Class 1 - 01-10 Types of remedies1. Compensatory - as if never had been wronged (retrospective)2. Preventative - prevent harm before it happens a. coercive - injunction (most important type of coercive) - personal command from courts ordering a litigant to do or to refrain from doing some specific thing b. declaratory - authoritatively resolve disputes about the parties’ rights but do not end in a personal command (Owner owns land, not opposing litigant). Resolves the issue but there is no injunction3. Restitutionary - Restores to Plaintiff all that Defendant gained at Plaintiff’s expense.4. Punitive - to punish for deliberate wrongdoing (stealing lumber knowing someone else owns it). Taking lumber one mistakenly believes is his own - even if done so negligently - is not punishable by punitive damages. Only if it is intentional can there be punitive damages.5. Ancillary - Ancillary damages are designed in aid of other remedies. Attorneys fees and litigation costs, for example. Writ of execution is another example - sheriff seizing D’s property to sell it to pay P. Or, any money owed to D will just be paid directly to P. These are all ancillary damages are awarded for collection purposes. Monetary/legal v. Equitable remediesCan only have an equitable remedy if a Legal remedy would not be adequateMONEY FIRST- Legal (monetary) remedies - Damages - compensatory and punitive are most common.- Equitable (non-monetary) remedies - injunctions and specific performanceThis distinction gets murky with restitution damages Prevenative/Prospecive versus Compensatory/Retrospective RemediesPerventative Remedies - 2 types- Coercive remedies - court orders party to do something or not to do something - ex., injunctions - the most important coercive remedy - a personal command from a court to litigants, ordering them to do or to refrain from doing some specific thing. Ex., neighbor must stay off owner’s land. - Declaratory remedies - binding adjudication that establishes the rights and other legal relations (liabilities) without providing for or ordering enforcement (in the case at barEx., alleged patent infringer brings action to “clean the air” about IP rights. Justice** wtf? A Practical focus on the “bottom line” A debate over whether laws have any moral force in the absence of remedies

Substitutionary relief - also known as specific relief à “law” v. “equity” “Another view of remedies taxonomy”Specific reliefinjunctions, specific performance (Contract Law)Restitution of PropertyRestitution of Specific Sum of Money (i.e., refund). Rightful position principle - compensatory remediesAt most basic level, harmed for $10k. He should receive $10k - no over or under compensationEasy in principle, but a lot harder in practice As Hatahley (1958) p. 11; (case in first reading - rich, but short case/excerpt from case) demonstrates)Appellate Court says the fundamental principle of damages IS: to put the injured party nearly as possible to the position the party would have been but for the wrong.- Expectation = Restitution Damage in this case. Class 2 - 01-12 Closer look at U.S. v. Hatahley (1958) - The Rightful Position and issues that arise. You can have multiple principles in tension w/ one anothere.g., cruel and unusual punishment vs. deterrence; orrightful position v. economic efficiency HatahleyFundamental principle of damages is the rightful position - Indian Livestock Case - what’s the value of the livestock?? Rare, unique, livestock, and where would they have been had the livestock not have been seized unlawfully? App. Ct. didn’t approve of what trial court did because they applied an erroneous rule when finding the value of the animals, w/out consideration for condition, age, or sex of the animals. Mechanics of compensation - e.g., district court’s approach in Hatahley- We create a default rule to pay $ to plaintiff- Losses are easiest to calculate when we can assign a $ value- But there are problems- Hatahley court faced the question of how to value horses/livestock, difficulties of travel, missed religious ceremonies, and emotional distress How do we value horses and livestock? And what were the challenges in coming up with a number in Hatahley?- Different ages, conditions, and sexes; they were special animals without a “normal” market

value- Even if we can quantify it accurately, it could cost far more to actually take the time and resources to actually quantify it- Maybe an estimate is the best we can do under the circumstances - but estimates will inevitably result in under- or overcompensation Assuming we actually care (from a Plaintiff’s perspective, he may not) about such a large price tag for D, how might we approach the problem? Social Justice - super-compensatory? Law and Economics - efficient behavior, maximization of social _______ IN RE SEPTEMBER 11TH LITIGATION - Silverstein purchased 99-year leases on four of the WTC buildings in July, 2001.- Sept, 2001, they fell.- Sued airlines, airport security companies, and the operator of Boston’s Logan Airport, alleging that “but for” their negligence, the terrorists wouldn’t have been able to enter the aircrafts they hijacked.- Sought $16.2 billion - the alleged replacement value of towers one, two, four, and five. Silverstein (’s companies) (WTCP) paid $491 mil. at closing. Rest of consideration - 99-years of payments with a present value of $2.595 billion.* WTCP was (net) valued at $2.84 billion. Originally built for “the single object of preserving . . . The economic well=-being of the northern New Jersey-New York metropolitan area” . . . This was in the public interest.- Cost $1 billion to build. LESSER-OF-TWO RULENew York follows the lesser-of-two rule- a plaintiff whose property has been injured may recover the less of the diminution of the property’s market value or its replacement cost. This rule applies even when the property in question has been completely destroyed. BUT . . .SPECIAL PROPERTY EXCEPTION - Lido Beach Test - Properties without market value (towers??)1. The improvement must be unique and must be specially built for the specific purpose for which it swas designed;2. There must be a specific use for which the improvement is designed and the improvement

must be so specially used;3. There must be no market for the type of property and no sales of property for such use; and4. The improvement must be an appropriate improvement at the time of the taking and its use must be economically feasible and reasonably expected to be replaced. This test is NOT whether there are, or were, special unique aspects to the property, but ratherWhether the use to which the property is put at the time of the tort is a unique use, suitable only to the owner, and without a fair market value **Fair market value for the towers was determined two months prior when the lease was signed!** P then argues: entitled to recover cost of contractual obligations to “rebuild, restore, repair, and replace” the buildings. D argues they can’t be held responsible in tort, and that EVEN IF THEY COULD, the new buildings represent radical improvements and differences and CANNOT be considered replacement structures within the meaning of the contract. Court: D is NOT responsible for damages which are remote from the wrong or indirectly related to it. Tortfeasor is responsible only for injuries that are the DIRECT, NATURAL, AND PROXIMATE RESULT of his actions, and those that the parties would have foreseen, contemplated, or expected. Palsgraf, v. Long Isl. RR Co. NOT: remote or indirectly relatedONLY: direct, natural, and proximate, AND foreseeable, contemplated, or expected. The market value of the towers is the measure of recovery for their destruction. - any special or different burden flows from the contract, not from the use of the damages property at the time of the injury (given these specific facts). Then WTCP wants damages for tenants not paying their rents.Argues the present value of lost rentals since Sept 11, 2001, is $3.9 billion. Seeks this amount over and above the value of the destroyed buildings, regardless of how it’s measured. Court: NO! That price (aforementioned fair market value) includes rental money. That the property would be rented out was considered when the contract (the 99-year lease) was made, and is included in the already-decided fair market value (not specialty value). . . . Claim is w/out merit. Price paid to port authority included the value of anticipated rentals. Price paid reflected the present value and of those rental streams that were destroyed. WTCP cannot recover twice.

IV. (p.22)The fair market value of a property is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsionto buy or to sell and both having reasonable knowledge of relevant facts.”U.S. v. Cartwright (1973). Generally, “a recent sale price for the subject asset, negotiated by the parties at arm’s length, is the ‘best evidence’ of its market value.” Schonfeld v. Hilliard (2000).- July, 2001 - Sept., 2001 is a short enough time lapse to presume equivalent market value.However, proof may be introduced to overcome the presumption, for market values can flucuate rapidly. Also, the Air Transportation Safety and System Stabilization Act limit’s the liability of each defendant to its insurance coverage. 49 U.S.C. §40101 P also sought to recover the residual value of the towers at the end of the 99-year lease.- N.Y. Real Prop. Acts. §833 (2008) provies that the holder of a life estate or a term of years can recover the value of the reversion and hold that recovery in trust for the owner of the reversion. The court appeared to accept this claim in principle, but dismissed it for lack of any evidence of the value of the towers in [the year] 2100, discounted at present value. Class 3 Notes - Jan-17 Efficient Breach - p.44 has an analysis Trinity ChurchCracks - damage in old stone churchIf it just completely fell all at once, it would be completely different. There would be no question as to whether there would be future damage and what that damage would be. But here, there is potential future damage - in the case that it continues to completely collapse - which would result in much greater replacement (or repair?) value. But the main problem herein is that there is not really a fair market value. Replacement value - or replacement in kind. -- what do you do when there is no fair market value (FMV)? Risk of under-compensation versus over-compensation Present value (and one more line in the powerpoint that is a remedy issue in the case -- go back and find it)

(additional) trinity church issues: Assume that if the church had been totally destroyed, they woul rebuild it with a substantially similar structure, and that the court would award replacement cost as the measure of damages Reliance and expectation - actual Day 3 stuffValue as measure of rightful position - the fundamental principle of damages is to restore the injured party, as nearly as possible, to her “rightful position”- of course, the question is what = “rightful position”- and in particular, how do or should we choose between the “expectation interest” and the “reliance interest” 3 damage interestingExpectation - putting the party in the position she (objectively) would have been in had the contract been performed. Reliance - costs incurred by the promisee (but not necessarily paid to the promisor); I.e., changes made/costs incurred “in [reasonable] reliance” on the contract. (Generally less than expectation interest, but more than restitution) Rest. Of Contracts 2d §349 Restitution - §38 restatement (3d) of Restitution and u\Unjust Enrichment (published 2011) (we discuss this later in the course). Reliance damages are often easier to prove - r. of K 2d 349Uncertainty as a limitation on damagesAs an alternative to the measure of damages state ed in 347, the injured party has a right to damages based on his reliance interestLess any cost that the party in breach can prove . . . Which do we choose?- default remedy is putting the party in the position they would have occupied but-for breach- or, to put another way: put the non-breaching party in the position they would have been had they performed Neri v. Retail Marine Corp. (1972)- selling boat case - it’s a lost sale?? Tongish v. ThomasRice-selling case, or somethingQuestion is whether the buyer is entitled to his actual loss of profit or the difference between the

market price and the contract price.Held: court awards buyer contract-market damages rather than lost profitsReason - UCC says so Chatlos Systems v. NCR (3d Cir. 1982)Breach of warranty Summary 1. Choice of a cause of action matters- Lost profits in contracts, but not tort- Punitive damages in tort but not in contract2. Expectation interest remains the dominant and preferred measure of damages in contract law. General damages - damages that law presumes to follow from type of wrong complained of; specifically, compensatory damages for harm that so frequently results . . . Blacks law definition Consequential damages - don’t flow directly and immediately from an injurious act but that result indirectly from the act Basic rationale: permitting consequential damages is just the logical extension of the but-for rightful position principle. Problems qith consequential damages- default limitations on conract damages - foreseeability - something else - probably mentioned in above notes - unpredictable - encourages litigiousness - hard to defineOther problems w/ consequential damages- author is probably right that the dinstinctions b/w consequential, general, direct damages is artificial and confusing Why it matters- parties use the distinction in contracts - clauses excluding consequential damages w/in the contract - legislatures use the dinstinction in statutes - many lawyers and judges still think of remedies in these terms. Meinrath v. Singer (1980)

Class 4 Notes - 01-19 Texaco, Inc., v. Pennzoil (1987), p.62There is an obligation of “good faith and fair dealing” (in this jurisdiction).But the Court doesn’t buy Texaco’s argument. Replacement cost is speculative / uncertain (p.64). Next, Texaco urges that the jury’s use of the replacement cost model resulted in a gross overstatement of Pennzoil’s loss becausea. Pennzoil sought to replace getty’s low value reserves w/ reserves of a much higher value; Rest of arguments are clearly stated (and most underlined) in text on pp. 64-65. LIMITS ON DAMAGES Kearney & Trecker Corp., v. Master Engraving Co. Issue: whether the UCC permit’s the enforcement of a contractual exclusion of consequential damages where the buyer’s limited remedy authorized in the contract of sale has failed to achieve its essential purpose. The remedy limitation clause in the contract was less than “put Plaintiff where he would have been but-for the breach.” Is the remedy limited to this? 1) Freedom of Contract (is in UCC §2-719)2) Right to limit or exclude consequential damages (§2-719)3) insistence upon minimum adequate remedies to redress a breach of contract (Comment 1, §2-719). If a limitation or exclusion of consequential damages is not unconscionable when K is made, must it be held unenforceable if the limited remedies provided in the contract do not achieve their intended purpose? UCC is inconclusive regarding this issue. The code only provides that when a limited remedy fails of its essential purpose, “remedy may be had as provided in this act.” (§2-719(2)) Court’s Conclusion: §2-719 does not require the invalidation of an exclusion of consequential damages when limited contractual remedies fail of their essential purpose. It is only when the circumstances of the transaction, including the seller’s breach, cause the consequential damage exclusion to be inconsistent with the intent and reasonable commercial expectations of the parties that invalidation of the exclusionary clause would be appropriate under the Code.

In re Trans World Airplines, Inc. (1998), p.74 TWA leased two plains from Interface Group.Rent payments missed, and parties renegotiated the leaseIn the renegotiated contract, TWA expressly agreed that the liquidated-damage clause was enforceable. Precedent Rule: “a liquidated damages provision has its basis in the principle of such compensation for loss.” Truck Rent-A-Center, Inc. v. Puritan Farms 2nd, Inc. (1977). But Also, New York public policies are “firmly set again the imposition of penalties or forfeitures for which there is no statutory authority.” Id. Thus, the law is: “contractual provisions fixing damages in the event of breach will be sustained if the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation.” Effect of liquidated damages clause in their Contract is this:- If TWO were to breach with one month left on lease, actual damages would be approx. one month’s rent per plane.- Under their clause, however, TWA would owe termination value of 12.5 million, minus the resale value at that time. TWA would owe 5.5 mil. Per plane, plus 12.4 mil. per (termination value minus one month’s rent). Public policy is intended to avoid this type of penalty (see Truck Rent-A-Center, which says, “A clause which provides for an amount plainly disproportionate to real damage is not intended to provide fair compensation but to secure performance by the compulsion of the very disproportion. A promisor would be compelled, out of fear of economic devastation, to continue performance and his promisee, in the event of default, would reap a windfall well above actual harm sustained.”). Important / Relevant Holding: Accordingly, Court affirms the District Court’s order holding that the liquidated damages provision contained in the lease is unenforceable. Another section of the lease authorized Interface to withhold 1,478,000 that it owed to TWA and to retain that sum as a “maintenance deposit” to be returned to TWA w/out interest upon . . .Essentially, section 33 assured Interface that, in the event of early termination, TWA would bear at least some responsibility for the cost of the overhauls. Because s.33 reflected a reasonable estimate, ex ante, of the injury that Interface would incur if TWA terminated the lease early, s.33 didn’t constitute an unenforceable penalty under NY law. Under s.33, the return of the deposit was conditioned on TWA’s performance . . ., and that condition was never satisfied. Accordingly, Interface is entitled to retain the deposit.Class 5 - (continuing class four discussion) - Jan-24

