Table of Contents

UNIT 1 (pp 1-52) CHAPTER 2: PAYING FOR HARM: Compensatory Damages ......................... 4
A. THE BASIC PRINCIPLE: RESTORING PLAINTIFF TO HIS RIGHTFUL POSITION ...................................4
UNITED STATES V. HATAHLEY (BUT-FOR PRINCIPLE) ........................................................................... 4
B. VALUE AS THE MEASURE OF THE RIGHTFUL POSITION.................................................................5
IN RE SEPTEMBER 11 LITIGATION ........................................................................................................ 5
TRINITY CHURCH V. JOHN HANCOCK (Cracked Foundation Case/special purpose exemption) .......... 6
C. EXPECTANCY AND RELIANCE AS MEASURES OF THE RIGHTFUL POSITION .....................................7
NERI V. RETAIL MARINE CORP. (Boat Case) ......................................................................................... 7
CHATLOS SYSTEMS V. NATIONAL CASH (computer case about expectancy).................................... 8
SMITH V. BOLLES .................................................................................................................................. 9
UNIT 2 (pp. 52-134) CHAPTER 2 CONT. ................................................................................ 9
D. CONSEQUENTIAL DAMAGES .......................................................................................................9
BUCK V. MORROW (Buyer suing seller) ............................................................................................. 10
MEINRATH V. SINGER CO. (seller suing buyer) .................................................................................. 11
TEXACO, INC. V. PENNZOIL CO. (buyer suing 3d party) (Covert Punitive/wrongfulness plus) .......... 11
E. LIMITS ON DAMAGES ............................................................................................................... 12
1. The parties Power to Specify the Remedy .................................................................................... 12
KEARNEY & TRUCKER CORP. V. MASTER ENGRAVING CO .............................................................................12
IN RE TRANS WORLD AIRLINES, INC. .............................................................................................................12
NORTHERN ILLINOIS GAS CO. V. ENERGY COOPERATIVE, INC .......................................................................13
2. Avoidable Consequences, Offsetting benefits, and Collateral Sources ......................................... 13
S.J GROVES & CO. V. WARNER CO. ................................................................................................................13
ODEN V. CHEMUNG COUNTY INDUSTRIAL DEVELOPMENT AGENCY ............................................................14
3. The Scope of Liability...................................................................................................................... 14
PRUITT V. ALLIED CHEMICAL CORP. ..............................................................................................................14
EVRA CORP. SWISS BANK CORP. ....................................................................................................................15
4. Substantive Policy Goals................................................................................................................. 16
BRUNSWICK CORP. V. PUEBLO BOWL-O-MAT (anti-trust) ............................................................................16
5. The Requirement of Reasonable Certainty .................................................................................... 17
BIGELOW V. RKO RADIO PICTURES ................................................................................................................17

UNIT 3 (134-187) CHAPTER 2 CONT. .................................................................................. 17

F. DAMAGES WHERE VALUE CANNOT BE MEASURED IN DOLLARS ................................................. 17
1. Personal Injuries and Death ........................................................................................................... 17
DEBUS V. GRAND UNION STORES (Per Diem Damages - 25% disabled from boxes falling on her)...............17
2. The Controversy over Tort Law ...................................................................................................... 18
ARBINO V. JOHNSON & JOHNSON (injured about birth control) ...................................................................18
3. Dignitary and Constitutional Harm................................................................................................. 18
LEVKA V. CITY OF CHICAGO (Stripped searched) ...........................................................................................18
CAREY V. PIPHUS (Marijuana) .......................................................................................................................19

UNIT 3B CHAPTER 3 .......................................................................................................... 20

A. PUNITIVE DAMAGES ................................................................................................................ 20
1. Common Law and Statutes............................................................................................................ 20
EXXON SHIPPING CO. V. BAKER .....................................................................................................................20
2. The Constitution ............................................................................................................................. 20

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 STATE FARM MUTUAL AUTOMOBILE INS. CO. V. CAMPBELL ........................................................................20
PHILLIP MORRIS USA V. WILLIAMS ................................................................................................................21
Exxon, State Farm, Phillip Morris Synthesis: ..................................................................................................21
3. Punitive Damages in Contract ........................................................................................................ 22
FORMOSA PLASTICS CORP. USA V. PRESIDIO ENGINEERS .............................................................................22

UNIT 4 (263-310) CHAPTER 4: PREVENTING HARM The Measure of Injunctive Relief .......... 22
A. THE SCOPE OF INJUNCTIONS .................................................................................................... 22
1. Preventing Wrongful Acts .............................................................................................................. 22
ALMURBATI V. BUSH (Terrorist Case) ............................................................................................................22
MARSHALL V. GOODYEAR TIRE & RUBBER CO. (Discharged for old age) ......................................................23
UNITED STATES V. W.T. GRANT CO. ..............................................................................................................24
Almurbati, Marshall, and W.T. Grant Synthesis: ...........................................................................................25
2. Preventing Lawful Acts that Might have Wrongful Consequences ................................................ 25
NICHOLSON V. CONN. HALFWAY-HOUSE ......................................................................................................25
PEPSICO, INC. V. REDMOND ..........................................................................................................................26
3. Repairing the Consequences of Past Wrongful Conduct ............................................................... 26
FORSTER V. BOSS ...........................................................................................................................................26
WINSTON RESEARCH CORP. V. MINN MINING ..............................................................................................27
BAILEY V. PROCTOR .......................................................................................................................................28

UNIT 5 CHAPTER 5: Choosing Remedies ............................................................................. 29

A. SUBSTITUTIONARY OR SPECIFIC RELIEF ..................................................................................... 29
1. Irreplaceable losses ........................................................................................................................ 29
a. Injunctions .................................................................................................................................................29
PARDEE V. CAMDEN LUMBER CO. (1911).................................................................................................29
BROOK V. JAMES A. CULLIMORE & CO. ....................................................................................................29
CONTINENTAL AIRLINES, INC. V. INTRA BROKERS, INC. ...........................................................................30
b. Specific Performance Contracts .................................................................................................................31
CAMPBELL SOUP V. WENTZ ......................................................................................................................31
VAN WAGNER AD CORP. V. S&M ENTERPRISES .......................................................................................31
2. Burdens on the Defendant or the Court ........................................................................................ 32
WHITLOCK V. HILANDER FOODS, INC. ...........................................................................................................32
CO-OPERATIVE INSURANCE SOCIETY LTD. V. ARGYLL STORES (HOLDINGS) LTD. ..........................................33
3. Other Reasons & More of the Same .............................................................................................. 34
EBAY, INC. V. MERCEXCHANGE, L.L.C. ...........................................................................................................34
WILLING V. MAZZOCONE...............................................................................................................................35

UNIT 6 (440-470) - CHAPTER 5 CONT. ................................................................................... 35

B. PRELIMINARY OR PERMANENT RELIEF ...................................................................................... 35
1. The Substantive Standards for Preliminary Relief .......................................................................... 35
WINTER V. NATURAL RESOURCES DEFENSE COUNCIL ..................................................................................35
COYNE-DELANEY CO. V. CAPITAL DEVELOPMENT BOARD.............................................................................36
2. The procedure for Obtaining Preliminary Relief ............................................................................ 37
CARROLL V. PRESIDENT AND COMMISSIONERS OF PRINCESS ANNE ............................................................37
SAMPSON V. MURRAY ...................................................................................................................................38

UNIT 7 CHAPTER 7: Preventing Harm without Coercion: Declaratory Remedies ................. 38

A. DECLARATORY JUDGMENTS; BACKWARD LAWSUITS ............................................................. 39
1. General Case................................................................................................................................... 39
NASHVILLE RAILWAY V. WALLACE .................................................................................................................39
CARDINAL CHEMICAL CO. VO MORTON INTL ...............................................................................................39

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 2. Special Case of interfering with State Enforcement Proceedings .................................................. 40
STEFFEL V. THOMPSON .................................................................................................................................40
DORAN V. SALEM INN, INC. (Strip Club Case) ................................................................................................41
B. QUIET TITLE AND THE LIKE ........................................................................................................ 42
NEWMAN MACHINE CO. V. NEWMAN............................................................................................... 42
C. REFORMATION......................................................................................................................... 43
HAND V. DAYTON-HUDSON ............................................................................................................... 43

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 UNIT 1 (pp 1-52) CHAPTER 2: PAYING FOR HARM: Compensatory
Damages

A. THE BASIC PRINCIPLE: RESTORING PLAINTIFF TO HIS RIGHTFUL POSITION

UNITED STATES V. HATAHLEY (BUT-FOR PRINCIPLE)

- Facts: The United States rounded up livestock of Navajo Indians which the government
considered trespassers and sold them to glue factories and horse meat plants. This
roundup was illegal due to the government not giving the Navajo notice and USSC ruled
that the government had trespassed under Utah law.

- Ruling: On remand, the District Court entered judgment against the government in the
sum of $186,017.50. Each horse was valued at $395 and each plaintiff was awarded
$3,500 for pain and suffering. The 10th Circuit took exception to the damages award.
First, the court found that the District Court applied an erroneous rule by considering
the special training of the animals and that the value given to the animals was arbitrary
and pure speculation. The Court also reversed the award for pain and suffering, since
that is a personal and individual matter and the District Court only found a total amount
and divided it among the plaintiffs. The case eventually settled for $45,000.

- Synthesis: This case provides a starting point for the concept of "restoring plaintiffs to
their rightful position". This fundamental principle is the essence of compensatory
damages. Traditional argument for restoring P to RP is based on corrective justice. P
should not be made to suffer because of the wrongdoing, and if we restore P to RP, she
will not suffer. To do less would leave part of the harm unremedied; to do more would
confer a windfall gain. Corollary of RP is one-satisfaction rule (P cannot recover the
same item of damage more than once). P can recover under only one theory, similarly if
P collects a judgment from one D, he cannot collect it again from another. This is an
interesting introduction to the concept before the book moves on to the 9/11 case
which has the intricacies of the specialty property exception as the measure of the
rightful position.

- But-For Rule: that the fundamental principle of damages is to restore the injured party
as nearly as possible to the position he would have been in but for the wrong is the
essence of compensatory damages.

