanying physical injury usually not required Bill collectors or landlords who badger, are profane, Bill collectors or landlords who badger, are profane,

and threaten lay the background for a lawsuit and threaten lay the background for a lawsuit See See White v. Monsanto Co.White v. Monsanto Co.

Invasion of PrivacyInvasion of Privacy

Infringement on a person’s right of solitude & freedom from Infringement on a person’s right of solitude & freedom from unwarranted public exposureunwarranted public exposure

Use of a person’s name or picture without permissionUse of a person’s name or picture without permission Intrusion on solitude (i.e. wiretap)Intrusion on solitude (i.e. wiretap) Placing a person in false light (publishing a false story)Placing a person in false light (publishing a false story) Public exposure of private facts (debts, drug use)Public exposure of private facts (debts, drug use) DefensesDefenses

Right of privacy waived by public figures, politicians, Right of privacy waived by public figures, politicians, entertainers, sports personalities, etc.entertainers, sports personalities, etc.

Information about an individual taken from public files or Information about an individual taken from public files or recordsrecords

See See Peoples Bank & Trust Company of Mountain Home v. Globe Peoples Bank & Trust Company of Mountain Home v. Globe International, Inc.International, Inc.

Defamation (Libel/Slander)Defamation (Libel/Slander) DefinitionDefinition: : An intentional false communication that injures a An intentional false communication that injures a

person’s reputation or good nameperson’s reputation or good name Elements of the TortElements of the Tort::

False or defamatory statementFalse or defamatory statement Published or communicated to a third personPublished or communicated to a third person Causing harm or injury to the plaintiffCausing harm or injury to the plaintiff

Defamation Defamation per seper se: : Presumption of harm Presumption of harm No proof of harm/injury is necessaryNo proof of harm/injury is necessary Examples: person has committed a crime; has a sexually Examples: person has committed a crime; has a sexually

communicable disease; carries out business activities communicable disease; carries out business activities

improperly, etc.improperly, etc. Case regarding WCase regarding Workplace Defamationorkplace Defamation: :

Frank B. Hall & Co. v. BuckFrank B. Hall & Co. v. Buck

Defenses to DefamationDefenses to Defamation Truth Truth is a complete defense in some statesis a complete defense in some states Absolute privilegeAbsolute privilege is an immunity is an immunity

Legislators in committee sessions Participants in judicial proceedings

Conditional privilegeConditional privilege eliminates liability if the false statement eliminates liability if the false statement was published in good faithwas published in good faith If there is no malice (unlike the Buck case) In order to protect a person’s legitimate interests

Constitutional privilegeConstitutional privilege Members of the press may publish “opinion” about public officials,

figures, or those of public interest if there is no actual malice (“absence of malice”)

See “Libel in Foreign Courts” (US communications companies sued in UK which does not grant news media extensive privileges traditional in U.S.))

Cyberlaw: Cyberlaw: Tort Liability for Tort Liability for Internet ServersInternet Servers

Q: Q: If Internet users are involved in illegal activities, If Internet users are involved in illegal activities, are the Internet servers liable?are the Internet servers liable?

A:A: Generally no, as long as they were not aware of Generally no, as long as they were not aware of it or had no reason to be aware of itit or had no reason to be aware of it

In In Zeran v. America Online:Zeran v. America Online: AOL not liable in tort AOL not liable in tort for defamatory message that AOL user sent. for defamatory message that AOL user sent. Sender is liable.Sender is liable.

In In Maraboi-FL v. Natl. Assn. of Fire Equipment Maraboi-FL v. Natl. Assn. of Fire Equipment Distributors: Distributors: Held that server could be liable if Held that server could be liable if aware of copyright infringement. Trial court will aware of copyright infringement. Trial court will determine the issue as to liability.determine the issue as to liability.

Intentional Torts Against Intentional Torts Against PropertyProperty

Trespass to Land:Trespass to Land: Unauthorized intrusion that interferes with another’s Unauthorized intrusion that interferes with another’s peaceful enjoyment of their propertypeaceful enjoyment of their property

Private Nuisance:Private Nuisance: interference with use & enjoyment of land interference with use & enjoyment of land Destruction of crops, causing health risks from pollution, throwing

objects on the land, using the neighboring house for drug deals See See Pendoley v. Ferreira Pendoley v. Ferreira and “and “Expensive Boom Box”Expensive Boom Box”

Public Nuisance:Public Nuisance: Interference with a right held in common by general Interference with a right held in common by general publicpublic Illegal gambling, bad odors, obstruction of a highway

Trespass to Personal Property: Trespass to Personal Property: Interference with the right of an owner Interference with the right of an owner to the exclusive useto the exclusive use and enjoyment of propertyand enjoyment of property