Northern Illinois Gas Co. v. Energy Cooperative, Inc. (1984), p.81No. Ill. Gas co. promised to buy 56 million barrels of naphtha from Energy Coop over ten years. NI Gas converted naphtha into natural gas. U.S. eased price controls on natural gas, and natural gas became cheaper from drillers and pipline companies. NI Gas quit buying naphtha and2 this case resulted. NI Gas argues: trial court erred in denying its motion for summary judgment on the liquidated damages clause and in striking the liquidated damages defense. The Court held that liquidated damages clause of the contract gave the non-breaching party the choice of recovering either actual or liquidated damages. And ECI chose to pursue actual damages, resulting in a jury award of $305.5 million. ECI says it has not made a demand for liquidated damages and, therefore, it has the option of seeking actual damages.ECI also relies on §2-719(1)(b) of the UCC in arguing that the liquidated damages clause does not provide the exclusive measure of damages unless it is expressly agreed to be exclusive and labeled as such. §2-719(1): Subject to the provisions of subsections 2 and 3 of this section and of the preceding section on liquidation and limitation of damages: (a) the agreemend may provide for remedies in addition to or in substitution for those provided in this article and may limit or alter the measure of damages recoverable under this article, as by limiting the buyer’sr remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts; and (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy. NI Gas argues that 2-719 applies only to contract provision which limit a remedy. A liquidated damages clause does not limit a remedy but instead provides an argeed upon measure of damages. Therefore, 2-719(1)(b) does not govern the liquidated damages clause in the contract with ECI. Ray Farmers Union Elevator Co. v. Wairau - involves anticipatory breach of three grain supply contracts which contained liquidated damages clauses. P’s claimed to have the option of seeking actual damages since the liquidated damage clauses were not declared to be exclusive as allegedly required by 2-719(1). Court rejected this, holding: a liquidated damages clause is NOT a remedy within the portent of 2-719. This Court:A liquidated damages clause which provides an agreed upon formula for calculating the amount of money damages owed in the event of non-performance is NOT a limitation on a remedy. Liquidation or limitation of damages is governed by 2-718; limitation of REMEDIES falls under 2-

719.The concepts are separate and distinct. The only cross reference b/w the two sections is found in 2-719, “subject to” 2-718. If, instead, 2-718 were made subject to 2-719, then the restrictions of 2-719(1)(b) would arguably apply to a liquidated damages clause. But 2-719 is subject to 2-718, indicating that any restriction on the right to liquidate damages by agreement is contained in 2-718 and nowhere else. We see no reason to impose restraints of 2-719(1)(b). Court reverses Trial Court’s order striking the liquidated damages defense. Brunswick Corp. v. Pueblo Bowl-o-Mat (1977) - p.118Petitioner is bowling equipment manufacturer.Petitioner acquired and operated many bowling centers since 1965. To establish a violation, respondents sought to prove tht because of its size, petitioner had the capacity to lessen competition in the markets it had entered by driving smaller competitors out of business. To establish damages, respondents attempted to show that had petitioner allowed the defaulting centers to close, respondents’ profits would have increased. Jury verdict for $2.3 mil. Court of appeals reversed the judgment and remanded the case for further rpoceedings. Court decided that the jury had not been properly charged and that therefore a new trial was required. Also, it decided that “an essential predicate” for the district court’s grant of equitable relief was the jury verdict, the equitable decree should be vacated as well. And it concluded that in any event, equitable relief “should be restricted to preventing those practices by which a deep pocket market entrant harms competition . . . Divestiture was simply inappropriate.” Both sides petitioned for writs of cert. Brunswick’s was granted. Petitioner only brings the issue “whether antitrust damages are available where the sole injury alleged is that competitors were continued in business, thereby denying respondents an anticipated increase in market shares.” Only injury is that the competitor bowling alleys stayed in business. To answer this question, we look to ant merger and treble-damages provisions of the Clayton Act. -- §7, which proscribes mergers whose effect “may be substantially to lessen competition, or to tend to create a monopoly.” §4 provides reble damages to “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws.” Court holds that for plaintiffs to recover treble damages on account of §7 violations, they must

prove more than injury causally linked to an illegal presence in the market. P’s must prove antitrust injury, which is o say injury of the type the antitrust laws were intended to prevent and that flows from that which make defendants’ acts unlawful. It should be, in short, “the type of loss that the claimed violations . . . Would be likely to cause.” Zenith Radio Corp. v. Hazeltine Research, Inc. (1969) McKennan v. Nashville Banner (1995)D fires someone for an unlawful reason, but later finds out that he could have fired them for a lawful reason. Age discrimination firing, but later finds evidence of wrongdoing by the employer sufficient to lawfully terminate him. Backpay awarded only until the day of the finding of the new evidence that would have allowed firing -- as if never unlawfully terminated - ding ding. Bigelow v. RKO Radio Pictures (S.Ct 1946) - p.124Double features - theaters owned by some of the conspirators were enabled to secure and show feature pictures in advance of independent exhibitors, not affiliated with respondents, such as petitioners. Petitions charged that, consequentially, they were subjected to loss of earnings in excess of $120,000 during the five year time period. Defendant made calculations of damages difficult, and in turn tried to hide behind this difficulty in its defense. “jury could return a verdict for the plaintiffs, even though damages could not be measured with the exactness which would otherwise have been possible.” - because the tortuous acts themselves precluded ascerainment of the amount of damages more rescisely, by comparison of profits, prices and values as affected by the conspiracy, with what they would have been in its absence under freely competitive conditions. “The msot elementary conceptions of justice and public policy require that the wrongdoer shall bear the risk of he uncertainty which his own wrong has created. The principle is an ancient one, and is not restricted to proof of damage in antitrust suits, although their character is such as frequently to call for its application. . . . In cases where a wrongdoer has incorporated the subject of a plaintiff’s patent or trademark in a single product to which the D has contributed other elements of value or utility,m and has derived profits from the sale of the product, this Court has sustained recovery of the full amount of defendant’s profits where his own wrongful action has made it impossible for the plaintiff to show in what proportions he and the defendant have contributed to the profits.

“The constant tendency of the courts is to find some way in which damages can be awarded where a wrong has been done. Difficulty of ascertainment is no longer confused with right of recovery” for a proven invasion of the plaintiff’s rights.”- Story Parchment, 282 U.S. at 565 Note 3 case - not enough proof - p.129-130 Brink’s v. City of NY - Note 4 - enough proof - p.130- Brinks contracts to collect parking- Brink’s employees steal from meters- Evidence of damages - collection increases $1 million in first ten months after replacing Brinks.- Court cites Bigelow:“It will be enough if the evidence show the extent of the damages as a matter of just and reasonable inference, although the result be only approximate. The wrongdoer is not entitled to complain that they cannot be measured with the exactness and precision that would be possible if the case, which he alone is responsible for making, were otherwise.” Ex Post and Ante issues.No reason you cannot allow evidence found between the breach and the trial. Jan-31 - Tort Reform Arbino v. Johnson & Johnson Personal accountability Should a company be punished for the bad actions of managers. And how much responsibility should a company be able to take for actions of their managers. Criminal penaltiesGeneral v. specific deterrence General deterrence by example vs. deterring a specific party When are punitive damages acceptable?How about risk * outrage = acceptability(just a general idea Totolo made up. Drunken sailor who causes damage (Exxon Shipping v. Baker)- truly irreparable harmBillions of dollarsEgregious (but not intentional) behavior

State Farm Auto Ins. Co. v. CampbellCampbell tried to pass 6 vans on a wo-lane highway in Utah.Caused an accident that killed one driver and disabled anotherLiability insurance only covered $25k per person, but State Farm refused offers to settle for policy limits. Jury found Campbell 100% at fault and rendered verdicts totaling nearly $186k.State Farm refused to pay the part of the judgment exceeding policy limits and refused to post a supersedeas bond to delay collection during appeal. Campbell hires own lawyer to negotiate.Two victimes decided not to collect from Campbell.Campbell agreed to sue State Farm using Slusher and Ospital’s lawyers, and pay 90% of any recovery to Slusher and Ospital Ut. Supr. Ct. denied Campbell’s appeal in original suits against slusher v. OspitalState Farm paid the judgment.And Campbell decided to sue State farm for bad faith, fraud, and intentional infliction of emotional distress. Trial CourtJury awarded $2.6 mil to Campbell in compensatory, $145 mil in punitiveTrial court reduced this to $1 mil and $25 mil. Respectively. Utah Supr Court applied the three guideposts in BMW v. Gore (1996).1) degree of reprehensibility of the defendant’s conduct,2) ratio between punitive award and thee harm likely to result from the defendant’s conduct, as well as the harm that actually has occurred,3) and the civil or criminal penalties that could be imposed for comparable misconductReinstated $145 mil. Punitive. Court also relied on State Farm’s wealth and testimony indicating that “state farm’s actions will be punished t most in one out of every 50,000 cases as a matter of statistical probability. Conclusion: “the ratio between punitive and compensatory was not unwarranted.Court noted that the punitive damages award was not excessive when compared to various civil and criminal penalties they could have faced, including $10,000 for each act of fraud, the suspension of its license, disgorgement of profits, etc. U.S. Supreme CourtStates have discretion, but there are procedural and substantive constitutional limitations on these awards.

Due Process prohibits grossl excessive or arbitrary punishments on a tortfeasor. This is because “elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice” of the conduct that will subject him to punishment as well as the severity fo the penalty a State may impose.” Punitive awards serve the same purpose as criminal penalties, however, defendants subjective to punitive damages haven’t been accorded the same standard of a criminal proceeding. Reasonableness of punitive damages -- Degree of reprehensibilityDetermine reprehensibility by considering whether:1) the harm caused was physical as opposed to economic;2) the tortuous conduct evinced an indifference to or a reckless disregard of the health or safety of others;3) The target of the conduct had financial vulnerability;4) The conduct involved repeated actions or was an isolated incident;5) And the harm was the result of intentional malice, trickery, or deceit, or mere accident State Farm’s handling of the claims against Campbells merits no praise. TC found that State Farm employees altered records to make them appear less culpable.State Farm disregarded the near-cerain probability that a judgment ine xcess of policy limits would be awarded.State Farm ampliied the harm by assuring the safety of their assets and telling them to put a for-sale sign on their house post-verdict. No error awarding punitive damages, but a more modest punishment for this reprehensible conduct could have satisfied the State’s legitimate objectives. State cannot punish a defendant for conduct that may have been legal where it occurred. Court saysBlurred line b/w punitive and compensatory damages“The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award . . .”- 9 times compensatory or less is constitutional. Cannot consider wealth if considering wealth trumps this 9-times-compensatory constitutional limits. Phillip Morris Co. v. Williams P died of lung cancer.Theory of the case was fraud - that Phillip Morris knew for the entire 40 years that there was at least a substantial risk that smoking caused cancer, and knew for most of that time that smoking in fact caused cancer, but that It falsely and systematically sought to reassure the public and

minimize the risk. Family persuaded him to quit, Williams repeated the assurances that smoking was safe. Jury: $21k in economic damages; $800k in no economic; $79.5 mil. in punitives.Williams died soon after. Oregon court upheld punitives.Concluded D’s conduct was extremely reprehensible, intentionally inflicting substantial risk o serious illness or death on thousans of Oregonians.Read State Farm as forbidding punishment for out-of-state conduct or for conduct dissimilar to the illegal conduct directed at P, but permitting punishment for conduct directed to others that was both in-state and similar. Concluded: “what Philip Morris had done was manslaughter, a felony that the legislature treated very seriously.” The punitives far exceeded a single-digit ratio to compenatories, either before or after the reduction to the statutory cap.BUT, single-digit ratios can be exceeded when the conduct is unusually reprehensible, and this was such a case. U.S. Supreme CourtConstitution imposes certain limits . . . “grossly excessive.”Constitutional Due Process forbids a State to use punitives for injuries upon nonparties to the case (other people who have received lung cancer or who are at risk for lung cancer). Feb-07 INJUNCTIONS Equitable vs. legal reliefInjunctions are equitable. Preventative wrongful acts (preventative injunctions) Themes1) faith in money vs. lack thereof2 Losses that are easily quantifiable vs. not-so-much3) judicial economy - injunctions require courts to oversee/supervise compliance- Damage judgments do not - although parties can come back seeking enforcement (eg.

Garnishment, etc.) 4 Types of Injunctions1) Preventive - enjoin wrongful acts to prevent harm2) Prophylactic - enjoin lawful acts to prevent possible future wrongful acts that may cause harm3) Reparative - to repair harm4) Structural - to force public institutions to comply with a particular legal obligation. - - Example: integration of universities in the 1960’sPreventative Injunctions Almurbati v. Bush (p.263)- P’s are 6 Bahraini nationals classified as “enemy combatants” and held at Guantanamo. P’s filed for habeas relief to be released.Then they filed for a preliminary injunction forbidding the Gov’t to transfer any plaintiff out of Guantanamo w/out 30 days’ notice to the court and counsel (filed as part of their habeas case). P’s allege that they will suffer “immeasurable and irreparable harm” (torture or death) by foreign gov’t to where they may be transferred (Pakinstan, Afghanistan, Saudi, or Yemen) Court: no evidence that they’ll be transferred to such a country. P’s rely on news reports and statements from two of the petitioners herein.- And most notably, they do not allege any statements were made by anyone with authority to determine their destination upon release. Respondents refute: the facts P’s allege. Specifically, “it is the policy of the United States not to repatriate or transfer individuals to other countries where it believes it is more likely than not that they will be tortured.”(More likely than not??) Rule: To obtain injunction relief, “petitions must show that the threatened injury is not merely ‘remote and speculative.’” Milk Industry Foundation v. Glickman (1996). Court Finds: That the underlying basis for the claims is their basic distrust of the Executive Branch. Distrust is based on nothing more than speculation, innuendo, and second hand media reports. “This is not the stuff that should cause a court to disregard declarations of senior Executive Branch officials submitted to the Court ‘under the penalty of perjury.’” Holding: Thus, because R’s directly refute P’s allegations of their potential torture, mistreatment, and indefinite detention . . . This Court cannot conclude that P’s would suffer irreparable harm if they are transferred from Guantanamo. Injunctions, ripeness, and the rightful position.Note Case - Humble Oil v. Harang (1996) (p.265, note 3??)

Issues w/ injunctionsEven when cost of imposing injunction is zero/nothing/nada, courts still will not grant them unless there is good reason - passes the tests. Hannah v. HeeterUnclear why it had been destroyedHeeter files counterclaim for spoilation of evidenceCourt: spoilation could be a stand alone . . .“but for the spoilation of evidence the injured party would have prevailed in the dispute à if presumption not overcome, the party that destroyed the evidence would be liable to the injured party for damages This is an example of a case where damages could be used to work like an injunctionMarshall v. Goodyear (1977) (p.269).- Secretary of Labor sued Goodyear- Alleged violation of Age Discrimination in Employment Act of 1967 District Court Found: there was a violation in terminating William Reed, and granted the requested relief - nationwide injunction against further violations, and back-pay. Appellant argues: regarding the scope of the injunction.- Court found single violation - Store Manager unlawfully fired Reed.- This doesn’t warrant such a broad injunction The General Rule: From previous case history establishes that a nationwide injunction is appropriate only when the fact indicate a company policy or practice violates the statute.(and cites 2 cases on p.270) Secretary Argues: that in the instant case there is sufficient proof of multiple violations to warrant a nationwide injunction, relying on the proof of a discriminatory job order placed by the Lakeland store. Court:1) Finds that the evidence to the one incident is slight;2) The Lower Court made no findings with respect to it;3) The Lower Court didn’t rely on it in determining the scope of the injunction; and4) The Court made no finding of discriminatory company policy or practice. District Judge expressed that Goodyear itself is committed to the principles of the statute, and Reed’s discharge was isolated -- a manager who thinks he can run the company best if he only has younger people working for him. Holding: Relief should be limited to only the one store.