- Litigation Post Mortems: Could the lawyer have argued sentimental value? In one of the
notes in a case later in the section it states that courts have awarded damages for
emotional distress if defendants destroyed personal property intentionally. I'm not sure
if sentimental value for damages had been recognized as being available at the time this
case was litigated.

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B. VALUE AS THE MEASURE OF THE RIGHTFUL POSITION

IN RE SEPTEMBER 11 LITIGATION
Facts: Ps purchased 99-year leases for WTC towers. P paid NY Port Authority $491 mil
and would also pay rent to NY for 99 years. The value of rental payments at the time of
closing = $ 2.8 billion. After 9/11, P sued seeking $16 billion in replacement costs.

- Ruling: Court awarded the loss in value and held that the WTC did not fall under the
special purpose exemption, even though it was impossible for the plaintiff to
reconstruct the towers on 2.8 billion but the court found it was not a special use
property.

- Synthesis: WTC presents more problematic application of value. But for the wrong,
wouldve owned 99-year lease on WTCs. Replacement is possible, but recovery of
market value wont pay for replacement. If not special purpose property, then Lesser-of-
two rule applies: P is entitled to be made whole, but only in the least expensive way:
either the loss in market value (difference between what it was worth before damage
and what its worth after ) or the replacement cost. Additionally, this case is likely the
second case in the book it introduces the special property exemption. The case
following this one, Trinity Church, really helps to illustrate the special property
exemption. However, unlike in In Re Sept. 11, the court decided that the special
property exemption applies.

- Litigation Post Mortem: In Re September 11th and Trinity Church together illustrate
how subjective the classification of special property can be. The court in Trinity
Church easily decided that the church fell under the special property exemption because
it was a church. The court in September 11th could have also found a special property
exemption as well. As characterized by WTCP, the World Trade Center was developed to
promote local commerce and industry between New York and New Jersey. It looked like
the court viewed the WTC as just another building(s), thus there is an abundant market
for this type of property to be traded. However, I think that WTCP could have expanded
on that argument and taken it further than just promotin local commerce and industry.
They should have pitched it that the WTC is truly unique in that it is the only building(s)
that were designed in NYC to promote interestate commerce between NYC and NJ.
There is not another building that focuses on that, and given the nature of the WTC,
there is no real market for that type of business. Admittedly, this is a hard sell. As the
court noted, by 2001, the WTC had become a huge profit center with a multitude of
businesses in the building. Maybe WTCP could have looked into any public interest or
NPOs utilizing space in the WTC, and if a great number of them were present perhaps
the special purpose exemption argument may have been easier to make. Maybe if the
losing lawyer focused more on the fact that the WTC came to be as a result of the Port
Authority's mission, just as the church came to be as a result of the dioceses' mission,
and there isnt really a market to trade in where both of those mission could be fulfilled,

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 WTCP may have had more luck in convincing the court. With a building like a church, it is
clear that it will fall under the special property exemption, but in Trinity Church, the
church did not need all the money it got. The building is still standing, even without
major renovation. The WTC, however, will literally have to be replaced. Further, the
market value now is probably much lower for the property than it would have been if
the building were never even built. There is rubble and debris on the property now, and
because the building was built so long ago, hazardous materials like asbestos were
strewn about the property. The WTC property would have to be cleaned before it would
even be up to par for any kind of market value as compared to other buildings in the
area. Maybe if the lawyer made that argument, coupled with the argument he/she
already made about the WTC promoting interstate industry and commerce, which no
other building like that does, maybe the court could have been convinced that the WTC
was the type of property that should fall under the special use exemption, and thus
entitle WTCP to replacement value, not market value.

TRINITY CHURCH V. JOHN HANCOCK (Cracked Foundation Case/special purpose exemption)

Facts: During construction of D's building, foundation of P's church got messed up. P
sought compensation for damage and quantified damages based upon the percentage
change in the structure in terms of the church's ultimate takedown condition, the point
at which reconstruction would be necessary.

- Ruling: Affirm jury verdict for Ps award for structural damages. Entitled to Reasonable
Cost of restoring church to its condition prior Hancock excavation

- Synthesis: First, in Hatahley, we learn that the overarching principle of all compensatory
damage awards is to restore injured party to their rightful position, and that value is
the method by which courts use to measure injury/loss to plaintiffs. From Hatahley, we
learn that two ways or measuring value are the market value and replacement costs, or
the cost of replacing a lost, destroyed, or stolen item. In Hatahley, the plaintiffs were
entitled to the replacement cost of their animals plus the use value of the animals
between the time the animals were seized and the time the plaintiffs reasonably could
have replaced the animals. In contrast, in the following case, in in re September 11, P
was denied compensation for loss of use, or the loss rental payments due to the
destruction of the towers. This is where the one-satisfaction rule comes
in. Granting P the destroyed market value and the loss rents
would have given it double the recovery.

- Instead, in re September 11 seems to follow Hatahley as a case exemplifying market

value vs. replacement costs as measuring value in tort cases when the amounts differ
significantly. The major questions in 911 were whether the plaintiff can recover
replacement costs or is limited to the market value. In re September 11 teaches use that
while, in a well-functioning market, market value and replacement costs are generally
equivalent, sometimes replacement costs are significantly higher than the market value
of a damaged or destroyed item. Here, the cost of replacement/repair would have been

6
 $10 billion more than fair market value before and after 911. The court applies the
lesser of the two rule after ruling that the towers did not constitute special purpose
property where a plaintiff whose property has been injured may recover the lesser of
the diminution of the propertys market value or its replacement cost (even if property
destroyed). Thus, P was only awarded fair market value instead of the replacement cost.

- Finally, because the special purpose property exception to awarding less market value
was not applied in 911, Trinity follows as a case that exemplifies when it does apply.
Ironically, in 911, it was certain that if replacement costs were rewarded, they would go
towards rebuilding the towers, but in Trinity Church, the replacement costs that were
rewarded did not go towards fixing the cracks. After the damage, Trinity Church was
simply closer to takedown than before. However, in Trinity, it did make sense for the
court to rule this way. If none of the prior tortfeasors had to pay the costs of damage
they did, the last final tortfeasor who damaged the building completely would be
responsible for paying for all the damage the prior tortfeasors did to the church.

- Litigation Post Mortem: P could have argued loss of sentimental value as discussed
earlier in the chapter

C. EXPECTANCY AND RELIANCE AS MEASURES OF THE RIGHTFUL POSITION

GENERAL RULE: expectancy damages are recoverable only in K, not in Tort.

NERI V. RETAIL MARINE CORP. (Boat Case)

Facts: P ordered a boat from D and deposited $. After delivery, P sent D letter stating he
could not go through with purchase of the boat and requesting his deposit be returned.
D would not return deposit and after few months, sold boat to 3d party for original K
price. P sued for deposit, D cross-complained praying for lost profits, arguing it would
have sold two instead of one, for consequential damages in the form of storage costs.

Ruling: Plaintiff is entitled to restitution sum of 4250, minus an offset of 3253 to

Defendnat due to lost profits/incidental damages

Synthesis: This case focuses on the expectations of a seller/buyer and the reliance that
the Defendant placed on Plaintiff's desire to purchase the boat. I would argue that the
case was placed in this section of the chapter because it doesn't really deal with an
outright injury or destruction of property as the cases before it, Hatahley, In re
September 11th Litigation, and Trinity Church, do. Because the Defendant was able to
resell the boat that the Plaintiff had contracted to buy, it would superficially appear and
many would argue, as the Plaintiff's lawyer did, that there is was no injury in Neri. Since
the injury is harder to discern from first look, it makes sense that the author would want
to introduce this case after the easily discernable injury cases were discussed. In the
other cases, it makes sense that there should be some type of remedy. In Neri, this is

7
 less clear. This case demonstrates that remedies are available even when there isn't a
clear loss/injury. Simple expectation/reliance on a promise can produced an injury that
can be remedied.

Volume Sellers: in a huge percentage of cases, theres a follow-up transaction to a

breach. That follow-up transaction has to be deducted from Ps remedies because its a
loss avoided UNLESS P can show that its not a substitution transaction. if it wasnt for
the buyers breach, I could have sold two cars and not one.

Litigation Post Mortem: The Plaintiff's lawyer was in a difficult position for this case. His
argument that there was no harm done by the Plaintiff's rescinding because the
Defendant was able to resell the boat appears to be the only one to make, but it is not a
very strong case--as demonstrated by the final decision and just common sense. While
the Defendant was able to resell the boat, it's obvious that the Defendant still incurred
some type of injury by the Plaintiff not coming through on the contact. Therefore, the
Plaintiff's argument seemed to be doomed from the start. Given that this case was
governed by the UCC, if I was the Plaintiff's lawyer, I would have done some more
digging through the Code and tried to find something that would prevent the Plaintiff
from having to offset his win. However, the UCC statutes seem clear-cut and appear to
favor the Seller/Defendant in this situation. I'm not sure Plaintiff's lawyer could have
argued a better point. As to if there are any hidden facts that Plaintiff's lawyer did not
spend enough time thinking about, I would say that it does not appear he looked at the
UCC very closely, as his main argument about the resale is completely destroyed by UCC
statute 2-718(2). They should have spent more time deconstructing the UCC and this
specific statute. The only way to improve the lawyer's argument would be to spend
more time with the UCC and attempt to find a clause that would allow the Plaintiff to
recover without an offset to the Defendant.

CHATLOS SYSTEMS V. NATIONAL CASH (computer case about expectancy)

Facts: P purchased computer from D for $46K. Computer was warranted to have certain
capabilities, it did not. DC determined $201K in damages. D contended K price was only
competent record evidence of the value of the system as warranted. DC relied on P's
expert testimony.

- Ruling: trial court awarded his expectancy interest

Rule of Law: For breach of warranty, the correct measure of damages is the difference
b/t the fair market value of the goods accepted and the value they would have had if
they had been as warranted.