Conversion: Conversion: Unlawful control of another’s personal propertyUnlawful control of another’s personal property Misappropriation: Misappropriation: Invasion of property rights such as trademarks or Invasion of property rights such as trademarks or

trade secretstrade secrets

Pendoley v. FerreiraPendoley v. Ferreira,,

Ferreiras started pig farming Ferreiras started pig farming in 1949; by 1960 there were in 1949; by 1960 there were 850 pigs, 225 piglets & 10 850 pigs, 225 piglets & 10 employeesemployees

30 new homes were built in 30 new homes were built in the area between 1949 and the area between 1949 and 19601960

Pendoley & others sue Pendoley & others sue Ferreira for Ferreira for nuisancenuisance from from smell; ask for an injunction smell; ask for an injunction to force closing of pig farmto force closing of pig farm

Trial court : $300 to each Trial court : $300 to each homeowner and injunction homeowner and injunction to prevent stenchto prevent stench

Ferreira appealsFerreira appeals

Held: Offensive operationHeld: Offensive operation must be terminated entirely must be terminated entirely within a reasonable time.within a reasonable time.

Damages alone cannot Damages alone cannot compensate for “nauseating compensate for “nauseating piggery odors”piggery odors”

There is “unreasonable There is “unreasonable interference with the proper interference with the proper enjoyment” of the landowners’ enjoyment” of the landowners’ residencesresidences

Ferreira given a reasonable Ferreira given a reasonable opportunity to move with opportunity to move with complete injunction at a future complete injunction at a future datedate

TORTS BASED TORTS BASED ON NEGLIGENCEON NEGLIGENCE

Duty (Owed to the plaintiff)Duty (Owed to the plaintiff) Breach of duty of careBreach of duty of care

Unintentional careless conduct that creates an Unintentional careless conduct that creates an unreasonable risk of harm to othersunreasonable risk of harm to others

Breach through an act or omissionBreach through an act or omission

Causation (causal connection to the injury)Causation (causal connection to the injury) Injury/DamagesInjury/Damages

There can be a negligence action even if there was no There can be a negligence action even if there was no intent to do harmintent to do harm

See See “Tort Liability in France” “Tort Liability in France” (French Civil Code (French Civil Code specifically defines elements of negligence)specifically defines elements of negligence)

Negligence: Duty of Care and the Reasonable Person Standard

The standard is how The standard is how persons in the relative persons in the relative community ought to behavecommunity ought to behave

One must be reasonable at One must be reasonable at all times, under all all times, under all circumstancescircumstances

““What a What a reasonable personreasonable person would do in same or similar would do in same or similar circumstances”circumstances”

Applies to professions--Applies to professions--Reasonable CPA, MD, Reasonable CPA, MD, attorney, etc.attorney, etc.

See See Bethlehem Steel v. Bethlehem Steel v. Ernst & WhinneyErnst & Whinney

Negligence Per Se Violation of statute is negligence.

Statute needs to protect that class of people Some states, it proves negligence. Some states, only evidence of negligence.

– We will use, it proves negligence.

Jury still must decide if this negligence caused the injury.

Examples:– Selling alcohol to minors, causing crash.– Leaving keys in car, causing crash.

Res Ipsa Loquitur “the thing speaks for itself”. Applies to a situation;

that usually does not occur in the absence of negligence;

the defendant is in control of; and the plaintiff is not negligent.

Shifts burden of proof to defendant! Examples

Airplane crash. Audi sudden acceleration case?

– Not res ipsa. Audi not in control at time.

Damages Defendant liable only for damages legally

(proximately) caused by his tort action. This is not physical causation, but legal

causation. Damages that:

Naturally flow from the action; Foreseeable from the action.

This limits the liability of the tortfeasor.

Palsgraf v. Long Island RR Co.Palsgraf v. Long Island RR Co. (1928 Landmark Case)(1928 Landmark Case)

Palsgraf waits on the platform for a train; another train begins to Palsgraf waits on the platform for a train; another train begins to leave the station; man carrying a package runs to catch it; jumps leave the station; man carrying a package runs to catch it; jumps on the train; looks like he might fallon the train; looks like he might fall

Guards try to help him as he teetersGuards try to help him as he teeters He drops the package which contains fireworks that explodeHe drops the package which contains fireworks that explode Shock from the explosion causes scales located on the platform Shock from the explosion causes scales located on the platform

to fall, injuring Palsgraf who sues RR for negligence of its to fall, injuring Palsgraf who sues RR for negligence of its employeesemployees

Jury finds for Palsgraf; appellate court affirms; RR appealsJury finds for Palsgraf; appellate court affirms; RR appeals Issue: Is it Issue: Is it foreseeableforeseeable that the assistance by the guards would that the assistance by the guards would

causecause Palsgraf’s injury through the falling scales?Palsgraf’s injury through the falling scales? Held: No. Nothing in the situation would suggest such a result. Held: No. Nothing in the situation would suggest such a result.