U.S. v. W.T. Grant Co.- Clayton Act of 1914, § 8 prohibits interlocking corporate directorates.- Court dismissed civil actions against Hancock and three pairs of corporations for which he served as director. Complaints alleged that the size and competitive relationship of each set of companies made it fall under §8Accordingly, Complaintants asked Court to order the interlocks terminated AND to enjoin future violations of §8 by the individual and corporate defendants. Soon after complaints filed, Hancock resigned from the boards of one of the Co’s. Both sides agree that voluntarily relieving oneself of duties doesn’t make a case moot. But, “the case may nevertheless be moot if D can demonstrate that ‘there is no reasonable expectation that the wrong will be repeated.’” U.S. v. Aluminum Co. of America (19450. “tHE NECESSARY DETERMINATION IS THAT THERE EXISTS SOME COGNIZABLE DANGER OF RECURRENT VIOLATION, SOMETHING MORE THAN THE MERE POSSIBILITY WHICH SERVERS TO KEEP THE CASE ALIVE.” 1) The “Test” - “something more than the mere possibility” vs. “some cognizable danger”2) key - distinction between “mootness” and “denial of injunction” Mootness - dismissal as a right - no case / case dismissedDenial no need for injunctive relief. Very high burdenNot enough evidence on the other side. What happens when courts decide merits and holds D’s acts to be illegal, but also that no injunction is necessary? U.S. v. Jones - note case (1998)) court reversed injunction to admit women “effective immediately” b/c Court was confident that the school would heed the directives of SC in a different decision.-- This means the case is still open.-- Voluntary cessation of wrongful conduct is very common Key PointsBurden is on P to prove propensityD then has burden to show mootnessVol Cess is usually not sufficient to call a case moot

Final Points and Takeaways1) Distinction b/w “some cognizable danger” and “mere possibility” is useless 2) The result in cessation cases may come down to the District Court’s fact ruling. Did DC believe that the D was going to really stop its activities? Substantial discretion for DC’s ruling. 3) If injunction is denied, one can be granted later if promise to cease is broken. 4. Can always seek damages. Feb-09 Nicholson v. Connecticut Half-Way House, INC.- D’s purchase home to turn into halfway house for those released from prison.- Suit for injunction filed against them.- Trial Court enjoined it as a nuisance, and D appealed. Issue: “Whether a proposed use constitutes a nuisance.” Test à “reasonableness of the use of the property in the particular locality under the circumstances of the case.” Court:- Use of the property is lawful, but Restidents have complaints 1) Fear of criminal activity - Insufficient without evidence - patterns/statistics/etc.“P didn’t allege or offer evidence to prove behavioral patters which would cause them harm to warrant the injunction. “present fear of what may happen in the future . . . Rests completely on suspicion. 2) Depreciated property values - Not a nuisance.“Mere depreciation of land values . . . Cannot sustain an injunction sought on the ground of nuisance.”--Other CasesTown Dump - enjoined because there was a measurable nuisance and evidence thereof.Embalming/undertaking - “clearly distinguishable on its facts from the present situation” Holding is limited- at this time; under the present circumstances; insufficient facts that D will make “unreasonable use” of the property.Granting of injunction is denied

Possible Alternative Arguments for PlaintiffsStatistics - half-way houses cause crimeD having problem in the pastPrior injunctions against DPrior Court orders D has ignored. Pepsico, Inc. v. Redmond (p.284).Feb-14 Assignment - pp. 295-310 (3 cases). Forster v. Boss (p.295)- Sale of property on the Lake of the Ozarks in Missouri- P’s buying property. D’s selling property. District Court- Awarded P damages for fraud and breach of contract, and injunctive relief. Defendants appeal- D’s Argue that P are receiving double recovery.- Injunction that makes them whole plus damages to compensate them for the loss of the veryr ights that the injunction has guaranteed. CourtAffirm in part, reverse in part, and remand for further proceedings. FraudD’s do not contest fraud. They represented that P’s could obtain permit for boat dock when they knew P’s wouldn’t be able to.Jury awarded $12,250 compensatory, and $10k punitive. Primary Issue - InjunctionUnion Electric agreed that if the Cour says P’s are entitled to a permit under their contract w/ Defendants, Union would grant permit to plaintiffs and revoke the permit already granted to Defendants.’- This Happened - P’s have their permit- D’s have lost theirs- No future permit may be granted to D’s that would interfere with Plaintiffs’ rights. D’s Argument- Injunction made P’s whole. -- dock removed and they have their permit.- Therefore, property transferred is exactly as agreed -- expectation damages granted.

- If P’s receive the difference between the value of the property as promised and the value of the property as transferred, they will recover double.P’s have received damages for fraud, breach of K, AND specific performance. They have money and property and are in a better position than would have been had there been no fraud or breach of contract. PlaintiffsUnder Missouri law, damages ffor fraud in connection w/ sale is difference b/w value of land on the date of sale as represented, and value of land on date of sale as actually conveyed. The value at date of contract was $12,500 more than at tome of conveyance. Nothing that happened thereafter, for example, an injunciton guaranteeing P’s their boat-dock permit can change this. However, if this argument were accepted, an injunction would be irrelevant to the recovery of damages, even though one or the other of these events occurred on the day immediately following the sale.This makes nos sense. The lapse of time was greated than one day -- about three years. It’s possible P’s sustained damages b/c they had to wait for complete fulfillment of the terms of the sale. But that’s not the case here. P’s argueThey sought redress for violation of trwo separate legal rights -- right not to be defrauded, and the “littoral rights” appurtenant to the purchased property (right to a boat-dock permit, and right to have D’s dock removed)Damages are designed to compensate the loss of these rights. CourtInjunction made them whole, and to keep compensatory and injunction would be a double recovery. Winston Research Corp Defendant) v. Minnesota Mining & Manufacturing Co.(Plaintiff) - P developed an improved precision tape recorder and reproducer.- D (Winston) developed a similar machine. P alleged D’s machine was developed by former employees of P, including Johnson and Tobias, by using confidential information acquired while working on Mincom machine. P sued for damages and an injunction.

1962 - Mincom had substantially completed research phase of program and began development of production prototype.Johnson was in charge of Mincom’s program quit working for Mincom. He joined Tobias, who had also worked for Mincom as sales manager.They formed Wisnton Research Corporation. - Late 1962, Winston contracted w/ Gov’t to develop a precision tape reproducer. Winston hired technicians who participated in Mincom’s development- 14 months later, Winston completed machine w/ same low time-displacement error as Mincom’s machine. District CourtFound (and Winston concedes) Johnson, Tobias, and gang based Winston’s production upon same approach as they did at Mincom.- Also found that the general approach was not a trade secret of Mincom’s.- But the particular embodiment of the general concepts was Mincom’s trade secret.-- That trade secret was improperly utilized in developing the Winston machine District Court enjoined Winston from disclosing or using the trade secrets for 2 years.Court also required assignment of patent applications to Mincom.No damages were awarded. P’s argues: Injunction should have been permanent - or at least for a longer period.D’s argue: No injunctive relief was appropriate. P was entitled to protection of its gtrade secrets for as longa s they remained secret.District Court’s decision was premised upon a determination that Mincom’s trade secrets would shortly be disclosed, through no fault of Winston, as a result of public announcement, demonstration, etc. P’s argue they were entitled to a permanent injunciton under Shellmar rule.D’s argue that under Conmar rule public disclosure would end the obligation, and neither employees nor their privies may be enjoined beyond the date of disclosure. - Thus, D’s argue would bar any injunction at all once there was public disclosure, and P’s argument would require an injunction in perpetuity w/out regard to public disclosure. District Court: rejected both of these and granted injunction for a period it concluded would be sufficient both:1) To deny Winston unjust enrichment, and2) To protect Mincom from injury from the wrongful disclosure and use of trade secrets by former employees prior to public disclosure.

Appellate CourtDistrict Court’s approach was sound.- Permanent injunction would subvert public’s interest in allowing technical EE’s to make full use of knowledge and skill in research and development- On the other hand, denial of any injunction would leave them unpunished where no damages were awarded. -- and they’d get a head start over legitimate competitors who didn’t have access to trade secrets until publicly disclosed. Injunction requires a legitimate Mincom competitor to develop a successful machine after public disclosure.. By enjoining use of trade secrets it would require a legitimate Mincom competitor to develop a successful machine after public disclosure of the secret information. District Court denied EE’s any advantage from their faithlessness, placed Mincom in position it would have but for the breach of confidence, and imposed the minimum restraint consistent with the realization of these objectives upon he utilization of EE’s skills. 2-year injunction was insufficient to overcome the wrongful advantage obtained by D’s.4 years were required to develop the machine, and Winston developed it in 14 months.Accordingly, injunction should be at least 3 years from completion of appellate review. CourtAppropriate injunctive period is that which competitors would require after public disclosure to develop a competitive machine. The time which Winston took with the aid of the very disclosure and use complained of would seem to be a fair measure of the proper period.District Court granted injunction for a longer period -- presumabley b/c their machine was builr in a way that requires some time for persons unfamiliar with it to determine the details of its construction, and to compensate for delay which Mincom encountered in final states of development b/c Winston hired away Mincom’s key personnel. Court felt it didn’t need to decide whether the injunction should be extended. Proper fto make injunctive period run from date of judgment since public disclosure occurred at about that time. Mincome: District Court should have awarded monetary damages as wellCourt says no.Winston sold no machines and had no past profits to disgorge.Evidence of future profits was at best highly speculative.To enjoin future sales AND make an award based on future profits would result in duplicating and inconsistent relief. And the District Court’s choice in implementing the injunctionm rather than monetary relief was not unreasonable. Winston showed evidence it would probably sell its machien and get profits after injunction

expired, but these sales and profits wouldn’t tainted by breach of confiedence, since Winston could have developed its machine from publicly disclosed information, by that point. Mincom sought damages on other bases, but they were too remote and/or speculative. Obtaining financing for development program; securing Gov’t contract; shortening development program, and reducing development costs. It’s obviously difficult to assign a dollar value ot this. Two year injunction depri Winston of any benefit that may have been gained, and shielded Mincom from potential harm from Winston’s competition. Mincom suggests that by hiring Mincom’s skill employees, Winston hindered Mincom’s development program and increased cost.Court: however, as we have noted, the District Court expressly considered this delay and extended the period of the injunction for an equivalent period. Bailey v. Proctor (p.304) Aldred Investment Trust - Mutual Fund before the Investment Company Act of 1940Its structure was typical of the abuses that led to the Act. Voting control of Trust was held by owners of $150k in stock.Holders of $6 mil. in debentures/investors provided most of the capital. [[Debentures are bonds or promissory notes -- promise to pay a fixed sum of money, usually on a date far in the future, and to pay periodic interest until principal is paid. Debenture holders are fixed-income investors, typically interested in a safe, steady return]] Uneven and misleading distribution of risk and reward.If trust goes broke, stockholders can lose no more than $150k, and investors can lose $6 mil.If trust does well, debenture holders get their interest.Profit goes to stockholders Profits can be enormous as a percentage of investment because $6 mil. invested benefit’s the stockholders.Example: 6% interest returned to investors. Trust gains 8%. Stockholders receive the extra 2%. Stockholders receive $120k after only investing $150 = 80% return. Investors receive only 6%. Stockholders risk $150k; Investors risk $6 mil. == Fraud. The Trust became insolvent / went broke / bankrupt / ruined / inoperable.Stockholders were caught in a fraud and self-dealing.Receiver was appointed at the request of the SEC.

Issue Came AboutThe initial control group (stockholders) was led by Hanlon. Bailey bought Hanlon, and increased investment made the Trust solvent again District Court: Ordered a receiver to liquidate the Trust. Bailey Appealed:1) Both reasons for receivership had been fixed: a) The trust was no longer insolvent. b) Those responsible for the fraud were no longer associate w/ the trust.2) And even if they hadn’t, the Court had no power to order liquidation.Appellants’ Argument #11) District Court lacked jurisdiction to liquidate the TrustCourt - jurisdiction is dependent upon jurisdiction existing at the time the receivership was commenced. At that time, Trust was insolvent and the officers-trustees were guilty of “gross abuse of trust.”Upheld Court’s decree appointing receivers -- within court’s general equity powers.However, at the time of appeal, emphasis was on power to appoint a receiver, rather than power to order liquidation as the end of receivership.Therefore, Court holds that a Court of Equity has inherent power to appoint a receiver to liquidate a corporation or investment trust where fraud, mismanagement, or abuse of trust is present, whether or not insolvency is likewise present. 2)Whether or not District Court could do this, now that nobody guilty of Fraud or Abuse of Trust -- New Shareholders. Temporary insolvency does not affect the court’s power to supervise receivership. There are other grounds for appointment of a receiver, other than solvency, so the court’s jurisdiction is not destroyed by this solvency. Jurisdiction at time of creating of the receivership is a continuing jurisdiction.Present solvency and removal of control of fraudulent officers do not pertain to jurisdiction, but to the manner in which the Court may exercise their jurisdiction. Court found that the plans for reorganization were not fair and reasonable, and accordingly, liquidation was the only other alternative. Issue to Address NOW:Whether we can say that the Court abused its discretion in failing to vest control in present common shareholders w/ terms of the Trust and capital structure unchanged. Rule: liquidation will only be decreed in an extraordinary case, or where special and peculiar circumstances exist.

Appellate Court: District Court didn’t provide the grounds for exercise of discretion. But Court is able to garner facts which seem to support he manner in which such discretion was exercised. SEC indicated that Aldred Trust embodied evils, which led to the enactment of the Investment Company Act of 1940. Important Question:Not personal honesty, integrity, etc., but the lack of balance and equality of control in the capital structure of the Trust.Court couldn’t feel assured that a recurrence of these events was impossible.Insolvency was likely; lack of sufficient earnings to cover interest was possible.Accordingly, nothing would prevent controlling shareholders (appellants or successors) from embarking on new speculation to the detriment of the debenture holders/investors. Court properly felt that the debenture holders were entitled now to the cash salvaged from what had appeared to be a doomed enterprise. Finally, it’s argued that one of the motives for continuing the Turst was to preserve its security structure, inasmuch as similar trust couldn’t now be created under the Investment Company Act. Grandfathered-In, The (potentially fraudulent) Trust is Lawful.Act doesn’t require liquidation or reorganization of existing investment companies which do not conform to new statutory standards. But, when a court of equity exercised jurisdiction to appoint receivers, pursuant to a complaint charging gross abuse of trust, it is proper for the court to afford complete relief -- to take account of the fact that capital structure is not in conformity with standards and safeguards which Congress has NOW written into law. Accordingly, these facts may well render it fair and equitable to require liquidation in the absence of an acceptable plan of reorganization. Deventure holders - who have the greatest equity and whose interest are being sought to be protected by the Court - do not dissent to this liquidation. If appellants intend to invest, they could form a new one, and even solicit present debenture holders. But it would be inequitable to allow them to do this “with burnt fingers” to remain investors in an enterprise of proven questionable value. We find it impossible to say that the order of liquidation was improper, but rather indicated a court of equity doing equity. District Court affirmed. Remanded. Feb 16 - pp. 310-342

STRUCTURAL INJUNCTIONS So far we’ve talked about private law remediesStructural remedies are much broaderThey go beyond any one specific plaintiff’s rightful position. There are many would-be plaintiffs, and best way to put them in rightful position is to require a structural change of some sort - akin to class action law suitsMore efficient as a deterrent and as a means of achieving rightful position Missouri v. Jenkins - theory doesn’t always match what happens in practice - rarely does Broad in their application- exception - statutes can sometimes be narrowly tailored, but structural injunctions are generally broad in application-- also, private bill aimed at specific individuals Quintessential structural cases - desegregation, busing, and prison reformExample, Miss. Higher ed. System is still subject to a structural injunction order Milliken v. Bradley - “white flight problem” Assignment for Tuesday, Feb-21Pp.330-342 (finishing previous assignment); and Next Assignment, 375-392 330-342 and 375-392 Lewis v. Casey (p.330) ComplaintInadequacy of the law libraries and legal assistance in state prisons- This interfered w/ their right of access to the courts, using Brown v. Smith. District Court- Law libraries and legal assistance are the means, not the ends.- The “ends” or goal is a reasonably adequate opportunity to present claimed violations of fundamental, constitutional rights to the courts. To use Bounds1) must show inability to file some or other no frivolous complaint, OR2) Had some other nonfrivolous complaint dismissed, due to inadequate access to legal

information. StandingMust show injury - constitutional principle preventing courts from undertaking tasks of other political branches à separation of powers. QuestionWhether the two proven injuries, and other findings, support an injunction. - actual injury requirement doesn’t work here.If a plaintiff demonstrated harm from one inadequacy in Gov’t, courts are authorized to remedy all inadequacies in that administrationRemedy must be limited to the inadequacy that produced the injury-in-fact that plaintiff has established. This is true for class actions, as well as other suits. Court found atual injury for one plaintiff - Bartholic,- cause for that injury was the inadequacy which the suit empowered the court to remedy -- failure to provide the special services that bartholic would have needed, in light of his illiteracy, to avoid dismissal of his case.Therefore, we can eliminate from the proper scope of this injunction, provisions directed at special services or special facilities required by non-English-speakers, y prisoners in lockdown, and by the inmate population at large. If inadequacies of this character exist, they have not been found to have harmed any plaintiff in this lawsuit, and hence, were not the proper object of remedy. Issue #2Was the inadequacy that caused bartholic’s injury widespread enough to justify system wide relief?Only findings supporting this were:1) finding w/ respect ot bartholic at the Florence facility, and2) finding that Harris, while incarcerated at Perryville, had once been unable to file a legal action. These were inadequate to conclude system wide violation, and are therefore inadequate to justify system wide remedy.Court of Appeals went beyond their scope. Further Reasons the Order Cannot Stand1)2)

Feb-21 CHAPTER 5 - CHOOSING REMEDIESA. Substitutionary or Specific ReliefI. Irreplaceable Lossesa. Injunctions Pardee v. Camden Lumber Co. (p.375)- P sued to enjoin D from cutting timber on P’s land Injunction awardedOrder dissolving the injunctionThis is an appeal from that order Unless trespass constitutes irreparable injury, none is shownThere is no allegation of insolvency of the trespaser nor of any other circumstance precluding recovery of such compensation in money as the law gives for the injury done and threatened by an action. The rule that would normally render the action for damages futile or unavailing does not command uniform approval by the public nor members of the legal profession. “Our rule permit’s a mere trespasser to utterly destroy the forest of his neighbor, provided he is solvent and able to respond in damages to the extent of the value thereof.- It allows property to be wholly altered in nature and character, or converts it into a mere claim for damages.After timber has been cut, owner may recover possession thereof by an action of detinue, or, waiving that, may recover its value, but this does not in either case restore the property to its former state, nor replace it by the return of an equivalentCan’t replant trees. Basic takeawayWe abandon the idea that monetary remedy is best. We can now get a preemptive injunction on damage to real property (logs).F.W.Maitland, Equity (p.378).Brook v. James A. Cullimore & Co (p.384)Question: Whether in a replevin action, the defeated litigant in possession of property whose recovery is sought may:1) elect to retain that property as his own, against the will of the successful party;2) impose his election by requiring the trial court to render an alternative money judgment against him; and3) avoid delivery of the property by tendering its value as set forth in the affidavit for replevin. - Cullimore sued Brook claiming special interest in multiple items of personal property.