- Synthesis: Example of over ambitious expectations. Builds on Neri, another example of

court not using value but expectancy. May be another example of over-compensation.
Somewhat like covert punitives, D's knew in advance the comp system they guaranteed

8
 and which was ordered would not deliver what was bargained for.. So, court may have
been punishing Ds for that snakers

SMITH V. BOLLES
Facts: D fraud represented stock to have great value and sold it to P for $6K. P sued,
recovered damages = to what stock would have been worth if the representations had
been true. D says improper measure of damages.

- Rule of Law - Proper measure of damages for fraud in the sale of stocks is the actual loss
suffered due to the deception. Expectancies are recoverable only in K, not Tort. "This
liability did not include the expected fruits of an unrealized speculation."

- Synthesis Expectancies only in contract, not in tort. Thus, P in Chatlos recovers, and P
in Bolles doesnt. Example of rightful position, not over-compensation like that arguably
found in Neri and Chatlos. Court does not award what P expected, but awards what P's
actual loss was. No real detrimental reliance, no care to what P may have gained
(completely contrary to Chatlos). Had court in Chatlos used this rationale, P probably
would have only received what it spent ($46K).

UNIT 2 (pp. 52-134) CHAPTER 2 CONT.

D. CONSEQUENTIAL DAMAGES

Sellers Side Rule:

- all you get is the expectation damages, no consequentials. Look at the money owed and
thats what you get

Buyers Side Rule:

- buyers are more likely to incur consequential damages than sellers.
- Thus, buyers are more likely to recover consequentials.

Plaintiff is always going to say that the damages are DIRECT DAMAGES and the Defendant is
always going to say no, the damages are CONSEQUENTIAL

Dan Dobbs System: how to divide direct and consequential damages (prof says the best way to
do it)
- Direct damages that can be calculated by going into the market place and looking at
market prices. Dont have to know anything special about either party.
o If a world trade center building is worth 3 Bill before and 0 after then that is
direct damage.
o two different ways to do this:
(1) the expense to repair and replace; or

9
 (2) diminution of fair market value
o In almost every case direct damages will be either of those two ways.
- Consequential damages are everything else according to Dobbs.

BUCK V. MORROW (Buyer suing seller)

Facts: D leased land to P for his cattle. The lease included clause requiring Morrow to
compensate P for any damages which resulted from any sale of the land. D
subsequently sold the land, and P was dispossessed. P lost several cows, had to hire
help, and spent $ on other things in an attempt to get alternative land. P sued, asking
for lost value of the lease and consequential damages. Trial court said no consequentials
allowed.

- Ruling: Court awards consequential damages as Buck was expecting to get the use of
the pasture, they dont get to use it and all these bad ripples happen.The Court
measured damages by the difference between the contract price and the rental value of
the pasture for the unexpired term. The Court also allowed the tenant to recover such
extra expense and damages as a result of the natural result of the breach.

- Synthesis: Essentially, the case defines a consequential damage as a consequence of the

initial loss. In Buck, the initial loss was the increase in rent as a result of the sale of the
property. Consequentially, Buck had to hire extra help to herd his cattle. This was not
the first instance of consequential damages we have seen. In Hatahley, the court
allowed the Plaintiffs to recover for their loss of sheep, goats, and cattle that resulted
from the loss of their horses and burros. In Neri, the seller recovered for incidental
expenses of storage, insurance, and maintenance of an unsold boat. However, I think
the author was trying to emphasize other important parts of Hatahley and Neri besides
consequential damages and that is why those cases were not included in those sections.

- I think Laycock purposefully places Buck as the first case in this section to lay a
foundational approach of what a consequential damage is and when it is
allowed. Essentially, the case displays that a consequential damage is a consequence of
an initial loss. Here, the initial loss was the loss of the use of the property. The
consequential damages occurred when Buck had to hire extra help herding his cattle.
However, I think the court in Buck and Laycock show considerable suspicion towards
awarding such damages.

- This suspicion is furthered in the following case in this section, Meinrath v. Singer, when
the Court flat out rejects consequential damages as too remote from the main injury to
be compensable and too speculative to be ascertainable. The Courts hesitation is
obvious a party could claim consequential damages as a result of just about any and
every initial impact. Laycock strategically places Buck before Meinrath to show that
although consequential damages can be recovered they will not result from every
casethere must be direct causation.

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 - Even further in Texaco v Pennzoil, Laycock reverts back to a case in which a court
allowed consequential damages as a result of Texacos tortious interference with a
contract between Pennzoil and Getty Oil Co. In tort, The author strategically places this
case after Meinrath to show a specific example of when consequential damages can be
awardedwhen there is tortious interference with a contract.

- Litigation Post Mortems: I think Bucks best and only argument really was his promise
to Morrow did not include every cost that could possibly be incidental to the breach--
only the reasonable ones. In 1893, when this case was decided, the amount of damages
were somewhat expensive considering it was nearly 120 years ago. I also think that this
was probably the first type of case in which consequential damages were applied. Buck's
attorneys probably appealed this because no other court had yet granted consequential
damages... at least not to this extent.

MEINRATH V. SINGER CO. (seller suing buyer)

- Facts: P entered in to K with D which required D to pay him bonus pay under certain
circumstances. P sued, alleging D's failure to make timely payments caused his other
business ventures to fail.

- Ruling: Court says the consequentials P asked for were too remote and too speculative.

Synthesis: 180* difference from Buck, where consequential damages were a direct
result and foreseeable. Consequentials were too remote and speculative. Shows SCOPE
of consequentials. Shows court's hesitancy to award speculative damages, just like in
Smith v. Bolles.

TEXACO, INC. V. PENNZOIL CO. (buyer suing 3d party) (Covert Punitive/wrongfulness plus)
Facts: D had agreement, agreement was breached by P when P made higher bid. D
presented expert testimony that its replacement cost for reserves was $7.53 billion.
Punitives found to be excessive.

- Ruling: this is an intentional tort, so the court awards him the consequential damages to
give him the full loss of the benefit earned by the D.

- Synthesis: It's a tort, but like Buck because the replacement cost was a direct result of
Texaco interfering with the K (tort). Illustrates court's readiness to aware consequential
damages in K and Tort. Punitives found to be excessive.

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E. LIMITS ON DAMAGES

1. The parties Power to Specify the Remedy

Primary tools for restricting recovery of consequential damages are (1) contractual limitations
on remedies, and (2) rules about avoidable consequences, remoteness and uncertainty

KEARNEY & TRUCKER CORP. V. MASTER ENGRAVING CO

Facts: Master engraving bought a machining tool from Kearney & Trecker Corp. The
machine malfunctioned frequently during the first year of operation and was inoperable
from 25-50 percent of the time available for its use. Master brought a breach of warranty
suit and introduced into evidence estimated lost profits on customer orders allegedly
unfilled because inoperability of the machine. Master sought consequential damages for
lost profits.

- Ruling: N.J. Supreme court reversed and remanded the trial court and appellate Court
reasoning that consequential damages disclaimer is not invalidated by the failure of a
limited remedy provision unless the provision was unconscionable.

- Rule of Law: Consequential damages disclaimer is not invalidated by the failure of a

limited remedy provision unless it is unconscionable.

- Synthesis: In Kearney & Trecker Corp., the courts favored the freedom of contract. In In
re Trans World Airlines, Inc., the court favored the UCC's insistence upon minimum
adequate remedies to redress a breach of contract, and sharply criticized the freedom
of contract policy. Last in Nothern Illinois Gas, Co., an opinion similar to Kearney &
Trecker Corp. was handed down, and the freedom of contract principle won the day
-
IN RE TRANS WORLD AIRLINES, INC.
- Facts: D leased 2 planes from P for $160 K per month. Parties renegotiated with intent
to be bound by liquidated damages clause. D defaulted. P sought to enforce liquidated
damages clause. LDC stated that in the event of a breach, D would have to pay
predetermined termination value less either the fair market value or the resale value.
Judge held LDC was penalty and thus invalid as matter of law.

- Ruling: Court said that clause was invalid because it was not proportional to the actual
damages of the breach. There was a liquidated damages clause that didnt work because
it was too big. Unenforceable.

Synthesis: In Re TWA is similar to Kearney&Trecker Corp. v. Master engraving due to

the fact that Interface, the contracting party with TWA specified a particular remedy in
the case of breach which was a liquidated damages clause. Interfaces remedy was
invalidated by the courts because it was seen as a penalty and thus made its enforcement

12
 unconscionable. Unlike the decision in Kearney & Trecker Corp. where the remedy
provision for consequential damages was not seen as unconscionable.
-
NORTHERN ILLINOIS GAS CO. V. ENERGY COOPERATIVE, INC
Facts: NI-Gas promised to buy 56 million barrels of naphtha from ECI over a ten year
period. NI-Gas converted the naphtha into natural gas. When U.S. eased price controls
on natural gas, it became cheaper to buy natural gas from drillers and pipeline companies.
NI-Gas stopped buying naphtha from ECI. ECI sued for breach of contract and sought
damages based on the difference between the contract price and the market price of
naphtha, plus consequential damages.

- Ruling: Court says its okay that the parties contracted to a liquidated damages clauses
the exclusive remedy. If you have an enforceable liquidated damages clause, you cant
pick the court remedy just because its bigger. You have to stick to what the parties
agreed to.

Synthesis: Contrary to In re Trans, court found that mutually agreed upon LDC provides
only measure of damages. If you agree to LDC, cannot chose to waive that and seek
actual damages.

2. Avoidable Consequences, Offsetting benefits, and Collateral Sources

S.J GROVES & CO. V. WARNER CO.

- Facts: D and P contracted for the supply of concrete. D consistently failed to make
timely deliveries. P nevertheless continued to use D even though P had other concrete
supplier. P was awarded damages but consequential damages were denied bc P failed to
mitigate.

- Ruling: The appellate court reversed and remanded in part because the alternative the
trial court imposed upon groves was available to Warner. Warner had used Trap Rock
Co. in the past to help with ready-made concrete deliveries. The court ruled that Warner
might not assert Groves lack of mitigation in failing to do precisely that Warner chose
not to do. Groves cannot be penalized for choosing an available means of mitigation by
staying with the breaching seller (Warner) based upon Warners assurances that
performance of the contract would be more timely. Consequential damages should have
been awarded.