Case reversed and dismissed.Case reversed and dismissed.

Proximate Cause Examples Lincoln dealer loose wheel case; Person killed by gun suing gun mfg; Dungeons and Dragons case; Rap music cases; Pornography and assault on women

cases; NAMBA killing of minor case.

Did the act cause the injury?

Defenses To A Negligence ActionDefenses To A Negligence Action

Assumption of RiskAssumption of Risk The injured party knew The injured party knew

or should have known or should have known of the risk and of the risk and voluntarily assumed itvoluntarily assumed it

Complete bar to the Complete bar to the plaintiff’s caseplaintiff’s case

Contributory NegligenceContributory Negligence Plaintiff’s action Plaintiff’s action

contributed to the contributed to the injuriesinjuries

Plaintiff’s case is Plaintiff’s case is

completely barredcompletely barred Pretty much gone now.Pretty much gone now.

Comparative NegligenceComparative Negligence Damages are reduced by Damages are reduced by

the % of injuries caused the % of injuries caused by plaintiff’s own by plaintiff’s own negligencenegligence

Pure ComparativePure Comparative Negligence: % set by the Negligence: % set by the jury regarding the cause jury regarding the cause of the injuriesof the injuries

50% Rule50% Rule: If plaintiff is : If plaintiff is 50% or more at fault, 50% or more at fault, case is completely barredcase is completely barred

See See Wassell v. AdamsWassell v. Adams

Wassell v. AdamsWassell v. AdamsCOMPARATIVE Negligence.COMPARATIVE Negligence.

Susan Wassell is visiting her fiancé north of ChicagoSusan Wassell is visiting her fiancé north of Chicago At 1:00 AM, hears a knock on the door; didn’t see anyone; At 1:00 AM, hears a knock on the door; didn’t see anyone;

thinks it is her fiance; opens door anyway; thinks it is her fiance; opens door anyway; Stranger is there; asks for a drink of water; she gets the Stranger is there; asks for a drink of water; she gets the

water; he says the water isn’t cold enough & also wants water; he says the water isn’t cold enough & also wants some money; man goes to the bathroom to get more water; some money; man goes to the bathroom to get more water; she hides her purse; man emerges; she runs from the room; she hides her purse; man emerges; she runs from the room; he drags her back to the room and rapes her; man is never he drags her back to the room and rapes her; man is never caughtcaught

She sues motel owners for failing to warn of high-crime area She sues motel owners for failing to warn of high-crime area Jury assesses damages at $850,000; but says Susan was Jury assesses damages at $850,000; but says Susan was

97% to blame for the occurrence97% to blame for the occurrence Under comparative negligence, she is awarded $25,500 in Under comparative negligence, she is awarded $25,500 in

damages; she appeals. In some states she would have damages; she appeals. In some states she would have received nothing, since more than 50% her fault.received nothing, since more than 50% her fault.

Held: Jury, not the appellate court, is the trier of fact and Held: Jury, not the appellate court, is the trier of fact and determines damages; judgment affirmed.determines damages; judgment affirmed.

Other defense examples: Normally, comparative negligence looks

at the cause of the accident. What about increasing the severity of injuries? Should the Jury consider:

Not wearing seat belt (required by law – neg. per se).

Not wearing motor cycle helmet (required – neg. per se).

Not wearing helmet (not required).

Strict Liability In Tort Under negligence, the act is done in an

unreasonable manner, so liable. Under S.L., the act is so inherently dangerous

(ultra-hazardous), that even if no negligence, the actor is liable.

Called “liability without fault”. Not true.

Blasting, storage of explosive or gas, keeping wild animals as pets, now defective products.

Only defense is assumption of risk; not comparative negligence.

Issue: Are Greedy Consumers Causing Issue: Are Greedy Consumers Causing the Punitive Damage ‘Crisis’?the Punitive Damage ‘Crisis’?

Industry groups are asking Industry groups are asking for statutory restrictions for statutory restrictions on punitive damage on punitive damage awardsawards

Actually Actually businesses businesses themselvesthemselves are winning are winning many of these high awardsmany of these high awards

Federal tort limitation Federal tort limitation Proposed Senate bill Proposed Senate bill

applied applied onlyonly to product to product liability cases. Passed.liability cases. Passed.