- Property was worth $2,500.- Brook attempted to satisfy the judgment by depositing $2,500.- Cullimore refused to accept this, and moved for a hearing “to determine whether said property is available” for delivery, and “if found to be available that judgment be rendered for Cullimore for immediate possession of said property.”Trial Court ordered Brook to deliver the property to Cullimore. AppealBrook sought remand with directions to take evidence of the value of the property, and to enter a money judgment for its value Common Law- There was no monetary damages available at common law.- If property couldn’t be returned, there was no method by which prevailing party could recover a judgment for the value. Winning litigant has the option - property or money- If possession can’t be given, prevailing party may then proceed to enforce his money judgment.- He doesn’t need to avail himself of the new remedy unless he wants to, and if not, he is not barred from pursuing the other remedy..- Primary object of statutory replevin is recovery of specific personal property, not money.- If return of property sought by replevin is possible, it must be returned.- Defeated litigant is not granted an option to either relinquish possession or to pay the value of the property.- Alternative remedy of a money judgment in replevin is extended solely for the benefit of the wronged party.Holding: Brook, against whom judgment for possession was rendered, did not have the power to retain the property and pay its value as stated in the affidavit for replevin. Property was of substantial value. Property was far from worthless or materially deteriorated. Cullimore was willing to accept it, and as the winning litigant, had a right to insist on it.Continental Airlines, Inc. v. Intra Brokers, Inc. (p.387).b. Specific Performance of Contracts Campbell’s Soup Co. v. Wentz (p.391)Campbell’s contracted w/ Wentz - PA farmers - for delivery by Wentzes to Campbell of all the Chantenay red cored carrots to be grown on 15 acres of their farm, in 1947 season.- Wentzes harvested about 100 tons of carrots. - Jan, 1948, they told Campbell representative that they wouldn’t deliver at the contract price.- Market price was $90/ton, and they carrots were virtually unobtainable. - Wentzes sold 62 tons of carrots to another farmer, who resold 58 tons - half to Campbell, half elsewhere - on the open market.

- Campbell suspected they carrots were “contract carrots” and refused to purchase more. - Campbell filed suit against Wentz and Lojeski to enjoin further sale of contract carrots, and to compel specific performance of the contract. Trial CourtP failed to establish that the carrots were unique goods. Appellate Court (this opinion)This isn’t a pure factual conclusion, like a finding that Chantenay carrots are of uniform color.- Whether they are unique goods is either a conclusion of law, or of mixed fact and law.- Accordingly, Appellate Court can make its own judgment regarding this.- Test for specific performance isn’t necessarily “objective” This case is a proper one for equitable relief. There is considerable authority showing liberality in the granting of an equitable remedy. There is no reason the court should be reluctant to grant specific relief when it can be given without supervision of the Court or other time-consuming processes against one who has deliberately broken his agreement. - Objects were unavailable on the open market.- P contracted for them- P built up a reputation for its products as part of which reuptation uniform appearance was important. Van Wagner Advertising Corp. v. S & M Enterprises (1986)“Specific performance of a contract to lease ‘unique’ billboard space is properly denied when damages are an adequate remedy to compensate the tenant and equitable relief would impose a disproportionate burden on the defaulting landlord.” Contract - 1981Barbara Michaels to lease to P, for 3 years, the wall on a Manhattan building, for advertising purposes -- with option to renew for 4 more years, for a total of 7 years. 1982- Van Wagner erected a sign and leased it to Asch Advertising for 3-ear period- Didn’t know that two months earlier, Michaels sold the building to Defendant S & M.- S & M sent Van Wagner a letter telling him to cancel the lease with Asch.S&M’s actions constituted a breach RemedyVan Wagner wants specific performance.S&M assert that monetary damages are adequate, but the amount awarded was improper.(note 2, p.402 - Past and present trends regarding specific performance vs. monetary damages).

CourtSpecific Performance or Damages is in the sound discretion of the Trial Court.Refusing specific performance was not abuse of discretion. RationaleNature of transactionSpecific performance is generally used for sale of real property.But K here is for a lease of real property.Specific performance is available for leases in some instances.But in this state (NY), specific performance for breach of a real property lease is not awarded as a matter of course. P ArguesSpecific performance must be granted in light of trial court’s finding that the demised space is unique as to location for the particular advertising purpose intended.Court: But “uniqueness does not automatically yield specific performance. Trial Court foundThat the leased property is physically unique, but so is every parcel of real property, as are many consumer goods.“Where specific performance has traditionally been the remedy for breach, uniqueness in the sense of physical difference does not itself dictate the propriety of equitable relief.Instead, uniqueness will be determined by the uncertainty of valuing it, rather than any inherent physical uniqueness of the property. TC correctly concluded:That value of unique qualities could be fixed with reasonable certainty without high risk of under compensating injured tenant. TC also correctly concluded:That specific performance should be denied on the ground that relief “would be inequitable in that its effect would be disproportionate in its harm to D and its assistance to P.”Specific performance should not be an undue hardship. Titolo’s main points on caseUndue hardship on the company’s inability to follow through with it’s reconstruction project A complex contract - damages hard to measure, but specific performance is also burdensome to the parties. Specific performance of merger agreement - Allegheny v. DQE - where specific performance was allowed.

Irreparable injury rule remains relevant and it is technically good law. Personal service contracts- standard rule: no specific performance (liberty)- but sometimes liquidated damages clauses and non-competes are enforced- sometimes emplmoyers are required to rehire employees! -- old view was that supervision was too difficult-- but not that is a standard approach --- but only really works w/ union protection backing the employee.Titolo’s Notes - Feb-23 - Chapter 5-b -- Campbell Soup Co. and Van Wagner Campbell’s SoupUniquenessIs uniqueness being used a proxy for “hard or impossible to replace”? If it’s difficult enough to get that product -- to get more of those carrots -- then courts will permit specific performance. Courts also consider fairness. Takeaways1) in a time of shortage -- when something is “rather unique” -- the buyer sometimes can get specific performance of a contract to sell personal property that would not otherwise be unique. 2) This conclusion leads directly to the replace ability rule in Pardee -- not going to be able to get these exact trees, regardless of the money. 3) Other factors - fairness and equitable discretion of the courts.- this implicit notion of rather uniqueness à that replacement isn’t impossible 4) other cases, e.g., in contracts, suggests there is a lot of fairness in play here. CounterexampleUnconscionabilityDifficult to invalidate a contract based on the unconscionability of the contract. Court: “the mere fact that cotton prices soared after this alleged contract is not in itself adequate to show buyer is entitled to specific performance.” Sometimes, in these cases, the problem using specific performance, you have to make sure both sides perform. “ready willing, and able to perform- DiGiuseppe v. Lawler 269 sw.3d. 588

Law and EconomicsEfficient breachTransaction costsDamages and equitable relief Economic analysis of the choice b/w damages vs. specific performanceLaw and econ - very influential movement beginning in 1970’s Efficient Breach in the context of specific performance1) damages v. injunctionEx ante vs. ex postOrdering someone not to do something is cheaper and less wasteful than resolving afterward. Freedom/liberty/economic perspective - injunctions are more inhibiting.But they’re both ways of setting prices for harms, and that’s what sets the table for the debate. Should specific performance be available even when damages are available? Damages may be under compensatory b/c of the time/effort/cost of finding replacement transaction.- wasteful to litigate over damages that could have been prevented by an injunction.- ***** Clever Argument à Schwartz (note 2, p.401) - request for specific performance itself proves the inadequacy of damages***** 2) transaction costs - coase theorem - Posner ruleTransaction cost analysisWhere there are no/low transaction costs, bargaining will (by definition) lead to an efficient outcome. . . . Because parties know what’s in their best interest, know what harm they are at risk to endure, and they know whether it’s possible to come up with a price. Under this theorem, ti would be vastly superior if we could get ex ante bargaining to determine what the parties themselves are willing to pay to pollute/avoid pollutionThis is preferable where there are low transaction costsKey: depends on assumption tha parties are in the best position to evaluate the harm and the cost to them individually -- better than outside parties would be. We will be in the business of transaction costs- costs of negotiating, legal fees, studies, etc. In summaryWhen transaction costs are low, Posner and Coase say we should issue an injunction.

When high - significant barriers . . . (check today’s ppt slide on TWEN).Note 4 (p.401)Macneil, efficient Breach of ContractQuestion of transaction costs - an empirical question and more dataBut we don’t really have enough data to speculate with any reasonable degree of accuracy to determine what is efficient (?? I think ??). 3) efficiency analysis- pareto efficiency Situation where no new allocation of goods can be made w/out making at least one person worse off Given an initial allocation of goods, situation where we can make one person better off w/out making anyone else worse off = pareto improvement (pereto optimal). When one person is better off and another is made worse off, if winner can compensate the loser, that is still good. Pareto applied to Campbell’s case - If breach, Wentz is made better off. - Third party buyer is made better off. - Campbell si not made worse off (gets the benefit of the bargain). In this case, Campbell gets $50 per ton.- which is less than the $60 difference in price ($90 fmv - $30 max k price in liquidated damages clause).- But it is what Campbell contracted for, and perhaps it outsmarted itself with these liquidated damages. Efficient breach isn’t inherently bad.- you can buy yourself out of a k if you make the other party whole, monetarily- this goes to the heart of the concept of irreparability. Efficient breach assumes that the price one is willing to pay is reflective of social worthLaycock - “Individual willingness to pay is quite an imperfect proxy for societal value.” It’s not a matter of whether it wills sometimes be true. Pareto assumes it is.- But is it always true or true by definition?- Does it matter if this approach gets it wrong in some cases but averages out?- Depends on one’s moral/normative perspective. 3) Welfare consequentialism - utilitarianism

Free market capitalism, so to speak, and to an extent Assuming we can assign a dollar value to itWhy not let some people go homeless, some children not get social services, if on balance, the value of other benefits (like economic growth) outweighs those things. If we can assign a dollar value, Benthamite utilitarianism suggests that we should choose the approach that provides for the greater overall good -- greater good for greatest number. Free trade - not as concerned w/ individual utility and outcomes- focuses on aggregate outcomes Ex: policy that leads to larger unemployment rate . . . Micr vs. macro economic perspective considerations- using small transactions to model complex macro systemsReasoning: models of discrete interactions fcan form larger policy choices. In SummaryMainstream law and economics theory suggests an efficiency-based approach to specific performance vs. Damages- law has rejected that approach, and Instead, law balances notions of “Efficiency” with notions of “Fairness.” March-08 (and stuff from March-06) Carroll v. President and Commissioners of Princess Anne (p.456)White supremacist group rallyingEx parte motion for TRO and Ex parte injunction request10-day TRO granted. And 10 days later, a 10 month injunction grantedAppellate Court reversed, saying 10-day was all right, but 10 month wasn’t U.S. Supreme Court - 10-day restraining order, issued ex parte, without formal or informal notice to the petitioners or any effort to advise them of the proceeding, cannot be sustained. Must give notice if the remedy is an injunction in relation to a first amendment right. “An order issued in the area of First Amendment rights must be couched in the narrowest terms that will accomplish the pin-pointed objective permitted by constitutional mandate and the essential needs of the public order.”

Sampson v. Murray - (p.460)- Probationary EE of fed gov’t was fired.- Sought preliminary injunction to prevent her discharge pending an administrative appeal to the Civil Service Commission.10-day restraining order granted, forbidding her discharge.Court wanted to hear testimony from the person who fired her.Gov’t refused to produce Sanders.Court extended 10-day restraining order until gov’t produced him - Court of Appeals held that a temporary restraining order continued beyond the time permissible under Rule 65 must be treated as a preliminary injunction, and must conform to the standards applicable to preliminary injunctions.- Supreme Court Agreed- It is appealable because it’s really a temporary injunction, not a TRO TRO - FRCP 65 (PowerPoint on this, March-06 class).- TRO’s aren’t appealable, but temporary injunctions are. Granny Goose v. Gteamsters (Sampson) note 2 Prospective or Retrospective relief - (p.470) Sovereign immunity - government’s immunity from being sued in its own courts without its consent.- Congress has waived most of the federal gov’t’s sovereign immunity . . . (ppt March-8) Edelman v. Jordan - 11th amendment “judicial power of the US shall not be construed to extend to any siut in law or equity commenced or prosecuted against one of the US by Citizens of another state or by subjects of any Foreign State”- But it now appears to read as:- “Judicial power shall not be construed to extend to any suit commenced or prosecuted against one of the United States “While the Amendment by its terms does not bar suits against a State by its own citizens this Court has consistently held that an unconsenting State is immune from suits brought in federal courts by her own citizens as well as by citizens of another State.” Ex Parte Young (1908)14th Amendment

- Suits are allowed against gov’t officials in their personal capacity, for unlawful actions taken in the scope of their employment- Can’t sue for lawful actions, but if the official leaves office (like the official in Edelman did!), then the suit doesn’t go along with that old official. Instead, it is transferred to the new official (who did nothing wrong!)- So is it really an “individual” suit? (no) Additionally, we can say, “tomorrow, you have to desegregate the school district.” Under constitution when originally ratified, the states largely assumed they were immune from suit under the new ConstitutionChosholm outraged them so much .. . . (ppt.) In response to that concern about complete unaccountability, ex parte young created its sweeping fictional exception that makes the constitutional enforceable against states again Edelman then puts a limit on young to keep the exception from swallowing the general rule Finally, Fitzpatrick and Seminole hold that congress can modify this Jud made scheme only when it is enforcing constitutional rights (not going to talk about this last issue that much). Edelman v. Jordan (p.470)- Facts/Reasoning- Was only paid starting on the date of determination (I.e., no back payments to the 45-day mark) - DC issues injunction compelling Edelman to comply with the time regulations and give the back pay - DC relied on the concept of “constructive consent” to conclude that Illinois had waived its sovereign immunity and consented to be sued Supreme Court- No, it must be an expressed waiver of sovereign immunity, not a constructive or implied consent.- Discussion of prospective and retrospective relief.- Equitable relief for unlawful actions is fine.- Legal relief is not. In other words- Prospective relief for unlawful actions via injunction is fine (ex parte young)