- Synthesis: Case addressed the avoidable consequences doctrine, which applies in

contract cases and to intentional torts as well. A plaintiff can choose to mitigate
damages or not, but they cannot recover for losses they could have reasonably avoided.
Situation similar to the Neri case which dealt with offsetting benefits for the volume
sellers. Offsetting benefits is similar to the avoidable consequences doctrine, in that it is
often the case that the benefit conferred is an opportunity that the plaintiff must take
advantage of to avoid some of the consequences of the wrong they have suffered.

13
 Additionally, Comparing this situation with the Evra Corp v. Swiss Bank Corp case. S.J.
In Evra Corp, the plaintiff did not engage in any sort of mitigation, they continued to
send wire payments in the same method, and on the same time schedule even after
defendant had previously attempted to cancel agreement based on late payment.
Plaintiff in Evra was responsible for mitigating foreseeable damage brought on by late
payment. They could have made their bank send the payment earlier but they didn't so
they could not recover. Like in S.J. Groves, foreseeability and mitigating a consequential
damage are related.

ODEN V. CHEMUNG COUNTY INDUSTRIAL DEVELOPMENT AGENCY

Facts: P suffered injuries at work. Jury awarded $66K for lost ordinary pension benefits
and $80K for future lost earnings and health and welfare benefits. P would also receive
$141K in disability. D moved to reduce bc of collateral source.

- Ruling: The court ruled that collateral source payments form a third party payer that
actually replace a category of awarded damages can be used to reduce the damage award
to the plaintiff. The N.Y. Statutory enactment (C.P.L.R. 4545(c) allowed the judge to
reduce the damage award if it could be determined that with reasonable certainty it would
be duplicated or double recovery via a collateral source. (A modification of the Common
Law Collateral Source Rule).

- Synthesis: All about the collateral source doctrine. Both collateral sources and the
sources of offsetting benefits are 3d parties that pay money to P (or for Ps benefit).
Money that, but for the wrong, P would never have received.

3. The Scope of Liability

PRUITT V. ALLIED CHEMICAL CORP.

- Facts: Pruitt and other plaintiffs sued Allied Chemical Corp. for Allieds alleged pollution
of the James River and Chesapeake Bay with the chemical agent Kapone. Plaintiffs
allegedly engaged in a variety of different businesses and professions related to
harvesting and sale of marine life from the Chesapeake Bay and all claimed to have
suffered economic harm from Allied Chemical Corp discharges of Kapone into the James
river and thence into the Bay. Allied moved to dismiss on the contention that there was
no direct injury to any property right held by those plaintiffs.

Ruling: The court ruled that recovery may be obtained for damages that were
proximately caused by Allieds negligence. The injury to the merchants and fishermen
was foreseeable from the pollution. Granting recovery to the merchants and the
fishermen would cause a situation of double recovery or forcing Allied to pay out twice
for the same infraction or injury. The court held that the injury to the fishermen was a
direct injury and should be recognized but the injury to merchants and others such as
sport fishermen was too distant in the proximate causal chain. Thus motion to dismiss
granted

14
 - Synthesis: consequential damages hinges on how foreseeable the damages were. For
example, the first few cases of this section highlight whether consequential damages
were foreseeable or not. For example, in Buck, it was foreseeable that if the land owner
were to sell the property, the cattle rancher would expend extra expenses to find new
land and temporarily hold his cattle. In Meinrath, the court refuses to award
consequential damages because the losses were too remote and speculative. The court
there infers that it was not foreseeable that Meinrath's other businesses would suffer
substantial losses because Singer failed to make timely payments under a separate
agreement. These losses were too remote and speculative and could not be recovered.
- In Pruitt, the Court again relies on this foreseeability factor in awarding consequential
damages. Specifically, the Court acknowledges that damages to businesses in the chain
of distribution for seafood were foreseeable as a result of alleged contamination of local
waters. Though foreseeable, the Court cuts off liability at a maximum of more than the
replacement value of a plaintiff's actual investment, even if the stream of profits lost,
when extrapolated into the future, would yield greater damages. This is one of the first
times we see a court saying that a party does not have unlimited rights to recover ANY
and ALL foreseeable consequential damages.
- The Evra Court does a narrowing of the rule in Pruitt just one case later. The Court
agrees that a party should be held liable for damages that were foreseeable. However,
the Court differentiates between general foreseeability and specific foreseeability. A
party cannot be awarded damages for general foreseeability because it is present in
nearly every case. There must be more than merely general foreseeability in order to be
compensated for consequential damages. The losses were not foreseeable because the
circumstances of this particular instance were must too remote from the Bank's
practical knowledge to have affected it decisions.
- These cases all relate back to the "rightful position" aspect we have been studying since
Hatahley. Consequential damages aim to place plaintiff back in its rightful position.
Whether it be recovering for consequential damages from losses of their livestock as a
result of the loss of their horses in Hatahley or recouping costs of storage, upkeep,
financince charges, and insurance costs in Neri, or local businesses recovering money for
lost profits in Pruitt. All have this overarching theme of placing plaintiff back in its
rightful position.

EVRA CORP. SWISS BANK CORP.

Facts: In 1972 Hyman-Michaels Co., a large Chicago dealer in scrap metal, entered into a
two year contract to supply steel scrap to a Brazilian corporation. Hyman-Michaels
changed its name to Evra corp. Evra chartered a ship to carry steel scrap to brazil. In
the agreement there was a stipulation that the ship owner could cancel the agreement
for a late payment. Payment was to be made by deposit in the owners account in a
bank in Switzerland. Evra Corp. would make payments by having its Illinois bank
electronically transfer funds through Swiss Bank Corp. Evra waited till the last minute to
order the transfer of funds, the Illinois bank telexed the order the day it was due and
the message was received but was not transcribed and thus the money was not

15
 transferred. Evra sued Swiss Bank for negligently causing the loss of the valuable
agreement and for the cost of arbitration. The District Court found for Evra and Swiss
Bank appealed on the basis that Evra failed to avoid the consequences of the non-
transfer by not immediately reordering the transfer of funds.

Brief Facts: P sued D for consequential damages caused by the D failure to transfer
funds upon P's request.

- Ruling: The Court held that a party may not recover consequential damages when the
consequences when such were consequences of the defendants negligence, which
were avoidable by the plaintiff.

- Synthesis: The Evra Court does a narrowing of the rule in Pruitt. The Court agrees that a
party should be held liable for damages that were foreseeable. However, the Court
differentiates between general foreseeability and specific foreseeability. A party
cannot be awarded damages for general foreseeability because it is present in nearly
every case. There must be more than merely general foreseeability in order to be
compensated for consequential damages. The losses were not foreseeable because the
circumstances of this particular instance were must too remote from the Bank's
practical knowledge to have affected it decisions.

4. Substantive Policy Goals

BRUNSWICK CORP. V. PUEBLO BOWL-O-MAT (anti-trust)

Facts: Pueblo Bowl-O-Mat which owned several bowling allies sued Brunswick Corp.
alleging that by Brunswick buying up multiple bowling centers that would have
otherwise gone out of business or declared bankruptcy had essentially caused Pueblo
Bowl-O-Mat to lose profits by readjustment to the market share of other participants.

Ruling: The Court held that antitrust relief is not available in every case in which a large
corporation takes over smaller businesses and indirectly causes readjustments in the
market shares for other participants.

Synthesis: This case is similar to Pruitt v. Allied Chemical Corp. in that Pueblo Bowl-O-
Mat was asserting that by Brunswick buying up other bowling allies that were in financial
trouble in essence proximately caused damages to Pueblos business by readjusting the
market share and caused them to have reduced profits. Although, this case was brought
before the Court as an Antitrust case, the underlying damages that Pueblo was asserting
that they suffered proximate damages and were entitled to a remedy.
- Provides example of statutory limits on damages and highlights how judiciary
referees/furthers the goals of said statutes. Another limit on damages, only here they
are statutorily mandated and not court mandated like in Pruitt.

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 5. The Requirement of Reasonable Certainty

BIGELOW V. RKO RADIO PICTURES

Facts: Bigelow sued RKO Radio Pictures in the District Court of Illinois under the
Sherman Act and the Clayton Act for an injunction and to recover treble damages.
Bigelow asserted that RKO entered into a conspiracy to which films were distributed
among motion picture theaters in Chicago in such a way that conspirators were enabled
to secure and show feature pictures in advance of independent exhibitors that were not
affiliated with RKO. The Jury awarded damages which were trebled, based on evidence
of the difference in profitability between Bigelows theater and theaters associated
with RKO. RKO appealed.

- Brief Facts: D contended P could not show damages with sufficient certainty to recover
for violation of Sherman Act.

Ruling: The Court held that a jury may make a just and reasonable estimate of damages
based upon evidence presented and a award does not have to be based on precise
mathematical computations.

- Synthesis: This Case is similar to Brunswick in that it was an antitrust case as well as RKO
manipulated the market share, not by buying up businesses to keep the business afloat
and diluting the market. But by conspiring to promote theaters and revenue from those
theaters that had an association with RKO. Which RKOs actions were the direct and
proximate cause of damages to Bigelow and others, that were independent theaters.

UNIT 3 (134-187) CHAPTER 2 CONT.

F. DAMAGES WHERE VALUE CANNOT BE MEASURED IN DOLLARS

1. Personal Injuries and Death

DEBUS V. GRAND UNION STORES (Per Diem Damages - 25% disabled from boxes falling on her)
Facts: Debus was injured in Grand Union Stores when a pallet of boxes, piled high and
imbalanced, toppled over and fell on her. The boxes contained cans of pet food, tumbled
off the pallet and onto Dubus when a store clerk attempted to move the overloaded pallet.
Dubus suffered injuries resulting in 20% permanent disability. During closing
arguments, Dubus counsel suggested a per diem figure and made the suggestion to the
jury to multiply the figure by the number of days in Dubus life expectancy. The Jury
awarded Dubus damages of $346,276.23. Grand Union Stores appealed.

Ruling: The court held that per diem arguments are not overly prejudicial and should be
allowed. The court made it clear to the jury that the final determination of damages was

17
 to be made on the evidence alone and not on persuasive arguments for any particular
formulas.