So business vs. business cases still are OK.

Consumer groups think Consumer groups think this is unfairthis is unfair

Some lawyers may argue Some lawyers may argue that punitive damages play that punitive damages play an important role by an important role by sending a strong message sending a strong message to companies who “don’t to companies who “don’t want to play by the rules.”want to play by the rules.”

Tort Liability

Intentional torts; Negligence; Strict Liability.

End of Chapter 7

Nelson v. Carroll (1999)

Carroll loaned Nelson $8000; $4200 had been repaid. Carroll sought out Nelson at a nightclub & demanded repayment.

Nelson offered $2300; Carroll (“a little tipsy”) pulled out a gun, hit Nelson on side of head and then shot him.

Carroll is sentenced 7 years in prison for criminal assault. Nelson suffers from health problems; sues Carroll for battery. Carroll

contends discharge of gun was accidental. Lower court holds for Carroll; Nelson appeals. ISSUE: Is the accidental firing of the gun a defense that will exonerate

Carroll of liability? HELD: No. Battery was committed by hitting Nelson on the side of head

and from an intent to cause harmful contact. This was not innocent conduct that accidentally resulted in harm. This is a

volitional act to invade another’s well-being. Intent requirement is NOT a specific desire for certain result.

Caldwell v. K-Mart CorpCaldwell v. K-Mart Corp..

Store security watches Caldwell; accuses her in parking lot of having Store security watches Caldwell; accuses her in parking lot of having merchandise in her purse; Caldwell opens her purse; no merchandise is merchandise in her purse; Caldwell opens her purse; no merchandise is there; guard asks her to come back to the store; they walk around 15 there; guard asks her to come back to the store; they walk around 15 minutes; guard says 6-7 times that he’s seen her shoplift; another minutes; guard says 6-7 times that he’s seen her shoplift; another employee lets Caldwell goemployee lets Caldwell go

She is emotionally upset for several days; experiences discomfort going She is emotionally upset for several days; experiences discomfort going into stores; moves her residence into stores; moves her residence

She sues for false imprisonment; jury awards $75,000 in damages + She sues for false imprisonment; jury awards $75,000 in damages + $100,000 punitive damages; K-Mart appeals$100,000 punitive damages; K-Mart appeals

Initial stop in the parking lot was justified; walking Caldwell through the Initial stop in the parking lot was justified; walking Caldwell through the store with continued accusations was not store with continued accusations was not

Guard violated requirements under K-Mart’s Loss Prevention ManualGuard violated requirements under K-Mart’s Loss Prevention Manual Was the jury’s finding re: damages reasonable?Was the jury’s finding re: damages reasonable? HeldHeld: Judgment affirmed. Large verdict was not motivated by “caprice, : Judgment affirmed. Large verdict was not motivated by “caprice,

passion, prejudice or improper considerations.”passion, prejudice or improper considerations.”

White v. Monsanto Co.White v. Monsanto Co.

Irma White (church-going woman) works at Monsanto Irma White (church-going woman) works at Monsanto refinery; boss sees idle workers and has a one minute refinery; boss sees idle workers and has a one minute “profane tirade”“profane tirade”

Irma has chest pains, head pounding, difficulty breathing, Irma has chest pains, head pounding, difficulty breathing, clammy hands; sees a doctor who diagnoses a “panic clammy hands; sees a doctor who diagnoses a “panic attack”attack”

She sues; jury awards $60,000 for emotional distress; She sues; jury awards $60,000 for emotional distress; Monsanto appealsMonsanto appeals

Was there a basis for tort of emotional distress?Was there a basis for tort of emotional distress? HELDHELD: Reversed. Although the tirade was “crude, rough, : Reversed. Although the tirade was “crude, rough,

and uncalled for, it was not tortious”and uncalled for, it was not tortious” Not directed just at WhiteNot directed just at White No intention to inflict severe distress by the supervisorNo intention to inflict severe distress by the supervisor

Peoples Bank & Trust of Mountain Peoples Bank & Trust of Mountain Home v. Globe InternationalHome v. Globe International

95-year-old Nellie Mitchell runs 95-year-old Nellie Mitchell runs a newsstanda newsstand

Globe’s tabloid publishes her Globe’s tabloid publishes her picture with headline “World’s picture with headline “World’s oldest newspaper carrier, 101 oldest newspaper carrier, 101 quits because she’s pregnant!” quits because she’s pregnant!”