- Backward-looking (retrospective) legal relief is not covered under ex parte young, and therefore violates 11th amendment and sovereign immunity. In other other words:- Edelman means that states are free to ignore federal law, including the Constitution, until somebody sues them.- Once sued, they may have to comply with law in the future.- Will not be liable for damages for previous non-compliance. Thoughts about Edelman and sovereign immunity / remedies generallyLegal vs. Equitable Relief- protection fo state treasuries- complying with equitable relief costs money- why is it okay to require a state to spend potentially millions of dollars (or billions!) complying with a structural injunction if it is immune from even a dollar in damages?Federalism SummaryTrying to balancea) right to some remedy for wrongsb) sovereignm immunity You can’t have a remedy against the state without limiting sovereign immunity. BUT, do we gut sovereign immunity too much if we . . . . Suits against officers in their personal capacities (p.486) Harlow v. Fitzgerald Qualified immunity (1887) Immunity from civil liability for a public official who is performing a discretionary function, as long as the conduct does not violate clearly established constitutional or statutory rights. - Blacks Law Dictionary But we can’t just let officials do whatever they want just because they’re working in their capacity. Qualified immunity = balancing of competing values- damages to protect rights vs. need to protect gov’t officials’ discretion working in their capacity What if an official is acting in his capacity, doing something legal. But later, that action becomes illegal.- What remedies are available?- abuse of power under color of law USC 1983- injunction

BUT, the state can adopt a policy that it will pay the monetary damages owed by an official who is sued while acting in his capacity as a gov’t employee Subjective v. objective aspect of good faith- qualified immunity would be defeated if an official “knew or reasonably should have known that the action he took within his sphere of official responsibility would violate the constitutional right of the plaintiff, or if he took the action with the malicious intention to cause a deprivation of constitutional right or injury. HarlowBare allegations of malice should not suffice to subject gov’t officials either to the costs of trial or to the reach of the broad-interpretation . . . Harlow Notes 6 and 7 ***** Take another look at these!!!!1) what counts as clearly established law? SC cases / Appellate cases?2) keeping abreast of legal developments- Informational newsletters- But does every rank-and-file employee know/understand? Anderson v. Creighton (note 8)FBI searched house w/out warrant Held: immunity denied b/c clearly establish that search requires warrant or . . . . US v. LanierD judge convicted under criminal statute making it a felony to deprive under color of law constitutional rightIssue: was judge on notice that there was a constitutional right not to be harassed? Holding: YES . . . Note 8 Continued, #3 When there’s a circuit splitOfficers sent information into resident who signaled he bought drugs10th circuit - law was clearly settled that this search didn’t fit exceptions SC reversed. Officers entitled to rely on cases from other circuits, and where courts are divided, officers should not be liable in damages for choosing the wrong side.

Safford v. Redding13-year-old girl strip searched. School looking for Advil pill she was supposed to haveHeld: no constitutional basis for searching beyond clothing. March-13Cause of Action Bivens v. Six Unknown Named Ageents (p.530)Issue: Is there a private cause of action for violation of the fourth amendmentHolding: Yes Berger Dissent: Violates separation of powers by creating judicial remedy Black Dissent: Debate is whether to create a Bivens cause of action” and grant remedies for violation of particular federal statutes. Wilkie v. RobbinsWhether there is a damage remedy in any given case involves judgment about best way to impliment constitutional guarantee Not an automatic entitlement. Can’t be the case that statutory authorization is required to vindicate constitutional right. Could Congress repeal the Bill of Rights by not allowing for remedies? Note 3 (p.535) - Bivens Controversy (and circuit split)(Also check out the rest of the notes, specifically, notes 3-6) Alexander v. Sandoval (P) - (p.536)Falabam Dept of Public Safety enforced regulating requiring all driving license tests to be given in English. P was Spanish speaker challenged rule under Title VI prohibits discrimination in federally funded program. 1) Private individuals may sue to enforce 601 for injunctive relief and damages2) 601 prohibits only intentional discrimination3) 602 regulations may validly proscribe activities that have a disparate impact on racial groups, even if such activities are permitted under 601. Analysis

602 doesn’t have any right in it. It’s just the provision allowing the gov’t to regulate 601 Gov’t and respondents argue that regulations authorized under 601 bear rights-constraining language and so must be privately enforceable. “Neither as originally enacted nor as later amended does Title VI display an intent to create a freestanding private right of action to enforce regulations promulgated under 602.”Dissent - 602 regs exist for the sole purpose of effectuating the substantive rights in 601. General point from Sondoval - Judicial hostility to implied causes of action. CHAPTER 7PREVENTING HARM WITHOUT COERCION: DECLARATORY REMEDIESA. Declaratory Judgments Nashville, Chattanooga, & St. Louis Railway v. Wallace - (p.573) Scope of Judicial Power: Article III, Section 2 Without case or controversy, the federal courts have no jurisdiction FactsAppellant brought Suit under Uniform Declaratory Judgments Act of TN, to secure judicial declaration that a state excise tax levied on the storage of gasoline is, as applied to appellant, invalid under the Commerce Clause and the Fourteenth Amendment of the Federal Constitution.Lower Court- Decree for appellees was affirmed by TN Supreme Court Issue: Whether this litigation presents a case w/in the appellate jurisdiction of this court. Supreme Court’s Holding- The Constitution doesn’t require that the case or controversy should be presented by traditional forms of procedure, invoking only traditional remedies.- The judiciary clause of the Constitution defined and limited judicial power, not the particular method by which that power might be invoked.- The states are left free to regulate their own judicial procedure.- As the prayer for relief by injunction is not a necessary prerequisite to the exercise of judicial power, allegations of threatened irreparable injury which are material only if an injunction is asked, may likewise be dispensed with if, in other respects, the controversy presented is, as in this case real, and substantial. . . . Accordingly, we must consider the Constitutional questions raised by the appeal. [On the merits, the Court upheld the tax.] Affirmed. Reasoning- TN Declaratory Judgment Act confers jurisdiction on TN courts “to declare rights . . . whether

or not further relief is or could be claimed”- “provides that “no action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for,“ and- It may be affirmative or negative in form and effect, and have the force and effect of a final judgment or decree. 1) Actual judgment isn’t necessary for jurisdiction. Usually there is a judgment, but that is only sufficient, not necessary.2) While the Constitution requires a case or controversy, ti doesn’t require that the case be any particular “traditional forms of procedure” and only “for traditional remedies.”Declaratory Relief isn’t per se impermissible for case or controversy purposes. Injunction - Orders action or inactionRequires Irreparable Injury and Ripeness Declaratory Judgment - Declares something unconstitutional- Requires Ripeness, you don’t need to find irreparable injury- Doesn’t require Irreparable Injury- Must be “Necessary and Proper” Few points from notesNote 2 - textbook case of unripe complaint where it’s not appropriate to get declaratory relief. Note 5 - (p.578)Claim preclusion vs. issue preclusionClaim preclusions “foreclose litigation of matters that have never been litigated. This makes it important to know the dimensions of the claim that is foreclosed by bringing the first action, but unfortunately, the precise definition is impossible. Request for further relief isn’t disallowed by claim preclusion.- However, if initial action sought more than just Declaratory Judgment, most courts hold that all related relief should have been brought at the same time Mycogen Corp. v. MonsantoMPS argues that judgment in Mycogen II wasn’t barred by res judicata b/c the action in I was brough under decl judgment, which provides “no jdugment udner this chapter shall preclude any party . . . “. . . Court Disagrees [[See note 5 and PowerPoint from March-13]] Cardinal Chemical Co. v. Morton International, Inc. - (p.579)

Federal Circuit, on appeal, affirms dismissal of infringement claim, and also vacates declaratory judgment, re validity of the patent, and refuses to hear the latter. Cardinal files petition for cert.- Argues that fed circuit’s decision means lower court’s decisions couldn’t even be appealed Supreme Court- Disagreement here satisfies the “case or controversy” requirement - Why would you need to know about the declaratory judgment re the patent, if the court found that the infringement claim was properly dismissed?- Because the (possibility of) threat of “scarecrow patents” might be sufficient- It just has to be enough of a threat that the Court can address it. - Using patents to implicitly threaten lawsuits w/out actually doing so would be in the other party’s interest (and society’s too, for that matter) to address the issue.- As a policy matter, addressing the issue now prevents multiple suits on the same matter.- If the Court now holds that the patent is valid, then others won’t be able to sue. Note 3 - Ex Parte Young- Choice b/w forfeiting asserted constitutional right and risking penalties- suit to enjoin enforcement of the law avoid the problem. Points1) Declaratory judgments are generally judged on their substance, not their form1) Highly similar to preventative injunctions, but the are NOT identical A. Not coercive - effectiveness in changing party behavior depends either on - Voluntary compliance or subsequent action B) Another way in which they differ is that “Irreparable Injury” requirement is probably stricter for injunctions than the “Necessary and Proper” requirement for declaratory reliefRemedies Class Notes 2March-20pp. 634-665 Chapter 8 - Benefit to Defendant as the Measure of Relief: RestitutionA. Restitution From Innocent Defendants -- and some who are treated as innocent I. Introducing Restitution - Mistake Blue Cross Health Services, Inc. v. Sauer- Insurance company mistakenly sends a check to the wrong person.- Unjust Enrichment

- Restitution Damages - Sauer must pay Insurance Co. back. That’s the General Rule - cannot be unjustly enriched for a mistake. Exception: The unjustly enriched person may not have to pay it back if he detrimentally relied on the money. As affirmative defense, Ds claim that they changed their position, and it would be unjust to require restitution- But D couldn’t show any change in position Why are D’s liable?D’s had no cognizable role in causing the mistaken payments Did they do anything wrong at all?NoFrom their perspective, this shouldn’t be their problem. Difficult caseIf the Sauers were on an extended vacation and the $ was direct deposited? Restitution (Black’s law dictionary) - liability is not based on tort or contract, but based on unjust enrichment. Quantum meruit, restitution, compensation, asame thing.“unjustified enrichment is enrichment that lacks an adequate legal basis; it results from a transfer that that law . . . ” (PowerPoint March 20). General right to recover for mistaken conferral of benefitWachovia v. Thomasko 529 S.E..2D 554 (2000)Bank teller mistook old pesos for new pesos- Paid $21,000 for Mexican pesos worth only $500Wachovia entitled to amount of overpayment. They Chose the wrong peso exchange rate -- MISTAKE -- restitution. Person making the mistake should be clueless re: the mistake If someone aware of a discrepancy pays $, they are taking a risk. If two parties settle dispute without perfect knowledge of the facts, neither side can claim mistake when a new fact emerges. For Example:But if the insurance co. sent it to the right person, but for the wrong amount, and later found out it could have saved 10% because of a different interpretation of the contract, this would not be

recoverable. Can’t recover based on facts discovered later. Change of position/reliance is a possible basis for seeking restitution. (p.624 note 10) Preference for voluntary contract- No forced exchanges if it can be avoided- Example: person mistakenly builds on another person’s land. Confers Benefit. Ps own lots of land 45 and 46Bulding on 47D claimed ownership on theory f annexationPs sue for $20,600 as value of land, improvedLower court requires Ds within 60 days to elect whether to 1) buy land + building for $19,500 or 2) sell land for $2000Court orders forced transaction. Somerville v. Jacobs - (p.627)Ifentitled to recover the value of the improvements from the landowner, or, in the alternative, to purchase the land so improved upon payment to the landowner the value less the improvements. DissentThis is crazy!It’s improper private taking - eminent domain- P should have used more care to make sure wasn’t mistaken- People have long-range plans for property, shouldn’t be forced to sell/purchase the building! Mistake-negligence- One side clearly in wrong- Improver knows he’s building on someone else’s land gets no remedy- innocent improver gets more generous remedy where landowner sees what’s happening and says nothing. Other grounds for restitution Emergencies (p.632)Ex: You are unconscious. Doctor saves your life. You refuse to pay. You’re liable. In re Cristan’s EstateMan saved from committing suicideCommitted to hospitalForced to pay for this interventionDamages = market value of treatment (his committal / intervention)

And other notes pp. 629-6342. Measuring Restitution from the Innocent - and More Restitutionary Causes of Action a. Court Orders Later Reversed State v. A.N.W. Seed Corp. (Wash. 1991)State action against Defendant ANW Seed Corp, alleging violation of the Consumer Protection Act.D’s appeared, but counsel withdrew and a default judgment against D was granted.Denial of D’s motion to vacate was followed b an apeal.D’s did not post a supersedeas bond. State obtained writ of execution.- Sheriff seized and sold farm machinery, vehicles, and other personal property of defendants.Sales proceeds were $16,588.50Sales were conducted in accordance with the statute. - 6 months later, Court of Appeals vacated the default judgment. D’s moved for an order of restitution to restore the property sold at execution, or, in the alternative, to restore the reasonable market value of the property and to reimburse defendants for lost income resulting from the seizure and sales.TC entered an order of restitution for the fair market value of the property.After a hearing, Court set the value at $57,631.50Court of Appeals Affirmed State Supreme Court Reversed (opinion).TC judigment is presumed valid unless superseded.Authority was granted.Debtor may delay collection until all appeals have been decided.These defendants did not supersede the judgment against them When the unsuppressed judgment is reversed, after execution thereon, the judgment debtors’ recourse is provided by Appellate Rule 12.8, which provides, “If a party has . . . Involuntarily partially . . . Satisfied a trial court decision which is modified by the appellate court, the trial court shall enter orders . . . Appropriate to restore to the party any property taken from that party, or the value of the property.” Because of the sales of property, it could not be restored. Restoration of its value is the remedy.

Titolo’s NotesRestitution P’s damages - at least FMV of goods sold + unspecified consequential damages from not using propertyRestitution D’s gain - much smaller number - only proceeds of the execution sale less the expenses of the sale. ANW seed lost its god and suffered damages, but state received only a fractionRestitution received is based on benefit receivedState is innocent b. Unenforceable Contracts and Quantum Meruit Anderson v. Schwegel (p.638)- P asks D to restore vehicle - oral agreement- No meeting of minds on the meaning of the material term “restore”- Accordingly, no contract existed.- Magistrate held that Anderson was liable under quasi-contract, allowing D to recover $4,800.27 for “reasonable value of services and materials retained by Anderson,” instead of the $1,000, which P thought he owed. Issue 2Measure of recovery under quasi-contract - contract implied in law.“Not the amount of the enrichment, but the actual amount of enrichment which, as between the two aprties it would be unjust for one party to retain.” Anderson requested the services or assented to having them performed for his own benefit.- “Based on these facts, magistrate did not err in valuing the benefit conferred as the reasonable value of the services provided.” Anderson also contends magistrate improperly allowed recovery of 20% mark-up he charged on some of ther sublet work.Correct measure for unjust enrichment is not the loss suffered by one party, but rather, the benefit unjustly retained by the other party. Magistrate found that amount billed represented reasonable value of the benefit received by Anderson. In absence of clear error, these findings must be sustained (because they’re findings of fact). Total benefit received by Anderson to be $9800, the reasonable amount of all services received. Farash v. Sykes Datatronics, Inc. - (p.643)- D leased building owned by P.