Synthesis: Cannot depart from a reasonable view of the evidence. This case in a way
extends the rule of law in Bigelow. Just as the jury must make a reasonable estimate of
damages based on the EVIDENCE, the attorney making per diem argument to jury must
not depart from a reasonable view of the EVIDENCE.

2. The Controversy over Tort Law

ARBINO V. JOHNSON & JOHNSON (injured about birth control)

Facts: Melisa Arbino suffered blood clots and other serious side effects caused by the
Ortho Evra Birth Control Patch. Arbino brought the action to Federal District Court, the
federal judge certified the Ohio Supreme Court the question of law as to whether the
limit or cap the on noneconomic damages in Ohio Rev. Code Ann. 2315.18 violates the
Ohio Constitution, and similar questions about statutory sections limiting the collateral-
source rule and punitive damages.

Ruling: The Court ruled that statutorily imposed caps on noneconomic damages are not
unconstitutional. The statute limited noneconomic damages to the greater of (1)
$250,000 or (2) three times the economic damages up to the maximum of $350,000 per
person or $500,000 per single occurrence. Noneconomic damages are said to consist
of pain and suffering, loss of companionship, and mental anguish. The statute did not
limit economic damages or punitive damages.

Synthesis: This case is similar to Debus v. Grand Union Stores; in both cases, the
individuals suffered personal injuries. In Debus, the defense argument was that per diem
damage award was prejudicial and should have been remittitur. In Arbino, the plaintiff
was essentially arguing for additur or removal of the damage cap on noneconomic
damages.

3. Dignitary and Constitutional Harm

LEVKA V. CITY OF CHICAGO (Stripped searched)

- Facts: D appealed from decision denying its motion for judgment n.o.v., or alternatively
for a new trial or remittitur, from a verdict rendered in P's civil rights action, contending
the circumstances attendant to the strip search which formed basis of P's suit did not
justify $50K verdict.

Ruling: On appeal, the court reasoned that a court might exercise discretion in reducing a
jury verdict when there is evidence that indicates that the award is excessive. The court
also reasoned that the award was at the allowable upper end for what the plaintiff alleged.
The court found that the award was excessive since it was a simple strip search done as
privately as possible and thus applied remittitur.

18
 Synthesis: Builds off Bigelow, if jury is unreasonable based on evidence, court may
overrule and reduce amount of the damages. This may promote the idea that judges are
the voices of reason in our society and are able to keep the juries from acting arbitrarily.
Just another limit on non-economic damages in addition to the statutory caps found in
Arbino. No real physical damage here.

CAREY V. PIPHUS (Marijuana)

Facts: Piphus was a high school freshman, when the schools principal saw Piphus with
what the principal believed, by shape and smell was a marijuana cigarette, without
recovery of the cigarette or giving Piphus a chance to explain himself, suspended Piphus
for a period of 20 days. Piphus sued, alleging that he was suspended without an adequate
hearing to determine his guilt or innocence, in violation of the Due Process Clause.
Piphus sought a declaratory judgment, an injunction deleting the suspension from his
record, and $3,000. In damages. The trial court held the suspension without hearing
violated due process but the plaintiff offered no evidence in damages. The appeals court
reversed on remedial issues, holding that Piphus was entitled to declaratory judgment,
injunction, and damages.

Holding: The Supreme Court held that the court of appeals was incorrect that his
deprivation may be compensated without proof of damages suffered. Absent of actual
injury caused by denial of procedural due process, only nominal damages could be
rewarded. Reversed and remanded.

Synthesis: This case is a 1983 action with violation of constitutional right of procedural
due process was similar to Levka v. City of Chicago, which was a 1983 action alleging
illegal search and seizure. In Levka the damage award was remittitur and in this case, the
damage award was nominal because the plaintiff was unable to show through his
deprivation of procedural due process violation that he suffered actual injury other than
denial of this basic constitutional right.

Litigation Post Mortem: Piphus possibly could have argued that he did suffer actual
damages by loss of time in his education at school, hiring an individual for supervision
while his parents were at work, as well as expenses for tutoring services so that he would
not fall behind in his school works. As well as emotional or mental anguish of being
convicted unfairly of an offense without appropriate due process of notice and hearing.

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 UNIT 3B CHAPTER 3

A. PUNITIVE DAMAGES

1. Common Law and Statutes

EXXON SHIPPING CO. V. BAKER

- Facts: the captain of Exxon Valdez was an alcoholic and left the bridge to a third mate in
which he told the mate to make a turn back into a channel. The third mate ended up
missing the channel and ran the ship aground. This resulted in a massive oil spill where
Exxon paid 2.1 billion in clean-up, a 25 million criminal fine, and 100 million in criminal
restitution. A group Alaskans consisting of landowners and commercial fisherman
brought this case. At trial, the jury awarded 5 billion in punitive damages. On the third
appeal, the Ninth circuit reduced the punitive damages to 2.5 Billion.

- Ruling: The Supreme Court said that this was not a constitutional case but a federal case
because the class of Alaskans brought the claims under federal maritime law. In federal
maritime law cases, the ratio of punitive damages to compensatory damages shall be
1:1. Therefore, the punitive damages are 507.5 million, which was the same amount the
district court ordered for compensatory damages.

- Synthesis: I think Laycock made a good choice putting this case first in this chapter
because it shows just how unpredictable punitive damages can be. This case was
appealed three times where the punitive damages were set at 2.5 billion, but then the
case ultimately went up to the Supreme Court and the punitive damages got cut to
507.5 million. Additionally, I think this case shows from its dissenters the lack of
consensus between which government branch, the legislative or judicial, that should be
determining how to limit punitive damages. It seems from the dissenters point of view
that they believe that the legislature should be the one setting limits on punitive
damages not the courts.

2. The Constitution

STATE FARM MUTUAL AUTOMOBILE INS. CO. V. CAMPBELL

- Facts: State Farm got sued by Campbell because State Farm refused to pay more than
the 50,000 coverage limit when a jury found Campbell 100 percent at fault when
Campbell got into an accident that ended up killing one person and permanently
disabling another. Eventually State Farm ended up paying the 185,000 judgment against
Campbell, but then Campbell sued State Farm for bad-faith refusal to settle, fraud, and
intentional infliction of emotional distress. At Trial, Campbell was awarded 2.6 million in
compensatory damages and 145 million in punitive damages, which the trial court
reduced to 1 million and 25 million respectively. When the case went up to the state
supreme court, the court reinstated the 145 million punitive damages award because of

20
 State Farms massive wealth and State Farms conduct was reprehensible. The state
supreme court concluded that the ratio between punitive and compensatory damages
was not unwarranted. State Farm appealed up to the Supreme Court stating that the
award was in violation of the due process clause.

- Ruling: The Supreme Court concluded that the award was grossly excessive, furthered
no legitimate purpose and constituted an arbitrary deprivation of property. The
Supreme Court held that the lower court erred in awarding punitive damages to punish
and deter conduct, which bore no relation to Campbells harm and that the wealth of
State Farm cannot justify an otherwise unconstitutional punitive damages award.

- Synthesis: I think Laycock placed this case after Exxon because State Farm differs
from Exxon in that State Farm was decided under constitutional law as opposed to
federal maritime law. However, the two cases are similar in that the Court still decided
to reduce punitive damages to single-digit ratios. Moreover, the court went further in
this case stating that there will be very few ratios over a single digit that will satisfy due
process. The Court says Higher ratios may be justified where a particularly egregious act
has resulted in only a small amount of economic damages.

PHILLIP MORRIS USA V. WILLIAMS

- Facts: In this case, Williams died of lung cancer from smoking Marlboros for 40 years.
The jury awarded 21,000 in economic damages, 800,000 in noneconomic damages, and
79.5 million in punitive damages. The Oregon Supreme Court upheld the punitive
damages because Philip Morris USAs conduct was unusually reprehensible.

- Ruling: The case went up to the Supreme Court where the Court held that a jury may
not use punitive damages to punish a defendant directly for harm the defendant caused
to nonparties to the litigation. The Court said that it raises procedural due process
concerns of risk of arbitrariness, uncertainty and lack of notice for defendants. Philip
Morris USA had no opportunity to defend itself from nonparties, therefore the punitive
damage award was inadequate.

- Synthesis: This case is similar to State Farm in the sense that it involved a constitutional
violation. However, it differs in that this case was not decided on a constitutional
question of whether the punitive damages were grossly excessive, but rather this case
focused on the procedures for determining the amount of punitive damages

Exxon, State Farm, Phillip Morris Synthesis:

Obviously, the overarching theme in this section is to show readers how the Court can limit
punitive damages. In Exxon, we saw the Supreme Court reining in a punitive damages award of
5 billion dollars to a punitive damages award of 507.5 million with a ratio of 1:1. We saw
in State Farm the Supreme Court limiting punitive damages finding that the award was grossly
excessive because the state lacked jurisdiction of punishing State Farm for unlawful acts
committed outside of the states jurisdiction. Finally, we saw in Philip Morris USA, The Supreme

21
Court limiting punitive damages on procedural due process grounds because a court cannot
punish a defendant for allegedly harming nonparties to the lawsuit. However, I think the
question still remains, which the notes after the cases discuss, is whether decreasing these
awards is a good thing. Punitive remedies are supposed to be used for deterrence and
retribution, however we still see side effects of Exxons oil spill today, we still see lawsuits
against State Farm about bad faith insurance practices, and Philip Morris is still the largest
cigarette manufacturer in the United States selling plenty of Marlboros that could potentially
cause lung cancer.

3. Punitive Damages in Contract

FORMOSA PLASTICS CORP. USA V. PRESIDIO ENGINEERS

- Facts: P submitted a bid on project. In preparing bid, P relied on representations made
by D. When P discovered representations were false, sued D for breach of K and fraud.

Ruling: The court held that a party might recover punitive damages for a claim of fraud,
which was based on economic losses related to the performance and subject matter of a
breached contract. Formosa acted with fraudulent inducement; they made fraudulent
representations with no intention of performing on them in order to lower the bids.

- Synthesis: ?