Was in fact story of “paper gal” Was in fact story of “paper gal” in Australia who allegedly in Australia who allegedly became pregnant by became pregnant by millionaire on her paper route millionaire on her paper route (“one thing kind of led to (“one thing kind of led to another”)another”)

Globe thought Nellie was dead Globe thought Nellie was dead at time of the storyat time of the story

Nellie almost suffers a stroke, Nellie almost suffers a stroke, was teased about being was teased about being pregnant and attempted to pregnant and attempted to buy up all of the papers buy up all of the papers

Jury finds invasion of Jury finds invasion of privacy; awards $650,000 in privacy; awards $650,000 in damages + $850,000 in damages + $850,000 in punitive damages; Globe punitive damages; Globe appealsappeals

Held: Globe loses. Nellie’s Held: Globe loses. Nellie’s experience likened to a experience likened to a person “who had been person “who had been dragged slowly through a pile dragged slowly through a pile of untreated sewage”of untreated sewage”

Frank B. Hall & Co. v. BuckFrank B. Hall & Co. v. Buck

Insurance agent, Buck, is Insurance agent, Buck, is fired by Eckert; no one will fired by Eckert; no one will rehire him; he investigates rehire him; he investigates through Barber (PI)through Barber (PI)

Eckert tells PI that Buck Eckert tells PI that Buck was horrible, a “classical was horrible, a “classical sociopath”, verbally sociopath”, verbally abusive, had stolen files, “a abusive, had stolen files, “a zero”, “a Jekyll & Hyde zero”, “a Jekyll & Hyde person”, was “lacking . . . person”, was “lacking . . . in scruples”in scruples”

Tells Burton (another Tells Burton (another agent) that Buck “didn’t agent) that Buck “didn’t reach production goals;” reach production goals;” “would not be rehired”“would not be rehired”

Buck sues Hall for Buck sues Hall for defamationdefamation

Jury awards $605,000 in Jury awards $605,000 in actual damages; $1.3 actual damages; $1.3 million in punitive million in punitive damages; Hall appealsdamages; Hall appeals

Q: Were statements to Q: Were statements to Burton sufficient to create Burton sufficient to create defamation?defamation?

A:A: Yes. (Note: Testimony Yes. (Note: Testimony of conversation with PI of conversation with PI coupled with comments to coupled with comments to Burton showed intent to Burton showed intent to violate Buck’s rights)violate Buck’s rights)

Bethlehem Steel Corp. v. Ernst & Bethlehem Steel Corp. v. Ernst & WhinneyWhinney

Ernst & Whitney, acctg. firm, prepares an audited financial report for Ernst & Whitney, acctg. firm, prepares an audited financial report for Jackson Mfg. overstating its financial status Jackson Mfg. overstating its financial status

Ernst knew Jackson needed the report for Bethlehem Steel to show Ernst knew Jackson needed the report for Bethlehem Steel to show Jackson’s finances were strong (Bethlehem would then sell steel to Jackson’s finances were strong (Bethlehem would then sell steel to Jackson on credit)Jackson on credit)

Jackson goes into bankruptcy, owing Bethlehem money; Bethlehem Jackson goes into bankruptcy, owing Bethlehem money; Bethlehem sues Ernst; jury awards $400,000sues Ernst; jury awards $400,000

Judge sets aside verdict; orders a new trial; Ct. of Appeals reverses; Judge sets aside verdict; orders a new trial; Ct. of Appeals reverses; affirms trial court decision; everyone appealsaffirms trial court decision; everyone appeals

Held: Ct. of Appeals is affirmed; remand case for new trialHeld: Ct. of Appeals is affirmed; remand case for new trial Non-clients rely on accountant’s informationNon-clients rely on accountant’s information Accountants should not be liable if unaware of the use of the Accountants should not be liable if unaware of the use of the

information they create or who will rely on itinformation they create or who will rely on it However, here false information supplied & losses incurredHowever, here false information supplied & losses incurred

CausationCausation

Causation Causation between a party’s act & another’s injurybetween a party’s act & another’s injury Cause in factCause in fact shows the person’s conduct is the actual shows the person’s conduct is the actual

cause of the event that created the injury (Some courts call cause of the event that created the injury (Some courts call this the “but for” test)this the “but for” test)

Proximate causeProximate cause indicates that the liability bears a indicates that the liability bears a reasonable relationship to the negligent conductreasonable relationship to the negligent conduct

If consequences are If consequences are too remotetoo remote--no liability--no liability If there is an If there is an intervening or superseding eventintervening or superseding event--no liability--no liability Chain of events created by a party’s actions must be Chain of events created by a party’s actions must be

foreseeableforeseeable Some states replace Some states replace proximate cause proximate cause withwith legal causelegal cause that that

creates a creates a substantial factorsubstantial factor in bringing about the injury in bringing about the injury