- P was going to make certain modifications and complete its renovation.- D never signed contract or occupied building- P 1) enforce oral lease for term linger than a year - Statute of Frauds3) third - parties contracted by exchanging promises that P would perform certain work in his building and D would enter into a lease for a term longer than one year. - Statute of Frauds. 2nd issueNot barred by statute of frauds.- seekes to recover for value of work performed by P in reliance on statements by and at the request of D.This isn’t attempt to enforce oral lease or an oral agreement to enter lease.D didn’t benefit from P’s efforts doesn’t require dismissal.P may recover for efforts that were to his detriment and that thereby placed him in a worse position.“The contract being void and incapable of enforcement in a court of law, the party . . . Rendering the services in pursuance thereof, may treat it as a nullity, and recover . . . The value of the services.” Erben v. Lorillard 19 N.Y. 299, 302 (1859). Dissent’s argument - that 2nd and 3rd are the same - and both barred by statute of frauds.- P attempts to take contract outside statute’s scope and make it enforceable. This shouldn’t operate to prevent recovery under quasi-contract theory - an obligation imposed by law to do justice -- not an actual contract. Restatement provides that “injured party who hadn’t’ conferred a benefit may not obtain restitution, but he or she may have an action for damages including one for recovery based on reliance.” Interpretation of Restatement §349“Injured party has a right to damages based on his reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured pary would have suffered had the contract been performed.”Dissent: This passage, by its very terms, deals solely with remedies available where a party has breached an existing contract. Maier Brewing Co. v. Fleischmann Distilling Corp. - (p.658)P’s made and distributed Black and White scotch whisky (well-known trademark).- D Maier brewed and distributed cheap beer under Black and White label. CourtDs deliberately infringed the trademark, that there was no competition b/w the two products, but that consumers might think that the beer and the scotch were produced by the same company.

Appellant’s argumentEven if the District Court had jurisdiction to enter order for an accounting of profits, makgin of an order wasn’t merited by the facts.Appellants allege that District Court granted an accounting of profits as a matter of right upon the finding of an infringement and the granting of an injunction.- They argue, this must be so, since appellees have shown no injury to themselves, no diversion of sales, no direct competition from which injury may be inferable, and no palming off or fraudulent conduct. Lanham Act, 15 U.S.C. §1117Appears to say that such a remedy shouldn’t be granted as a matter of right, but let’s analyze. - §1117 provides that a trademark registrant shall be entitled, upon the finding of an infringement and “subject to the principles of equity,” to recover:1) D’s profits,2) any damages sustained by P, and3) costs of action. “P shall be required to prove D’s sales only- D must rove all elements of cost or deduction claimed.0 In assessing damages, Court may enter judgment for any sum above amount found as actual damages, not exceeding 3 times that amount.If Court finds amount is inadequate or excessive, Court may enter judgment for such sum at its discretion and as it deems just, according to the circumstance of the case.- Such sum, in either of the above circumstances shall constitute compensation and not a penalty. This language apparently confers a wide scope of discretion upon District Court judge. It must be determined if the concept of unjust enrichment, utilized “subject to the principles of equity,” will properly serve to effectuate the policies of the Lanham Act. We conclude that the District Court reached the correct and proper conclusion when, upon finding that the appellants “knowingly, willfully and deliberately infringed the said trade-mark ‘Black & White,’ ” it granted the appellees an accounting of the appellants’ profits. Appellants also argue that award of profits was of both Maier and Ralph’s Grocery Store, and is overcompensation, but this is based on the assumption that the accounting of profits in this action was utilized as a method of compensation the appellees for diversion of sales.But this wasn’t the basis for accounting in this action. Amount has no relation to damages sustained by P. B. Recovering more than Plaintiff Lost

1. Disgorging the Profits of Conscious Wrongdoers Olwell v. Nye & Nissen Co. - (p.649) Remedies Notes 3Thursday, March 22[[Don’t forget to go back and read the egg cleaner case, Maier, etc.]] Sheldon v. Metro-Goldwyn Pictures Corp - (p.665)- Sheldon apportioned profits to the inputs required to make movie- Estimate the importance of the misappropriated iput- pro rate method- - Unclear why we needed “guesswork” (note 3) Question: what kind of evidence can we use? Three Boys Music Corp. v. Bolton- Jury found Bolton copyright infringed with a song.Question: how do we calculate the profit that D owes to PWhat can be subtracted as elements of cost that ought not to be included in calculation?- Conscious wrongdoer can deduct money spent in acquiring the property/carrying on the general business- conscious wrongdoer cannot deduct direct contributions/expenditures incurred directly in the commission of the wrong Hamil America, Inc. v. GFI - (p.675)According to Hamil, GFI copied one of Hamil’s favbric patterns.= Hamil sued SGS for using the fabric.- They sold to JC Penney and JC Penney sold the garments in the store. Hamil applies the two-step process used in Sheldon.1) determine what overhead expense categories (rent, business, entertainment, personnel, and public relations) are actually implicated by the production of the infringing product.- Once a sufficient nexus is shown between a category of overhead and the production or sale of the infringing product, a court need not scrutinize for inclusion or exclusion particular items within the overhead category2) Arrive at a fair, accurate, and practical method of allocating the implicated overhead to the infringement. - Infringer has the burden of demonstrating a “sufficient nexus between each expense claimed and the sales of the unlawful goods.”

- Infringer also bears the burden of proposing a fair and acceptable formula for allocating a portion of overhead expenses to the infringing items at issue.District Court must determine that the particular allocation formula is optimal and sound, and all presumptions are drawn against the infringer. District Court erred appling Shelding by using a blanket prohibition of all overhead deductions. On remand, District Court must recalculate GFI’s profits.And in this finding, GFI, as a willful infringer, “must demonstrate a direct a and valid nexus” between each claimed overhead expense category and the production of the pattern, and propose a fair and acceptable formula for allocating a portion of overhead to the pattern’s production. Snepp v. United States - (p.678)Previously Found that profits attributable to Snepp’s breach are impressed with a constructive trust.”- S.Ct grants cert. to correct the judgment - Snepp worked as a CIA agent- Published a book about certain CIA activities in South Vietnam.- Published it without submitting to the Agency for prepublication review. Employment ContractSnepp pledged not to divulge classified information and not to publish any information without prepublication clearance. Government brought this suit to enforce this agreement. District CourtFound Snepp “willfully, deliberately, and surreptitiously breached his position of trust with the CIA and the . . . Secrecy agreement” by publishing his book without submitting it for prepublication review.- Also Found that Snepp deliberately misled CIA officials into believing that he would submit the book for prepublication clearance.- Finally, Court determined as a matter of fact that publication of the book had “caused the United States irreparable harm and loss.”District Court enjoined future breaches of Snepp’s agreement and imposed a constructive trust on Snepp’s profits. Court of Appeals.Accepted findings of District Court and agred Snepp breached a valid contract.- Affirmed finding that Snepp’s failure to submit his manuscript for prepublication review had

inflicted “irreparable harm” on intelligence activities vital to our national security.Court upheld the injunction against future violations of Snepp’s prepublication obligation. But also Concluded that the record didn’t support imposing a Trust. - Rationale - First Amendment right to publicsh unclassified information and the Gov’t’s concession - for the purposes of this litigation - that Snepp’s book divulged no classified intelligence. Court thought that Snepp’s fiduciary obligation extended only to preserving the confidentiality of classified material.Therefore, Court limited recovery to nominal damages and to the possibility of punitive damages if Gov’t - in jury trial - could prove tortuous conduct. U.S. Supreme CourtCourt of Appeals denies gov’t the most appropriate remedy for Snepp’s acknowledged wrong.- Nominal damages are a hollow alternative, certain to deter no one.- Punitive damages recoverable after jury trial are speculative and unusual- They bear no relation to Govt’s irreparable loss or Snepp’s unjust gain. Constriuctive Trust protects both gov’t and former agent from unwarranted risks.- This is a natural and customary remedy and consequence of breach of trust.Gov’t couldn’t pursue the Court of Appeals’ remedy without losing benefit of bargain it seeks to enforce.- Proof of tortuous conduct necessary to sustain punitive damages might force gov’t to disclose some of the very confidences tha Snepp promised to protect.When gov’t cannot secure its remedy without unacceptable risks, it as no remedy at all. May v. Muroff - (p.683)- buyer is buying a property right- Time between contract to sell and the final closing thereof, seller improperly sold fill from the land in question to a third party fo $240k.- Purchaser claims that $240k 3 Part Test1) Profitable2) deliberate, and3) inadequate protection of promise’s entitlement - could be situation where there is not a substitution transaction available. Usually we measure contract damages by P’s loss, not D’s gain, but restitution is better sometimes.- tendency to assume that disgorgement is not available in KDisgorgement will be rare b/c in real world, profitable breaches are rare.Sometimes courts will use disgorgement of profits as a measure of P’s damages where they are hard to prove.

Look for inadequate remedies, e.g., when what non-breaching party bargained for doesn’t have an easily identifiable/measurable monetary valueEx., protection of government. Mobil Oil Exploration v. US - (p.686)- If K had gone through, money would have been lost (or smaller amount of money).- what happens when there’s a deposit and a losing profit from their point of view- D wants to know if they need to repay all of that. Rescission- Restores status quo as closely as possible- clarifies why P’s might want rescission instead of damages- Where K would have been a losing contract- Appeals to elemental notions of justice - This doesn’t make sense from a rightful position point of view Total breach on one side of the contract- other side wants to cancel the contract altogether because he would have been worse off- That’s okay - put everyone back to start. Bush v. Canfield (Price change on flour- Seller breaches- Buyer wants $5k down payment backSeller argues buyer would have lost 3k if K was performed Held: Buyer was entitled to a refund, and the doctrinal explanation is that he could rescind the contract and recover restitution of his down payment (And rest of notes starting on p.688) April-03First Class After BreakConstructive TrustsWrongdoer/beneficiary is converted into a constructive trustee over P’s property Purpose of law of constructive trust is to distinguish owners from creditors. Owners deprived of property by some means giving rise to a claim in restitution do not become ordinary creditorsThey Can still assert their claim to ownership for as long as their property or its proceeds

remains identifiable If the remedy were extended to ordinary creditors, the distinction would be lost and the remedy would lose most of its value. Everyone would have a claim to identifiable property. Usual application of this rule is to ordinary contract creditors; its application in Ruffin to child support highlights the strength of the rule. Distinction between deprived owners and ordinary creditors has fuzzy boundaries at the margins. If both creditor and victim of fraud, usually you’ll be able to press your position as victim of fraud -- especially if the fraud is serious. In re Teltronics in note 4, pp. 707-708 is a clear example. In re involves cases highlighting insolvency proceedings, and these are where constructive trusts matter most.In re Leitner, In re Erie Trust, In re JD Services, In re Mesa, -- are all insolvency proceedings, either in bankruptsy courts or state court receivership. Paoloni v. Goldstein Ruffin v. RuffinHusband owed wife spousal support and child support.Husband won lottery.No constructive trust.Commissioner found no evidence of fraud or unjust enrichment warranting the imposition of a constructive trust on husband’s winnings.You need to be able to connect the specific money owed directly to the winnings -- or whatever P is trying to get the constructive trust over.It helps if it’s a larger amount of money. In both Ruffin and Paoloni - P claims to the proceeds of the lottery ticket bought with ill-gotten $ In re LeitnerWetherill hired Leitner to perform legal and accounting services.Leitner embezzled a bunch of money from Wetherill and used it for a home.Wetherill says Leitner’s fraud creative a constructive trust.Trustee, Clark contested the existence of a constructive trust. TimingFraud

Files BankruptcyThen suit 1) It has already been decided. 2) Whether bankruptcy court should ever impose a constructive trust based on state law when the state court has not done so before a debtor has filed for bankruptcy. A constructive trust is fundamentally at odds with the general goals of the Bankruptcy Code. 6th Circuit previously held that a constructive trust is an equitable remedy effective only from entry of a final judgment. But this is not universally accepted. Majority state law - constructive trust arises at the time of the occurrence of the events giving rise to the duty to reconvey the property -- NOT at the date of final judgment declaring the trust. This State - Kansas - hadn’t addressed the issue. CourtPredicts that Kansas would follow the majority rule.Holds that Wetherill woned the equitable interest in the residence on the date Leitner filed bankruptcy. Leitner held only legal title, which he was obligated to convey to Wetherill. Accordingly, the equitable interest in the homew as owned by Wetherill, not Leitner, at the time he filed bankruptcy. Accordingly, it didn’t become property of the estate. Clark also argues that }547(b) operates to avoid constructive trust and attachment lien as preferential transfers. This lacks merit because neither the trust nor attachment were a “transfer of an interest of the debtor in property.” Seciont 547 requires transfer by debtor before it can operate, which was not the case here. Debtor didn’t own any transferable, equitable interest in the home. Order - trustee is ordered to convey the bare legal title to Wetherill. In Re Erie Trust Co. Court filed an adjudication surcharging Erie Trust for $26,000 - cash taken from estate by company as commissions to which it was not entitled. Court of common pleas denied right to a preference over general creditors. Where improperly converted assets of a trust estate are traced into the fund for distribution, a prefernce has always been allowed on the theory that such assets never have become a part of those of the trustee but at all times have remained, whether in their original or substituted form,

the property of the trust beneficiary. Therefore, the trustee’s general creditors are not entitled to any share in their distribution. IssueHave appellants been able to trace converted cash of the estate into the assets in the hands of the receiver for distribution? - Lower Court said no.The money was taken by Erie Trust from the estate and placed in the general cash funds of the company.Lowest amount of actual cash in those funds from the time when the money was taken from the estate until the receiver was appointed was $2800, together with cash items of $1900. Lowest amounts in other banks was $6300. Other large transactions were made as well. In PA, it’s not sufficient for a trust beneficiary merely to show that the general assets have been increased by an unauthorized appropriation of trust property, but he must also identify the trust res by tracing it into some specific property, funds, or assets. The deposits of the trustee company in other banks are to be considered, together with the cash on hand and the cash items, as constituting a single fund, sufficiently differentiated from the company’s general assets to meet the requirements of the law in regard to the tracing of trust property. - This conclusion is based on the fact that banks and individuals alike generally regard cash on and and deposits in banks as a unit of cash resources distinct from assets consisting of securities and other forms of personal property. Investments made by the trust company - after the time of the conversation, from funds on deposit in other banks, are also subject to the claim of appellants in this proceeding. If deposits are considered part of the fund into which the trust res has been traced, any securities into which such deposits were transmuted must be regarded as merely substituted forms of the trust property. Appellants are entitled to their rights in the general cash funds as well as to pursue the balance of their claim of $25,800 into the Church of the Covenant bonds and the Leichner mortgage). Lower Court Order reversed. In re JD ServicesOne of JD’s subsidiaries deposited a check for $7250 into an account. Bank coded the check as $725,000. Debtor wire transferred $800,000 from the account to a new one at First Security Bank. Parties agreed that the extra money was included in this transfer. This tracing step wasn’t explained.

Bank of America noticed the oerror and notified him. The second bank agreed to put a hold on the account for the difference. Debtor continued to use the accounts, and about $6.5 million went through the account over a couple weeks.Some deposits bounced, and the bank put length holds on deposits before making the funds available. 2 Approaches1) “Collected Balance” - total funds on deposit, regardless of whether or not funds are available for withdrawal or use by the Debtor. - Lowest balance during the 2 weeks is no less than $717,750 - the extra amount. 2) Analyze the amounts on deposit as the “Available Balance,,” - total funds available for withdrawal at any given time. - Lowest balance is no less than $394,400. If funds held in constructive trust have been commingled, beneficiary of trust must trace funds using the lowest intermediat ebalance rule.Constructive trust must havef a trust res at all times.Turst is created in property and exists only so long as there is an identified and ascertainable interest in the property to be the trust res. - To impose the same tracing requirements as are required under state law is reasonable and will cause no greater hardship on the bank than it woul experience outside a bankruptcy setting. Furthermore, a tracing requirement is reasonable when weighed against bankruptcy policy, which demands equality of distribution among cretors of equal rank. If it traces the funds, return of trust res ot Bank won’t violate bankruptcy policy because the Bank will eb receiving its own money and not property of the estate.If bank can’t trace funds, bank becomes creditor to the extent of its lost. The bank must trace its funds held in constructive trust using the lowest intermediate balance rule. - “any funds removed from a commingled account are presumed to be the Debtor’s funds to the extent the funds exceed the beneficiary’s equitable interest.If trustee deposits other funds, it is generally held that trustee isn’t replenishing trust funds. New deposits aren’t subject ot he equitable claim. Of the two approaches - available balance most accurately traces the actual funds, which means he has an unsecured claim for the remaining $323k.