UNIT 4 (263-310) CHAPTER 4: PREVENTING HARM The Measure of

Injunctive Relief

A. THE SCOPE OF INJUNCTIONS

1. Preventing Wrongful Acts

ALMURBATI V. BUSH (Terrorist Case)

Facts: P held at Gitmo. Seek Preliminary Injunction against D forbidding transfer to
another country without notice to a federal court.

Ruling: The court ruled to obtain injunctive relief; the petitioners must show that the
threatened injury is not merely remote and speculative. Additionally, there was no
evidence on record that would support the detainees allegations. It was nothing more
than speculation, innuendo, and second hand media reports. The court could not
conclude that the detainees would suffer irreparable harm if transferred and denied the
motion.

Synthesis: This case is placed first because injunctive relief is a form of preventive relief
and the concept of preventing harm would be demolished if a Plaintiff could bring a case

22
 without providing sufficient evidence the harm occurred or is likely to occur. Almurbati
is a good example of how injunctive relief is so different than monetary relief. The
prisoners provided evidence of the guards taunting them or threatening them to be sent
to another prison to be mistreated. If they were seeking monetary damages, this
evidence may really help prove a cause of action. This case was also placed first to
illustrate the ripeness rule. The alleged threat of injury must be ripe. If this requirement
did not exist, the courts would be functioning more like a moral compass. The cases in
Unit 3, about consequential damages, showed how the legislatures and courts try to
ensure consequential damages are not too detrimental. They balanced the right of
Plaintiffs to recover with policy concerns. Here, this section resembles Unit 3 by
showing how courts require injunctions be proved with ripeness of the alleged harm
and the injunctive relief cannot be too broad.

Litigation Post Mortems: I would have provided extensive evidence of any situations in
which prisoners from Guantanamo did get sent to other prisons that were dangerous
and mistreated them. It would take a lot of investigating and money to pay the lawyer
to investigate this deepbut you should be expected to expend a lot of money on
counsel fees when suing the government. The Petitioners relied on the news articles,
which were relying on the theory of a conspiracy. I would have presented evidence of
journalist who provided solid evidence that the conspiracy is actually occurring. I would
have tried to stay away from allegations based on conspiracies since conspiracies
automatically generate thoughts of doubt and falsehoods. All of the evidence just
mentioned may be very hard to find, but there are always incidents happening, you just
have to dig deep enough. For example, Vice TV always uncovers insane stories that most
media outlets choose not to report on. That way the court would be less likely to think
the Petitioners mistrust of the Executive Branch was the reason they sued. Lastly, I
would not of sought such broad injunctive relief. They were asking for relief that would
put many burdens on the prison and apply to all prisoners who were detained there in
the future.

MARSHALL V. GOODYEAR TIRE & RUBBER CO. (Discharged for old age)
- Facts: Secretary of Labor sought injunctive relief against Goodyear based on an
employee being fired allegedly because of his age.

- Ruling: courts have limitations when issuing injunctions to prevent overly broad
injunctions being granted. A copy wide or nation wide injunction is appropriate if the
facts prove a company policy or practice in violation of the statute. There were no
findings of either in this case; just one discharge.

Synthesis: This case is about the scope of injunctive relief. 2 remedies here, first back
pay (compensatory) and second, injunction. Like in Almurbati, aimed at preventing
violations that have no happened and may never happen. Same premise as in

23
 consequentials. The scope of past violation determines the scope of the remedy against
future violations. We saw in Buck, direct consequences fully recoverable and Meinrath
where no relation, no consequentials. Court refused to extend scope of consequentials
in Meinrath just like in the present case."one time, never again." - RIPENESS

- This case follows for multiple reasons. First, Almurbati involved a Plaintiff not being able
to provide evidence that the harm was not remote and speculative. Here, the harm was
clearly not remote or speculative because it occurred when William Reed was wrongly
fired. However, this case shows that even if the harm occurred and was not speculative,
this does not automatically mean an injunction will be granted. Second, this case
illustrates ripeness in another situation beyond Almurbati. The incident causing harm
already occurred but that does not mean future harms are likely to occur. Goodyear
shows the restrictions put on courts when granting injunctions. There cannot be an over
sweeping injunction for a small, single event of alleged harm. The injunction must be
appropriate in light of the harm.

- Litigation post mortems: I would have done extensive research into instances of
discrimination within the company, nationwide. While the injunction asked for was for
good reason, it was not proportionate to a finding that every Goodyear must be
impacted because of the firing. I would have searched for evidence of Goodyear
discrimination in different states, to justify the injunction. Also, I would have looked at
the managers or people with high ranking positions in the company. If any of them had
a history with discriminatory practices, it would help show that they are likely teaching
those methods to the employees beneath them. This court mentioned the lower courts
reliance in forming the injunction to be based on the isolated incident. This may lead me
to believe the lower court heard a lot of good evidence regarding the one incident.
While the attorney had a duty to prove Reeds case, they should have painted a general
picture of discriminatory practices within the company. Focusing on Reeds individual
case too much, may have ruined an argument that the scope should be nationwide
-
UNITED STATES V. W.T. GRANT CO.
Facts: Hancock was the director of several competing retail giants, which included W.T.
Grant Co., S.H. Kress & Co, Sears Roebuck & Co. and Bond Stores, Kroger Co and Jewel
Tea Co. The Government brought an action seeking an injunction against Hancock and
the retailing firms under 8 prohibitions against interlocking corporate directories
under the Clayton Act of 1914. Hancock subsequently resigned and the Government
continued to petition for an injunction contending that there was a danger of future
violations existing in the future. The Government did not admit any evidence of plan for
Hancock or the retailers of continuing the practice of these activities. The Trial court
dismissed the petition and the appellate court affirmed.

Ruling: The U.S. Supreme Court held that, there must be some danger of recurrent
violations to grant a permanent injunction. The Court also recognized that voluntary
cessation of illegal activity did not render an action to enjoin moot and that proof of the

24
 relief is needed must be shown, more than the possibility must be shown. There was no
evidence that the conduct in question would occur and the trial court was within its
discretion to deny the injunction. Affirmed.

Synthesis: This case is the injunction was to prevent future irreparable harms and the
court denied the injunction on the basis that there was no evidence that the illegal activity
would continue. In Goodyear, the court ruled that the injunction was beyond the scope of
the issue of the case, even though the harm was committed to that specific individual and
should have been entitled to a remedy. It is also similar to the ruling in Almurbati v.
Bush, which the plaintiffs provided no evidence that such harm existed because it was
merely speculation. The court did not recognize that there was a possibility of such
reoccurrence continuing and further violation of the Clayton Act, just as it did not
recognize that such violations of the Age Discrimination act would probably reoccur.

Almurbati, Marshall, and W.T. Grant Synthesis:

o As for why these cases are arranged in this order I believe it has to do with the
strength of the evidence that the bad act would occur. In the Almurbarti the
evidence is outside media reports and no harm has actual been done. In
contrast, the Marshall case had evidence the bad act already took place, but
nothing to support the idea that it will continue to happen on a national scale. In
the last case there was very strong evidence that the defendant was going to
violate the law; however, once the plans for the interlock ceased to exist so did
the cognizable danger of recurred violation. So, essentially, the section of the
chapter leads off with a case with a case where very little evidence suggested
the Plaintiff would suffer irreparable harm, followed by a case where the Plaintiff
did suffer harm, but there was little evidence that similarly situated people
would suffer the harm, and ends with a case where the was strong evidence that
harm was going to occur until the defendant backed out. In the final case the
appellate court even hints that the outcome may have been different if the
abuse of discretion standard was not so high.

2. Preventing Lawful Acts that Might have Wrongful Consequences

NICHOLSON V. CONN. HALFWAY-HOUSE

- Facts: D purchased home and planned to use it to rehabilitate ex-cons. Adjoining
landowners sought injunctive relief.

- Ruling: The Court reasoned that a private property owner might not use their property in
an unreasonable manner to injure their neighbors. However, the halfway House intended
any zoning law does not prohibit use. The fear of future events does not constitute
irreparable injury for which equity would grant an injunction as well as the injury must
be real and current. Judgment reversed.

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 Synthesis: This case is similar to the reasoning used in Almurbati v. Bush, which the
court used mere speculation of irreparable harm to deny an injunction. The decrease in
property value is not mere speculation as such was the case that the plaintiffs cited in
Brainard v. Town of West Hartford, which the court found that the proposition that an
unreasonable use of property which is merely anticipatory may be enjoined. In that
case, the proposed use, a town dump in a residential area was a known quality whose
attributes as a nuisance could be readily adjudged before the undertaking. The
establishment of a dump on the land would greatly depreciate the value of the plaintiffs
land. Additionally, The Action in the current case can be seen as ripeness or
prophylactic action to enjoin possible harms to the residents property value.
-
PEPSICO, INC. V. REDMOND
Facts: D worked for P for 10 years and then accepted job offer from competitor. P
sought an order enjoining D from taking position to prevent him from disclosing trade
secrets.

Ruling: The Court of Appeals held that in litigation involving trade secrets, a court might
enjoin the actual or threatened misappropriation of trade secrets. Since Redmond had
the knowledge of PepsiCos plans and would allow Quaker an unfair advantage.
Therefore, the trial court properly allowed the preliminary injunction motion as well as
PepsiCo demonstrated a likelihood of success on the merits of its statutory trade secrets
claim.

- Synthesis: A lot like Nicholson, but not a ripeness case. It is a scope of relief case. The
rule of law from this case would have enjoined the halfway house in Nicholson. In
Nicholson, the court will learn much more about the magnitude of the problem when
the halfway house opens. But if D goes to work at competitor, it will be hard to know
whether he is misusing Ps information. Question in both Nicholson and PepsiCo is
prophylactic relief. To what extent can the court enjoin conduct that is lawful, in order
to prevent or reduce the likelihood of wrongful consequences. The more egregious the
violation, the greater the fears of further defiance or evasion, and the greater the desire
for prophylactic injunctions. Page 292 n. 11.

