Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning Chapter 10 Business Torts Its Legal, Ethical, and Global Environment MARIANNE

Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning

Chapter 10 Business Torts

Its Legal, Ethical, and Global Environment

MARIANNE M. JENNINGS

7th Ed.

2 Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning

• A tort is a civil wrong that is an interference with someone’s person or property such that injury results.

• Latin Word Tortus: means “crooked, dubious, twisted”.

What is a Tort?What is a Tort?


• Tort is a private wrong.– Injured party seeks remedy.

– Recovers damages from the one who commits the tort.

• Crime is a public wrong.• Wrongdoer is prosecuted.• Pays fine to government or is jailed to

pay debt to society.

Torts vs. CrimesTorts vs. Crimes


• Intentional torts: – More than an accidental wrong.

• Tort of negligence:– Accidental harms that result from the failure to

think through the consequences.– Still have liability but there are defenses.

• Strict tort liability:– Absolute standard of liability.– Used in product liability cases.

Types of TortsTypes of Torts


• Property Torts– Trespass

– Disparagement

– Palming off

– Negligence

• Personal Torts– False

imprisonment– Defamation– Battery– Assault– Emotional distress– Negligence

Other Types of TortsOther Types of Torts


• Untrue statement by one party that is published to a third party.

• Slander is oral or spoken defamation.

• Libel is written, and in some states broadcast, defamation.

DefamationDefamation


• Elements:– Statement about a business’ or person’s

reputation or honesty that is untrue.

– Statement is directed at business and made with malice and intent to injure.

– Publication - someone heard and understood the statement.

– Damages - economic losses such as damage to reputation.



• Defenses:– Truth is a complete defense.

– Privileged speech: two types.• Absolute privilege.

• Qualified privilege.



• Case 10.1 Wilkow v. Forbes (2001).– What was Forbes’ defense to libel?– Can an opinion be libelous?

• Case 10.2 Burnett v. National Enquirer, Inc. (1983).– Was malice established in the case? Why was

it necessary to establish malice?– Is the National Enquirer a newspaper for

purposes of the protection of the privilege?



• References and defamation.– Managers must use caution when

speaking of former or current employees to potential new employers.

– The tort of defamation can be established if false statements are made.



• Elements:– Tortfeasor knew of Employee’s contract.

– Tortfeasor intended to interfere with or breach contract between Employer-Plaintiff and Employee.

– Employer-Plaintiff is injured by breach of contract.

Contract InterferenceContract Interference


• Texaco, Inc. v. Pennzoil, Co. (1987)– The court awarded Pennzoil $7.53

billion in actual damages and $3 billion in punitive damages for tortuous interference of contract.

– On April 12, 1987, Texaco filed for bankruptcy protection.

Contract InterferenceContract Interference


• Custody of someone else for any period of time against their will.

• Need not establish physical damages; just the fact that they are detained establishes sufficient damages.

• Defense of shopkeeper’s privilege.– Can detain for reasonable time.– Must have basis for detaining the individual.

False ImprisonmentFalse Imprisonment


• Liability for conduct that exceeds all bounds of decency.

• Difficult for plaintiff to establish emotional distress.

• Has been used by debtors against collectors.

Intentional Infliction of Intentional Infliction of E.D.E.D.


• Public disclosure of private facts• Appropriation of another’s name for

commercial advantage• Galella v. Onassis (1972).

– The court ruled Galella had invaded Jacqueline Kennedy Onassis’ privacy.

• HIPAA protects health/patient privacy.

Invasion of PrivacyInvasion of Privacy


• Unauthorized use of someone’s name, voice, image, or likeness for commercial advantage.

• Even if manner of use is accurate, it is a tort because of the use without authorization.

AppropriationAppropriation


• Case 10.3 Midler v. Ford Motor Co. (1988).– On appeal, Ms. Midler’s case was tried

and she recovered $400,000.– Was the audience confused as to who

really sang in the commercial?– Was the use of Midler’s voice

appropriation?

AppropriationAppropriation


• Duty—Element One.– All persons are expected to behave as

ordinary and reasonably prudent persons do:• Standard of the law is not always used.• Example: The speed limit of 45 is not

appropriate in ice and snow.

NegligenceNegligence


• Case 10.4 Randi W. v. Muroc Joint Unified School District (1997).– What concerns are raised about

imposing liability on those who provide letters of recommendation?

– What was the proximate cause of Randi W’s injury?



• Breach of Duty—Element Two– Failure to comply with established

standard of conduct• Often connected with element one as courts

struggle to determine whether a duty even exists

– Case 10.5 Graves v. Warner Brothers (2004).• What duty did Jenny Jones show have to

the Plaintiffs?



• Causation—Element Three.– Breach of duty caused the plaintiff’s

injuries.

– “But/for” causation test .

– Restricted by the zone of danger rule = Duty.



• Proximate Cause (Foreseeability)—Element Four.– Some courts hold the cut-off line must be

drawn between the "but/for" causation and events contributing to plaintiff's injuries

• Case 10.6 Palsgraf v. Long Island RR (1928) – There is a legal limit to what is foreseeable.



• Damages—Element Five.– Medical bills.

– Lost wages.

– Pain and suffering.

– Loss of consortium (as between spouses).



• Contributory negligence:– Plaintiff is also negligent. – Operates as a complete bar to recovery

• Comparative negligence:– Compare acts of plaintiff and defendant and

assess blame for accident.– Reduces plaintiff’s recovery by amount of

fault.

Defenses to Defenses to NegligenceNegligence


• Assumption of risk—plaintiff knew of inherent risk and went forward anyway.

• Case 10.7 Mosca v. Lichtenwalter (1997).– Is the risk of being struck by a line inherent

in the sport of fishing?– What is the difference between assumption

of the risk in day-to-day activities and in sports?

Defenses to Defenses to NegligenceNegligence


• Current Attempts at Reform:– Limits on verdicts.– Standards for recovery.

• Case 10.8 BMW of North America, Inc. v. Gore (1996).– What constitutional issues are raised?– To whom would the dissent leave the issue of

punitive damage?

Tort ReformTort Reform


Tort ReformTort Reform

• Limits on Punitives: – Eighth Amendment excessive punitive

damages is cruel and unusual punishment. Cooper Industries v. Leatherman Tool Group (2001).

– Due Process violated with excessive punitives. State Farm v. Campbell (2003).


Strict LiabilityStrict Liability

• Absolute liability for injury.

• Can result from violation of statute (improper disposal of toxic waste).

• Public policy reason is manufacturers take appropriate steps to design and manufacture products.

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Copyright ©2006 by West Legal Studies in Business A Division of Thomson Learning Chapter 10 Business Torts Its Legal, Ethical, and Global Environment MARIANNE