His notes on JDThis was a mistakeSame rules for mistake and fraud. Court applies exactly the same tracing rules it would have had D embezzled the money.- History of the account.JD Services illustrates thse kinds of issues.- For example, Ponzi Schemes - Bernie Madoff These cases usuall involve commingling the funds of multiple victims, and courts don’t let victims of a common fraud invoke the tracing fictions against each other Cunningham v. Brown - the original Ponzi scheme case, said that vcictims could reclaim as much of their own property as they could actually identify without reliance on fictions. In the unusual case where P could trace into an asset worth more than the amount that P lost, P could recover that extra value from a solvent conscious wrongdoer, but not from an innocent recipient (to protect the recipient) or from an insolvent recipient of any kind (to protect the other creditors). Tracing ProblemsScum manages a trust fund for againg mother100 shares of Microsoft worth $30/share100 shares of Exxon Mobile worth $50/share100 shares of Walmart worth $60/share.$10,000 of Scum’s personal cash in his checking account (not part of the trust). Scum sells 100 shares = $6000Scumuses $6k to buy 300 shares of GE at 20/shareGE stock drops to 10 - now worth 3kStill $10,000 in scum’s personal checking account. Problem 8-1- She could just sue, but the problem is that there are other creditors- How do we trace it?- easy - sell one stock and buy another - simple tracing.She can only get a constructive trust on the reduced amount (and she lost $3000). But this is better than being kicked into the group with other creditors. Problem 8-2Sells 100 shares for $3kDeposits into checking à $13,000- Withdraws $12k from checking and loses it in Vegas - now $1,000 in account.Receives $4k & deposits it, and the balance is $5kSells 100 shares of Exxon from mother’s account, receiving $5k in cash. Deposits, raising it to

$10k.Writes an $8,000 check on the checking account, buying 1,000 shares of Casino Co. at $8. Account à $2,000Casino Co. rises to $12, so 1,000 shares are now worth $12k. Lowest amount was $1,000, but then deposits more of her money -- So Mom Account Money goes from $3k, to $1k (and stays as lowest amount). Then adds more Mom money à $5000 = $6,000. Writes $8,000 check for sock, leaving $2,000 in account.She can elect to trace all $6k of her money into the Casio stock, so that she gets ¾, leaving 2k of Scum’s money to be lost in the poker game.¾ of casino stock is now worth 9k. - Good Lawyering - losses go to scum, winnings go to mom If Scum ahs no other creditors, mom can get the windfall of ¾ of casino stock, worth $9k. If scum has other creditors, her recovery will probably be capped at her actual loss of $8k. April-05pp. 726 - 757 Equitable Liens In re Mesa - (p.726)- Debtor purchased home in Florida- Debtor then knowingly assisted in fraud in order to pay for improvements on home- Total of the amouts invested into home ($378,415.61) dwarfs the equity in the amount of the home, which may be no more than $25,000.- “Nevertheless, the Court [imposed] an equitable lien for the full amount.”- “If, contrary to Debtor’s testimony, a smaller amount was invested in the home improvements, there is no prejudice to the Debtor since the total amount paid to contractors and suppliers alone far exceeds the probable equity in the home.” Court Orders:1) Travelers’ objection to homestead exemption is sustained2) travelers is granted an equitable lien in $378k3) Debtor’s homestead exemption shall not be a defense to any action by Travelers to enforce its equitable lien by foreclosure or otherwise. His notesAnother distinction - who owns the property?Constructive Trust- Debtor owned the home, and these fraudulent moneys were used to improve it.

Theoretically, it’s possible to give pro rata constructive trust in such cases.In practice - the rule = he gets only equitable lien - basically, the same lien he would have gotten if he had voluntarily loaned the money for the improvements. Equitable Lien à subrogation (see ppt slide for today). - Young couple builds house on parents’ land, expecting to eventually own land- Divorced, and parents still own land and house- High inflation- House cost 27k to build à Time of trial it’s worth 57k - Makes a big difference whether we call her constructive trustee or lien holder- Constructive trustee à 50% share of house (which more than doubled in value)- Lien holder à value of labor put into the house- Here, court gives hybrid remedy- Calls it an equitable lien, but looks more like a constructive trust- Gives 50% of the value of the house at the time of trial secured by lien on house.- This makes it so they don’t force the owner to sell the house, but still gets interest owed. Innocent DefendantsMany D’s are innocent recipientsPs who work on the wrong property by mistake or pay more than their fair share on join property get lienLien = Value of the benefit or the cost of producing it (whichever is LESS). - In constructive trust, you get to choose higher or lower if there’s a bad actor- but here, you give whichever is less. Some protection for innocent DJones v. Sacramento Savings & Loan Association- Lender loans D money to buy lots in subdivision- Lender records first mortgage but the mortgage has clause providing that it would be subordinate to a constructive loan Sacramento loans $ for construction, relying on the subordination clause in the first mortgage- Builder completed hosues and defaulted on both loans- Jones buys fitsrst mortgage for low price- Sacramento didn’t fulfill the terms of the subordination clause, so Jones becomes the senior creditor.- Jones gambled on the lien, hoping that the clause wasn’t enforceable, so they would be bumped down after him.- Court grants Sacramento an equitable lien on theory of unjust enrichment b/c Jones would profit from the improvements.

- But, restricted Sacramento’s right to enforce lien- not demand immediate sale- avoid undue hardship on Jones- no award of interest- and no monetary judgment Wealthy Mexican citizen leaves Tuscon property to Rotary ClubSold the tuscon homeMexican court struck rotary club from list of legateesCourt found no notice or service of process, refused to enforce Mexican judgmentDaughter innocently used money from house to buy a second house Rotary club traced money to second house, which goes up in valueRotary club gets equitable lien instead of constructive trustClub cannot recover more than it lost from an innocent DHere: award equitable lien for the amount of the original payments, not a constructive trust for fractional interest in the house. Review1) how you trace property2) choices P has as to what assets to choose3) one of two remedies - culpability determines when constructive trust or equitable lienMort v. United States - (p.733) Myers writes promissory note to Kern - $30k - secured by deed of trust on property Myers owned separately IRS puts lien on Myers for $33k for unpaid income tax Belmont loans Myers’ Trust $38k Myers paid off Kern loan and part of Tax Lien Morts paid Belmonts $38k, and Belmonts gave Morts their interest in the promissory note and the deed of trust (with the title insurance policy). Morts learned of the IRS lien, and 2 months later, IRS seized the land. Procedural History- Morts filed complaint in U.S. District Court seeking injunction and declaratory judgment that their trust deed was superior to federal tax lien.- District Court Dismissed complaint without prejudice, concluding that the Morts couldn’t bring their claim for equitable subrogation without first pursuing their legal remedies against the title

insurer. Issue 1: Does the court have jurisdiction to grant equitable relief?- “E His Notes on Mort v. U.S.Morts acquired their interest after IRS filed a atx lien on the property, but argued that they were entitled to be equitably subrogated to the priority position of the lender whose loan was paid off by their assignor. - THIS IS How YOU DO IT ON THE EXAM IF LIEN PROBLEM -- TIMELINE- Dec. 12, 1990: Myers signs promissory note (to kerns) signed secured by Nevada property (Senior lien)Aug 24, 1992, IRS files tax lien on property for $33k (junior lien). If you stop there, it’s easy - Senior Lien is padi before Junior LienHowever, the Kern’s interst, which arose prior to the IRS lien, is transferred after the IRS lien. Now we need to figure out the priority -- does IRS beat out this claim?Oct 1992, Myers conveys title to property of the trustNov. 13m 1992, Belmont loaned to DeLee . . .Belmonts conveyed interest to Morts for $38k payment1993 - IRS seized the land. RuleDoctrine of equitable subrogation allows a person who pays off an encumbrance to assume the same priority position as the holder of the previous encumbrance. Person asserting subrogation has only the rights of the person to whom he is subrogatedU.S. v. CaliforniaUS sues to recover sales ax paid to state by federal contractorUS could be subrogated to contractor’s claim against stateHere: that claim was barred by Statute of LimitationsNewton v. Porter - (p.741)- March, 1869 - P owned $13k gov’t bonds, which were stolen.- Bonds were sold by the thief, and proceeds were divided between them Judge found that D’s had notice at the time they received the securities that they were the avails and proceeds of the stolen bonds, and directed judgment against them for the value of the securities, it appearing on the trial that they had collected or disposed of them and received the proceeds. The doctrine upon which this case proceeded:“The owner of negotiable securities stolen and afterwards sold by the thief may pursue the proceeds of the sale in the hands of the felonious taker or his assignee with notice, through

whatever changes the proceeds may have gone, so long as the proceeds or the substitute therefore can be distinguished and identified, and have the proceeds or the property in which they were invested subjected to a lien and trust in his favor, . . . . . . Is founded upon the plainest principles of justice and morality, and is consistent with the rule in analogous cases in courts of law and equity.” “The purchaser from a thief, however honest and bona fide [literally, good faith] the purchase may have been, cannot hold the stolen chattel against the true proprietor, but the latter may follow and reclaim it wherever or in whosoever hands it may be found. The right of pursuit and reclamation only ceases when its identity is lost and further pursuit is hopeless; but the law still protects the interest of the true owner by giving him an action for conversion of the chattel against any one who has interfered with his dominion over it, although such interference may have been innocent and under a claim of right, and in reliance upon the title of the felonious taker. Rule: “A thief cannot convey a good title to stolen property has an exception in case of money or negotiable securities transferable by delivery, which have been put into circulation and have come to the hands of bona fide holders. Lower Court found that D’s had notice of the larceny of the bonds, and the use made of the money arising from their sale, at the time they received the notes and mortgage. It was for the trial court to weigh the testimony, and the finding was warranted by the evidence.Judgment Affirmed. Banque Worms v. Bankamerican International - (p.748)- Security Pacific International Bank mistakenly wired $2 million to Banque Worms - a French Bank.- A few hours after the transfer, he directed Security Pacific to stop payment and make it instead to National Westminster- SP received the telexes, Spedley had a credit balance of only $84kLater, SP received additional funds to cover the transaction and then began to execute- In mistaken disregard of Spedley’s second telex canceling the transfer, SP transferred funds into Banque Worms’ account at BankAmerica- That aafternoon, SP executed Spedley’s second payment order and transferred $2 mil to Natwest, USA. His account was debited twice and was overdraftedSP attempted to get the funds from Spedley, but failed because by that time, he had entered into involuntary liquidation All banks sued each other.District Court applied the “discharge for value” rule, and granted judgment for Banque.SP appealed, arguing that NY didn’t recognize the discharge for value” rule in cases like this,

and the controlling rule is “mistake of fact”, which says: “in order to be entitled to retain the mistakenly transferred funds, Banque Worms needed to dfemonstrate detrimental reliance. Court“Discharge for value” rule should be applied. His notes on Banque WormsDoes Banque Worms need to return the money? Held: “They don’t need to return the money - discharge for value rule applies.” Under ordinary restitution, there can’t be unjust enrichment. Courts discourage it. But with the bona fide purchaser rule, there is an exception. It’s a policy-driven rules. National uniformity in the treatment of electronic funds transfers is an important goal, as are speed, efficiency, certaintiy, (to enable participants in fund transfers to have better understanding of their rights and liabilities), and finality. Replevin, Ejectment, and the LikeReplevin/ejectment - writs for the recovery of property- restitutionary remediesOften arises under repo of [something]9 Replevin P has choice b/w replaying and damages- can also sue to recover damages for loss during the period of deprivation of property- forcible detainer à due process requires some kind of hearing before seizure of property- be aware of these remedies, as they can come up in legal practices. April-10Collection (Of Money)Overview of CollectionJudgments- Judgments in themselves don’t obligate someone to pay.- Must file a writ of . . . . Writ of attachment, Writ of execution, Writ of garnishmentOr . . . . . . . . .Writs of possession and fierfi facias on judgments for specific property“on a judgment for recovery of specific property, real or person, a writ of possession may issue for the specific property, . . . “The writ may be levied upon goods and chattels . . . . Judgment proofWhether a debtor is judgment proof often depends on the diligence of the plaintiff’s attorney,

and on whether the amount to be collected exceeds the cost of collecting it. - Judgments against deep pocket corporations and governments get paid by check- they may offer to pay 80% now or the whole thing after a barely colorable appeal, but sooner or later they payThey have lots of assets and no way to hide them- judgments against small businesses or especially individuals creates problems- just the beginning of a whole new game- Plaintiff now knows as the judgment-creditor, has to scrounge around to find assets- P or P’s attorney or sheriff has to search around P may have to deal with- whether sheriff did it right (Credit Bureau v. Moninger)- fight other creditors who are chasing assets- secured creditors and taxing authorities may claim priority over him. Bankruptcy Petition- Ther are personal injury defense lawyers who immediately file bankruptcy petition for every client found liable - Collection is easiest in states with fewer exemptions- But even wage garnishment doesn’t make collection easy- other creditors may get there first, or garnishment may cause the employee to lose his job, or file for bankruptcy, or quit his job and disappear. - Heart of the problem is that no everyone is capable of paying a judgment- But the collection process aggravates the extent to which that is true- Except for garnishment, the collect process ignores income and focuses on assets. The collection process leaves creditor chasing assets that often don’t exist and that were not the basis of his extending credit.(A few more points on ppt.) Credit Burea, Inc. v. Moninger - (p.829)- Judgment creditor files writ- Writ issues to sheriff - He “expressly asserts dominion over property” (varies across states) Ex.: Physically take possession, and Inform parties that he’s executing the writ- Sheriff sells asset at auction- Proceeds go to1) Sheriff for costs of repo2) Senior lien(may or may not be judgment creditor3) Junior lien, etc.Governed by UCC and bankruptcy priority rules outside scope of this class.

State ExemptionsAlso: states exempt certain classes of property from judgmentPolicy - don’t’ leave debtors without the means of subsistence (household furniture, clothing, automobiles) - Ex. One car à 5k- Household goods, furniture, toys, animals, appliances, books, and wearing apparel that are held primarily for the personal, family, or household use of such individual à 8k, etc. Beaurline v. Sinclair Refining Co. - (not in book)- Sheriff named Lysinger tried to levy on 500 acres of growing cottonSheriff apparently thought he should drive around the cotonPratt wasn’t at home, but his wife was thereLysinger told her he was levying on his cotton and for her not to do anything with it.- “Came to hand this 6th day of July . . . “- Court - That’s not a levy. Rule1) if you’re making a levy, you have t o take possession of it - what if it’s really big? - then you have to go onto property, assert dominion over it, and forbid its removal by the person against whom the writ has been issued. - The officer in making a levy on such property must do something that constitutes trespass.The fact that the sheriff’s dept made no effort to get the cotton picked and thereby reduce it to actual possession emphasizes the fact that there was no levy accomplished. . . . He didn’t advertise, etc. Dixie national Bank v. Chase - (p.837)- Garnishee - third party who owes money to judgment debtor (usually bank or employer)- sometimes wages that are garnished, other times bank accounts- Garnishee can argue that it doesn’t owe judgment debtor, but no challenge the underlying judgment - If the Bank had accurately reported the balance in the account, the garnishment action would have been straightforward.- Chase can recover what the Bank owes to Gore, but no more than that.- The Bank could assert against the garnishor any defenses good against its depositor, although defenses as such are rare for banks and employers, the most common garnishees. - One issue with banks à set off claims- aside from having the account, the judgment debtor may also owe money to the bank, and the loan agreement may authorize the bank to set off the debtor’s deposits against the loan in the

even to f defaultGarnishment may act as “default” under the loan terms. - may have two claims - one against the garnishment creditor, and the other from the bank so it can satisfy the loan. Face-off b/w bank and creditor- In most states, the bank wins- banks exercise right to set off by an entry in their own books, so they regularly claim that they exercised the right just in the nick of time. Takeaways- Garnishee can be exposed to risk if not handled properly- In Dixie, instead of the bank handing over debtor’s $ to satisfy judgment, it has to hand over its own $- Consumer Credit Protection Act protects judgment debtors by capping garnishment at 25% disposable earnings or 30x federal minimum wage/weekState law may be more restrictive than this federal cap. Post-judgment Discovery- Judgment creditor can investigate debtor’s assetsThird partiesThe process can be done electronically now à very creditor friendly. ABA Journal 1984 - to illustrate technicalities- D appears for deposition w/out lawyer- P’s lawyer worked through every point on an elaborate checklist, asking 10 different ways- All answers were “no.”- They settle - Years later, P’s lawyer asked D’s lawyer if deposition answers had been truthful. They had been- On the morning of Deposition, D withdrew all assets and had $10k in his pockets about which they never asked in the Depo. In re Marriage of Logston - (p.848)- Illustrates use of the contempt power to collect alimony and child support.- Until execution process begins, no interest in particular property arises for a judgment creditor- And there are exemptions- In this case, alimony debtor raises exemption statute as defense. Contempt Order -- Coercive Judgment- Instead, the Court issues a contempt order against debtor- Non-compliance with order is evidence of contempt.