3. Repairing the Consequences of Past Wrongful Conduct

FORSTER V. BOSS
Facts: This case arises out of a sale of property fronting on the Lake of the Ozarks
Missouri. The plaintiffs, the Forsters are buyers of the property from the defendant
sellers Boss. Defendants, the Bosses agreed to sell their property to the Forsters, they
represented that the Forsters could obtain a permit for a boat dock in front have there
newly, acquired property. When in fact, unknown to the Forsters, the sellers had a boat
dock permit them, which made it impossible for the Forsters to obtain a permit
themselves. The district court granted the Forsters a permanent injunction and

26
 compensatory damages due to the Bosses fraud when they sold the lakefront property
without a boat dock permit. The Bosses appealed, claiming that the Forsters were not
entitled to double recovery and that under the election of remedy doctrine, the forsters
had to choose either the injunction or the compensatory damages.

- Ruling: The court held that in a case where either remedy would make an individual
whole again, a defendant must choose whether it wants to receive compensatory
damages or an injunction. Since the injunction entitled the Forsters to receive a dock
permit, they could not recover damages for the same loss. Compensatory damages
were awarded for one dollar so that punitive damages could be awarded for the Bosses
fraud, abuse, and misrepresentation.

- Synthesis: In this case the Bosses fraud and abusive conduct in the sale of the property
cause the court to not only award injunctive relief but also to award compensatory
damages of nominal value in order to award punitive damages in order to deter and
punish the conduct of the Bosses. This case is analogous to PepsiCo as well as
Almurbati, in a sense that the injunction was to prevent irreparable harm that was
actually suffered by the Forsters because they were denied the use or purpose for
buying the property by the Bosses fraud. It differs from Nicholson and PepsiCo in that
the injunction was not prophylactic or even an issue of ripeness.

WINSTON RESEARCH CORP. V. MINN MINING

- Facts: The Mincom division of the Minnesota Mining and Manufacturing Company
developed an improved precision tape recorder and reproducer. Sometime later, Winston
Research Corp developed a similar machine. Mincom alleged that the Winston machine
was developed by former employees of Mincom, including Johnson and Tobias, by using
confidential information, which they had acquired while working on the Mincom
machine, and sued for damages and an injunction. The District court granted an
injunction but denied damages. Both corporations appealed.

Ruling: The Court reasoned that unfair competition should be enjoined for time it would
take to develop a similar product after public disclosure thereof. The court also reasoned
that a permanent injunction would go beyond the goal in that Winston would be denied
the ability to pursue normal research and development on their own account. An
injunction should not serve to prevent the development of technologies. Affirmed district
court.

Synthesis: The differences between this case and Forster, is that the court denied the
permanent injunction because it would hinder prosperity of industrialization, research,
and development. This case was in 1965 at the height of the U.S. industrialization and
development. The injunction that Minnesota Mining and Manufacturing was trying to
obtain was generally a punitive in its nature but not said. Unlike Forster, the court did
not award compensatory damages because in that case the only reason they were
awarded was to enable punitive damages. Additionally, the case is in line with the

27
 reasoning in Forster, in that double recovery for the same wrong is forbidden. Either
the injunction or compensatory damages. The case is also related to PepsiCo in that
former employees had brought with them trade secrets to the new company and
intended as well as actually, used the knowledge that they had gained to unjustly enrich
their new company.

BAILEY V. PROCTOR
Facts: Aldred Investment Trust was a mutual fund organized before the Investment
Company Act of 1940. Its structure was typical of the abuses that led to the formation
of the act. The structure was characterized with concentrated decision-making power
with the prospect of high profits for the controlling shareholders to the detriment of the
other investors. The trust became insolvent and a receiver was appointed. The
management was changed and the trust became insolvent again. The court ordered an
injunction liquidating the trust even though it was under new management. Bailey as
well as other controlling members appealed the order to dissolving the trust.

Ruling: The court ruled that a court might order the liquidation of an investment
enterprise when necessary to protect the investors. Although there was new
management of the trust, the structure that gave rise to the initial solvency was still in
place. Therefore, it was necessary to liquidate the trust to protect the investors.
Affirmed and remanded.

- Synthesis: Winston and Bailey are analogous and different at the same time. In
Winston, the case represents an action to restore the plaintiff as near as maybe to the
position it would have been but for the violation or the rightful position approach. This
leaves room for discretion of the courts or deference of the trial courts. Bailey
represents the equitable discretion approach, in which once there is a violation that
brings a case into equity court, the chancellor has the roving commission to do good.
He should liquidate the trust because it is fair, even though it is not legally

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 UNIT 5 CHAPTER 5: Choosing Remedies

A. SUBSTITUTIONARY OR SPECIFIC RELIEF

1. Irreplaceable losses

a. Injunctions

PARDEE V. CAMDEN LUMBER CO. (1911)

Facts: Pardee filed suit against Camden Lumber Co, seeking an injunction to prevent
Camden Lumber Co. from harvesting trees for lumber from Pardees land without his
consent. The Trial court awarded the injunction against Camden lumber Co. The
appellate court reversed the injunction, stating that equitable relief was inappropriate.
Pardee appealed the judgment.

Ruling: The Superior Court reinstated the injunction, stating in opinion that unless
trespass is an irreparable injury, monetary compensation is a justified remedy. Money
can replace the value but cannot restore the property. The Court further stated that
property owners have the right to possession and dominion of their property.
Additionally, property owners have immunity from injury unless it can be replaced
substantially. If the property has a peculiar value to the owner, then the injunction was
appropriate.

Synthesis: 1st case because it introduces us to the idea of EQUITY. P states cant replace
trees, doesnt want money, so stop cutting trees. This is fair. This case also would fit well
in the section titled The Parties Power to Specify the Remedy because this case begs
the question whether there was an adequate legal remedy. Cant we just pay Pardee for
market value of timber?

BROOK V. JAMES A. CULLIMORE & CO.

Facts: Brook barrowed $8,000 from Cullimore in exchange for a security interest in
property worth around $2,500. Brook defaulted on the loan and Cullimore sued Brook
under replevin. Replevin is an action to recover personal property wrongfully taken.
Cullimore had a property interest or property as collateral in exchange for the loan.
Brook attempted to pay for the value of the property, but Cullimore wanted the
property. The trial court granted specific performance and the appellate court granted
replevin.

Ruling: The Oklahoma Supreme Court held Cullimore had the right to the property
rather than recover money for its value.

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 - Synthesis: The irreplaceability of property here is irrelevant. This case highlights a
situation in which legal remedy IS adequate. Replevin is a legal remedy. Replevin makes
specific relief available without any showing that damage remedy is inadequate.
Important difference between replevin and injunction is means of enforcement.
o Injunction enforced by contempt power.
o Replevin enforced by sheriff seizing property, delivering it to P.
- If goods are replaceable P may get an injunction ordering return of the goods, to avoid
riskier enforcement mechanisms of replevin. Both will restore goods, usually. So why
not injunction? Replevin has a narrower scope than injunctions. Lies only to recover
goods, does not lie to prevent a threatened destruction or dispossession like in Pardee.
P was wronged, P wants property, not $, so Court gives P property (rightful position in
Ps POV like in Hatahley). Also, a case that could have gone in The Parties Power to
Specify the Remedy. Highlights ways court rules in interest of EQUITY. $ arguably
would have been adequate, like in Pardee, but $ wasnt what the P wanted.
-
CONTINENTAL AIRLINES, INC. V. INTRA BROKERS, INC.
Facts: Continental airlines published discount coupons, which were acquired by Intra
Brokers who sold them to travel agents, which in turn would resell them to customers.
Continental initially informed Intra that the language in the clause-prohibiting sale of
the coupons would not be enforced. Continental decided to enforce the prohibition of
resale and Intra brokers refused to comply. There was an absence of evidence that
Intras refusal damaged Continental Airlines or the converse that Intra lost money on
reliance of Continentals original policy. The district court granted a permanent
injunction against Intra.

Ruling: The ninth Circuit applied the Irreparable Loss rule- if there is an adequate
remedy, and then equitable remedy would not be appropriate. The court granted the
injunction, enabling Continental to choose whether or not to enforce its policies.

Synthesis: Damages are an inadequate remedy for loss of something irreplaceable,

including land, property, and rights. Continental doesnt talk about replaceability or
uniqueness but Continentals right to control its own business cannot be replaced. Legal
remedy is adequate only of it is as complete, practical and efficient as the equitable
remedy. Arguing within irreparable injury rule works well for Ps seeking permanent
injunctions (See Pardee or Continental) or specific performance (see Campbell). Example
of waiver, I wouldve argued that here. The harm here was to Ps right to control its own
policy (difficult to value). Harm in Pardee was to Ps right to control land and its use
(difficult to value worth of land). Harm in Brook would be to Ps right to control its
desired relief. It is easy to value the damage here, however. Just like its easy to value
worth of land in Pardee. Pardee says legal remedy inadequate equity intervenes.
Continental says when damages difficult to prove, equity intervenes. 2 pills better than
1.
-

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b. Specific Performance Contracts

CAMPBELL SOUP V. WENTZ

- Facts: Campbell and Wentz entered a contract where Wentz would deliver carrots
grown by Wentz to Campbell. The price was $30 per ton, after the market price
changed, Wentz refused to deliver on the contract at that specific price. Wentz stated
that the market price was $90 per ton. Wentz sold the carrots to Lojeski, a neighbor
who in turn sold the carrots to Campbell. Campbell filed suit to enjoin Wentz from
selling the contracted carrots and to compel Wentz to specific performance on the
contract. The trial court denied the injunction and Campbell subsequently appealed.

Ruling: The third circuit held that a party could have specific performance of a contract
for the sale of goods if the legal remedy is inadequate. The court stated that specific
performance was proper, because the goods were unavailable in the open market. And
that the trial court erred because specific performance should have been granted.

Synthesis: Forget unfairness of contract, court probably would have ordered D to sell
carrots because no adequate remedy at law. Carrots unique and irreparable injury
occurs if take the away, but not really. If some other carrot would suffice, then money
would be sufficient. But if not, $ cant replace. No other carrots were like the ones
contracted for, t/f specific performance. However, exception when there is too one-
sided an agreement. Choice between specific performance and damages is a choice
between 2 ways of giving P its expectancy (carrots or expected value of carrots. Specific
performance is often not an option because courts move too slowly; the parties must go
about their business then litigate over damages. Campbells rightful position would be
too unfair to the D Court here shows no regard for Ps RP. Carrots (unique) =
irreplaceable loss, BUT K is too unfair. Had the K been fair, court may have enjoined new
deal and ordered D to give carrots to P, or maybe just pay damages. Dont know. Carrots
unique like land in Pardee.