- Debtor cannot defend on the grounds that he didn’t have enough $ for “bare living expenses”- Can be kept in jail on the contempt citation.Most common in child support cases. Notes 3 & 5: Limiting Expenses- Court can order you not to get married- Note case - Court ordered him not to become a priest, but to go back, pass the bar, and become a lawyer and make money to pay for the judgment against him. (He had already failed the Bar Exam four times). - Collection in many cases is difficult and may be impossible- Creditors lend on income, but if the debtor doesn’t’ pay voluntarily, they generally have to collect out of assets . .. April-10 ContinuedChapter 10 - More Ancillary Remedies: Attorneys’ Fees and the Costs of Litigation A. Fee Shifting Statutes City of Riverside v. Rivera - (p.877)- This case sets up the basic policy question of whether losing litigants should eb liable for the other side’s attorneys’ fees Rationale for awarding fees1) rightful position2) manipulate incentives to litigateSecond rationale has dominated the American debate. This is the main debate in American Economy.- There won’t be any civil rights cases.- Poorer Plaintiffs won’t be able to file suit. - Fees are treated as a collateral or ancillary matter and not as part of basic compensation. Partial fees are sometimes awarded, especially to prevailing defendants. If P’s win, they get attorney fees from D’sIf P’s lose, they don’t pay D’s attorney feesRationale - we don’t want to deter poor P’s from suingSome controversy - attorneys padding fees How much is awarded- Full compensation at reasonable market rates

- But how exactly do we measure this?- The underlying dispute is a disagreement about how much incentive to bring these claims is appropriate.- Ex.: $10,000 judgment, and $100,000 attorney fees Conservatives à It’s sufficient if some lawyer somewhere will take these cases. If some of these cases are uneconomic and don’t get brought, that is the way it should be.Liberals à want the market rate for paying clients with equally complex cases, so that statutory cases will be equally attractive to lawyers with a choice. Buckhannon Rule- Emerging rule - Court needs to retain some jurisdiction to enforce a settlement agreement (whether or not formally entered as a consent decree).- Some public interest lawyers have said that this makes it harder to get attorneys to take these cases because D’s can give up early and avoid a judgment. Lodestar Method - How to Calculate Damages- Lodestar = reasonable hours X reasonable hourly rate PLUS appropriate adjustment for type of case / issues in caseà The novelty and difficulty of the questions.à The skill requisite to perform the legal service properly.à The amount involved and the results obtained. Reasonable hours- Prevailing firm turns in billing sheets- Only provable work is recoverable as fee award- D’s are now looking more closely at these billsKEEP DETAILED RECORDS OR YOU WILL NOT GET PAID April-12Unconsciounability & Arbitration - substantive and procedural Unconsciounability- usually if you have one or the other, you have both- many of the recent Unconsciounability cases have been about class action waivers in arbitration clauses (usually in consumer contracts -- buying something online from Apple - A clause waiving Jury trial generally isn’t considered unconscionable- But waiving class action suits or arbitration generally is unconscionable Eisenberg & Miller, Arbitration’s Summer Soldiers: An Empirical study of arbitration Clauses- 75% of consumer law contracts contain arbitration clauses

- Every consumer law contract contains provisions prohibiting class arbitrations- Only 6% of companies contract with other companies contain arbitration clauses One-sided arbitration clauses- Often these bind the less powerful party but not the powerful party - Davis v. O’Melveny & Myers- Employment K with dispute resolution clause- Whether it’s procedurally unconscionable- The employment k was written by a sophisticated employer - a national and international law firm, no less- But there are no factors of adhesion such as surprise or concealment.- The DRP was not hidden- Nevertheless, in a very real sense, the DRP was “take it or leave it, and that makes it procedurally unconscionable.- Requires you to agree or else you can’t get hired Substantive Unconsciounability- whether the substance is unconscionable- Here, the Court finds several terms substantively unconscionable where the K:1) Shortened the time in which an employee could bring a claim2) imposed an overbroad confidentiality clause forbade employers from . . .3) Waived some other right . . .Court finds it’s substantively unconscionable Rent-A-Center, West, Iinc. V. Jackson- Where an agreement to arbitrate includes an agreement that the arbitrator will determine the enforceability of the agreement, (they almost always do)If a party challenges specifically the enforceability of that particular agreement, the district court considers the challenge, but if a party challenges the enforceability of the graeement as a whole, the challenge is for the arbitrator- It didn’t really resolve the underlying question, just whether the arbitration clause was enforceable Choice of Law- Some states allow class actions, and some states don’t- Challenges to parts of the contract other than arbitration clause are handled by the arbitrator. Obstead v. Dell, Inc.- Class action waiver is unconscionable under California law . . . And California has a materially greater interest than Texas in applying its own Law.- Dell can’t just come from Texas into California and contract around Dell, ignoring California Law and applying Texas Law- Class action waiver is unconscionable in this case because it’s unconscionable under

California law. Unclean Hands and In Pari Delecto Unclean Hands- Used to be called the clean-hands doctrine- The principle that a party cannot seek equitable relief or asseert an equitable defense if that party has violated an equitable principle, such as good faith. Such a party is described as having “unclean hands.” - Black’s Law Dictionary Example- Section 8 of the uniform child custody jurisdiction act says there’s no relief where, E.G., one party has wrongfully removed a child from another state, improperly retained custody of a child after visitation, or has wrongfully removed a child from the person with custody- Unclean hands doctrine evolved from the discretionary nature of equitable relief in English courts of equity, such as Chancery. In Pari Delecto and Unclean Hands are basically the same thing- both available in equity and damages claim Pinter v. Dahl- Two-prong test1) P bears at least substantially equal responsibility for the underlying illegality2) P’s recovery is barred only if preclusion of the suit does not offend the underlying statutory policies - In other words, P could be barred from seeking damages -- even if where P could otherwise win on the merits. The doctrine seems to let D get away with bad conduct Precision Instrument Manufacturing Co. v. Automotive- P invesnts wrench and D files false patent claiming to have invented the wrench- P and D settled the case and D assigns the (fraudulently filed) patent.- D begins manufacturing the wrench- P (guy who developed the wrench) sued à was barred by unclean hands- P didn’t disclose that the other guy lied, so he’s screwed- P was involved with the fraud, so he says we’re not going to let you enforce it. Kaiser Steel Colp. V. Mullins - Note Case- If the K violates Antitrust law, it’s not enforceable.- same as under the general contract rule/policy of illegality

Fraudulent transfers- Beelman v. Beelman- If the fraud isn’t aimed at the Defendant, D can’t bring it up- P transfers $ to brother-in-law to escape IRS collection, asks for it back, brother-in-law says no.- Held - P not barred by unclean hands because fraud wasn’t aimed at brother-in-law Cases usually use a comparative fault approach.- Example: Gamblers cannot sue to recover their illegal losses, but some states recognize an exception where D cheated- It comes down to which is worse - illegal gambling or cheating at gambling?- In this case, apparently cheating at gambling is worse Estoppel and Waiver -- (Skipping over some Estoppel and Waiver Stuff) Estoppel and Contract- Adds the whole course of dealing as a contract term- Evidence not confined to words of agreement à not rooted in K formalities- Linked to fraud à all fraud gives rise to estoppel Equitable estoppel1) A Defensive doctrine preventing one party from tking unfair advantage of another when, through false language or conduct, the person to be stopped has induced another person to act in a certain way, with the result that the other person has been injured in some way.- This doctrine is founded on principles of fraud.- Black’s Law Dictionary Getty - (p.941)House near golf course- Apparently they didn’t know golf balls fly through the air- They get stopped from filing suit -- stopped from forcing the other side to give you a remedy, where the other side invested so much money (golf course)- relates to reliance -- you know the other side invested a bunch of money, you can’t take advantage of that and tell them to undo everything they’ve done U.S. v. Georgia-Pacific - Note Case- 1934 - Land K with U.S. Gov’t- Gov’t now obligated to provide protection1941 - Co. had cut and conveyed 6,000 acres1958 - gov’t retracted the boundaries of forest and fire protection(Decades after the original K) - gov’t tries to sue to get the land back- CA: gov’t stopped from asserting ownership because it led private owners to believe it had abandoned contract à leads to reliance on that apparent representation

Waiver- Voluntary relinquishment or abandonment - expressed or implied - of a known right Carr-Gottstein Foods Co. v. Wasilla- could have just as easily been an estoppel case- “you can only put one type of store there- Company puts another type there- Shopping center agrees- Center later decides to enforce the contract- They waived that right Another Example - contract to sell blue widgets, make red widgets, sell many times -- on the 10th time (or at least eventually), you can no longer bring up the issue and sue for the blue widgets because you waived that. Richardson v. Richardson- Ex wife didn’t waive her right to spousal support by hiring a hit man to kill her ex-husband- Trying to kill her husband was not an “unequivocal attempt to relinquish” Procedural Waivers- This comes up e.g., in administrative law, civ pro, etc.- f you didn’t raise a claim or procedural right at a certain time, you waive the right to bring it up later - Tuesday - laches, Statutes of Limitations, and Continuing violations- Thursday - Wrap-up and summary of course- Come up with questions and issues you want clarified for the last couple classes (whenever we start review -- either Tuesday or Thursday) Tuesday, April-17 Estoppel, Waiver, Laches, Statutes, of Limitations, and Continuing Violations (p.941-973) Laches - unreasonableness + Prejudice- Remissness; slackness- Unreasonable delay in pursuing a right or claim - almost always an equitable one - in a ways that prejudices the party against whom relief is sought.- Also termed sleeping on rights 1) what is unreasonable delay?2) what is prejudice?

3) When does laches apply? Pro Football, Inc. v. Harjo - (pp. 957 and 958)Redskins Football - complaint about their name- Laches applies because they created the name decades before (1960’s?), and they unduly delayed their complaint. Preventative Injunction McCarthy - Senator McCarthy (Communist) wants to be on the ballot for (president?)Applicants tried and failed to qualify for a position on the ballot in a previous election. They were familiar with the statute and could have brought suit earlier. The delay meant that the legislature could not consider alternative filing requirements. . . . . Klehr v. A.O. Smith Corp. - (p.966) How to deal with measuring gSOL when there are continuing harms- last predicate act à one predicate act within the SOL period, P can recover for harms that occurred earlier than the SOL but were part of the same act.- antitrust à each overt act that is part of the violation and that injures P starts- separate accrual à one act within the SOL starts the clock running, but only as to harms within the SOL periodNo Bootstrapping Where does this happen?Example continuing violation in employment law -- continuing violations across time- where do you recognize the harm -- early on in employment?If the rule says “this happened outside the SOL, then it’s not defensable. It’s the harsher rule- With respect to paycheck discrimination cases, new violation occurs with each paycheck - Lilly Ledbetter Fair Pay Act of 2009 Right with legal remedy only - yes, no Right with both legal and equitable remedies: - P seeks legal remedy - yes, no - P seeks . . . (Check PowerPoint for April-17, last day of class before exam review) SUMMARYBasic remedies question: where would the parties be but for the violation- usually where would the plaintiff be?

In damages, you want to give him enough money tobuy his way back to that position- Where that is impossible, reasonable compensation - for pain and suffering and suchThat is hard to measure. Preventative Injunction- you want to keep P in that position to start with Reparative injunction- you want to restore him to that position in kind- prison cases, desegregation cases (which one should be held responsible for desegregating) Equity- There is a competing tradition that the chancellor has broad discretion to do good, without regard to the position anyone would have occupied but for the wrong.- But that tradition doesn’t make much sense unless it can identify a principled stopping point, -- Supreme Court doesn’t like broad discretion in the Chancellor (equity) courts -Specific performanceS.P. decree is just a specialized form of injunction at this level of analysis- Declaratory judgments . . . . (see ppt.) Restitution- sometimes P can demand that D be resored to his original position Restoration1) innocent recipients of undeserved benefits2) see pp. Irreversible Transactions - and Innocent Defendant- when part of the transaction is irreversible, money restitution from D is generally measured so as not to make D worse off, even if that leaves P under compensated- Each side must account for interest or the rental value of property during course of possession. 2) Conscious wrongdoers- Restitution is measured much more aggressivelySomething in bold here on the ppt. Three categories under Restitution1) D harms P w/out any equivalent benefit to himself- P seeks damages, and restitution is irrelevant

2) direct transfer from P to D and no change in value- P loss is equal to D’s gain, and damages are equal to restitution- But P may prefer restitution if D is broke and if P can still trace the very thing he lost. Constructive trust, equitable lien, etc.3) D makes profits greater than the harm inflicted on P- Then P plainly prefers restitution.Olwell, Maier, etc. Punitive damages are the great exception to the rightful position principle- There is no sense in which they restore anyone to his rightful position. They are designed to punish and deter, not to repair. Ancillary remedies- None of these remedies are worth having without ancillary remedies for enforcement.- Without the ability to enforce remedies, there’s no point in having them.- We force equitable remedies, execution, garnishment, and a miscellany of others to collect most money remedies. Remedies is all about limitsSome of those limits are closely linked to the basic rules (of rightful position? . . . .)(see ppt.) With so many remedies, there must be rules or procedures- irreparable injury- relative cost of alternative remedies- etc., (see ppt.) Substantive policy concerns such as free speech and free labor (problem is not that we avoid inadequate remedies but that we fear remedies that will be TOO effective) Policy and EconomicsConflict between the economists and the corrective justice theorists - between efficiency and Fairness as the measure of law.- e.g., too expensive to compensate P The Economist concentrates on getting just the right amount of every kind of behavior, including harmful behavior.- The goal of corrective justice is to stamp out wrongdoing and to fully compensate every wrong. Remedies are the key to getting just the right amount of deterrence, so remedies law is a testing ground for the two approaches. Despite radically different starting assumptions, most cases can be decided the same

way under either theory. Most justices and judges consider both corrective justice and (compensation?) Work comfortably w/ the full range of remedies- Most remedies leave discretion to trier of fact- (and more on ppt.) EXAM - WAY TO ANALYZE - whether in litigation or the exam, work through your options. Are there measurable damages?- how many ways oculd I measure them?- Which is most lucrative - or least lucrative - and still within the bounds of fair argument?- This is where the room is for persuasive argument- Argue both sides on exam Is there other harm still about to happen, or things that D could fix directly? How?- What exactly do I want D to do? Is it workable?- Could it be drafted and enforced?- Did D profit from the violation, and are there any advantages to going after that profit instead of, or in addition to, P’s damages? -- constructive trust, lien, etc. If so, D can be on the hook for more damages. We’ll give a more generous reward when there’s wrongdoing -- especially fraud. Every problem from 3 perspectives1) P’s perspective - look to maximize remedy - (fairness if often a P’s argument (sometimes, not always -- but sometimes it can be D’s argument)- Don’t’ forget to discuss collecting judgment- You can only get paid if you can find a way to get paid. Must actually be able to get and collect the money.2) D’s perspective - look for ways to minimize - (avoid economic waste)3) Court’s perspective - look for the best remedy -- whatever you think that means.- Injunction?