VAN WAGNER AD CORP. V. S&M ENTERPRISES

- Facts: Michaels owned a building and leased billboard space on the side of a building to
Van Wagner Advertising Corp. In which Van Wagner erected a sign and leased it to Ash
Advertising for a period of three years. Michaels subsequently sold the building to S&M
Enterprises, which cancelled the lease. Van Wagner sued for specific performance and
damages for breach of contract. The trial court ruled in favor of Van Wagner stating
that the parties to the contract did not intend that any future purchaser could terminate
the lease at-will. The court did not order specific performance and Van Wagner
appealed.

Ruling: The N.Y. Court of Appeals held that specific performance on a contract to lease a
unique billboard space is properly denied when damages are an adequate remedy to
compensate the lease. Equitable relief would impose a disproportionate burden on the
defaulting landlord.

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 Synthesis: Property like in Pardee but contrary to Pardee, it is irreplaceable. Further,
contrary to Pardee, Court not concerned with uniqueness BUT parallels Continental and
the difficulty of valuing the worth of coupons (uncertainty of valuing it). P wants specific
performance because of uniqueness of location, etc. Defendant wants damages. Court is
moving away from uniqueness. Taking focus off uniqueness and puts it on the
uncertainty of valuing it. Physical uniqueness v. Economic interchangeability.
o Uniqueness - Court not buying the physical uniqueness of property.
o Economic Interchangeability all property interchangeable with money. We can
speculate as to courts decision in Pardee if they firmly believed this.
Further, specific performance should be denied on the ground that such relief would
be inequitable in that its effect would be disproportionate in its harm to D and its
assistance to P. Specific performance cannot cause an inequity. Whether legal remedy is
inadequate for the P has little to do with whether the equitable remedy would be a
hardship on D. Undue hardship is independent reason for denying specific relief. 2
doctrines applied here legal remedy is inadequate and specific performance would be
an undue burden on D. Any case where loss is irreplaceable is also a case where
damages are hard to measure.
Court looks at D, like courts in Pardee and Continental looked at P. What do I mean? I
mean that the court found that harm to the Ds right to control property here was
greater than the harm to P. Court says P could get billboard space from someone else,
t/f specific performance is not appropriate - Contrast with Campbell where court said P
couldnt get carrots from elsewhere but bc K was one-sided, didnt get Spec Perf. If you
use this rule of law in Campbell and assume the K wasnt one-sided, Court would have
said market value is not uncertain. Damages and NOT specific performance. Why isnt
this case in next section? Undue hardship to D is independent reason for denying
specific relief.

2. Burdens on the Defendant or the Court

WHITLOCK V. HILANDER FOODS, INC.

- Facts: Whitlock owned adjoining land to Hilander Foods. Hilander accidently built
footings of a retaining wall on Whitlocks adjoining property. Whitlock met with the
workers and requested that if the footings were to remain, he would like a lease. Over
the next several months, the parties and lawyers exchanged offers in an attempt to
resolve the issue. Whitlock sued for injunction to remove the footings from his property
when the parties could not come to an agreement. The trial court granted summary
judgment for Hilander Foods, as the encroachment on Whitlocks property was not
intentional.

Ruling: The Appellate court held that the court must balance the hardship to decide
whether or not to make the defendant remove the encroachment. If the hardship is
great and the benefit only slight then the remedy at law is monetary. If the

32
 encroachment is deliberate, an injunction without considering hardships is justified.
The court also examined the defendants actions and circumstances. Did the defendant
contribute to the delay and whether the defendant knew that they were violating a
property right. The court reversed the judgment and remanded for the lower court to
determine whether the injunction was proper.

Synthesis: Builds off undue hardship introduced in VanWagner. Hardship must be

disproportionate to any benefit P will derive from injunction. As seen in Whitlock, courts
also give weight to Ds culpability and Ps diligence or acquiescence. Laches? Would it
have been burdensome on D in Van Wagner to not tear down building with billboard?
YES. Would it have been burdensome on D in Whitlock to tear down wall? Yes, 1.5
million. BUT it was intentional so it doesnt matter. This case introduces us to undue
hardship but also provides us with an exception.

Litigation Post Mortem: The defendant could have possibly argued that the
encroachment on Whitlocks property was unintentional as well as attempts were made
to remedy the situation and that the plaintiff intentionally delayed and as well as
refused to compromise and accept monetary damages. The wall was a necessity and
would be a tremendous burden upon the defendant to tear it down and rebuild it.

CO-OPERATIVE INSURANCE SOCIETY LTD. V. ARGYLL STORES (HOLDINGS) LTD.

- Brief Facts: P leased space to D supermarkert. The Lease required D to stay open certain
hours. D losing $ = closed store, P wanted SP for D to stay open.

Facts: Argyll stores leased commercial space from Co-operative for the operation of a
supermarket. A covenant in the lease required the Argyll to keep the store open for
trade during the usual business hours. Argyll decided to close the store because the
supermarket was not a successful business. Co-operative sought an order from the
court that the covenant be specifically performed. The trial court refused to order
specific performance. The court of appeals reversed the trial court decision and ordered
specific performance on the contract. The British House of Lords granted review.

Ruling: The court held that no court might order specific performance of a covenant to
maintain business hours when a lessee believes it would be a financial detriment to
continue with the business. Specific performance should not be ordered when
monetary damage awards are an adequate remedy at law. Reasons since it would
require constant supervision from the court. This would also allow unjust enrichment at
the expense of the defendant. The order of the trial judge was restored. Reversed.

Synthesis: Too burdensome, Court stated courts cannot force D to stay open if staying
open causes them to lose $ - this is textbook definition of EQUITY (fairness), even
though D breached K, it is not in public interest to force company to stay open and lose
$.

33
 2 pills better than 1 Whitlock introduces us to undue burden, case where its there but
theres an exception. This case shows how it is applied. Also, introduces us to undue
burdens on court. If it did force D to stay open, would have to supervise performance
and resolve and quarrels for remainder of lease (18 years) no go.
This case is different from the Whitlock, in which the burden of the upholding the
injunction was a burden on the defendant. In this case, the burden would be on the
court to require the court to constantly supervise the maintenance of the injunction. As
well as unjustly enriching the plaintiff at the detriment of the defendant. Like the
previous case, the hardship is great and the benefit is only slight. Therefore, monetary
remedy would be appropriate.

3. Other Reasons & More of the Same

EBAY, INC. V. MERCEXCHANGE, L.L.C.

- Facts: EBay operates an auction website in which private sellers can list goods for sale.
MercExchange held several patents sought to license a business method patent to EBay.
No agreement was reached between the parties and MercExchange filed a patent
infringement suit. The jury found that EBay infringed on the patent and damages
awards were appropriate. MercExchange also filed a motion for permanent injunctive
relief. The injunctive relief was denied by the district court. The Court of Appeals
reversed the district court decision on the basis that courts may issue a permanent
injunction for patent infringement absent exceptional circumstances. The U.S. Supreme
Court granted review.

Ruling: J. Thomas applied the four-part test of preliminary injunction to a permanent

injunction. The test requires that a plaintiff must demonstrate that: (1) that it has
suffered an irreparable injury; (2) that remedies available at law, such as monetary
damages are inadequate to compensate for that injury; (3) that considering the balance
of hardships between the plaintiff and defendant a remedy in equity is warranted; (4)
the public interest would not be disserved by a permanent injunction. Because neither
the district court nor the Court of appeals applied the traditional four-factor test, the
case is remanded to the district court for correct application of the test. Vacated.

Synthesis: Introduces us to Permanent Injunction. Introduces us to 4-factor test for

permanent injunction; 4 factors presented are a combo of previous cases in Unit 6. For
example, (1) Irreparable Injury prereq to injunctive relief (injury to land in Pardee,
injury to Continentals right to control policies.) (2) Legal Remedies Inadequate Pardee
(questionable), Continental and Campbell (questionable uniqueness of carrots, $ cant
compensate. (3) Balance of Hardships has been a defense, reason to withhold an
injunction. (Whitlock and Argyll). (4) Public Interest Argyll (burdens on court). 4 factors
highlight Courts skepticism of injunctions. P need not demonstrate all four elements.
Synthesis 2: In this case, J. Thomas applied the preliminary injunction test for a
permanent injunction. This case is also unusual in the aspect that Irreparable Injury

34
 Rule in that if monetary damages or awards will compensate the plaintiff then an
injunction or equitable relief is or should not be available. It is one or the other. The
case is similar to Campbell in which they were seeking monetary relief as well as
equitable relief.

WILLING V. MAZZOCONE
Facts: Quinn & Mazzocone represented Willing in a workmens compensation suit. She
was under the belief that this firm cheated her in her case. She began picketing outside
city hall with a placard stating that the firm stole money from her and sold her out to
the insurance company. Mazzocone sought action to enjoin Willing, the court issued an
injunction and Willing appealed.

Ruling: The Pennsylvania Supreme Court held, that a court may not enjoin defamatory
speech. Prior restraints of free speech are repugnant to the Constitution. A legal
remedy for defamation is adequate. A suit for libel or slander can exonerate a party and
compensate for actual damages. Although Willing is indigent is irrelevant and a legal
remedy is not inadequate because it appears uncollectable. Reversed and the court
awards monetary relief/damages

- Synthesis: See how court applies 4 factors given in eBay. Case really highlights PUBLIC
INTEREST FACTOR (1st Amendment). Court doesnt go into detail bc $ is adequate. 4
factors. 1 reputation to attorney, 2 - $ damages adequate, 3 no hardship to D to be
quiet, benefit to P to keep reputation, 4 1st Am. implications

UNIT 6 (440-470) - CHAPTER 5 CONT.

B. PRELIMINARY OR PERMANENT RELIEF

1. The Substantive Standards for Preliminary Relief

WINTER V. NATURAL RESOURCES DEFENSE COUNCIL

- Brief Facts: Environmental group sought to enjoin Navy D from using Sonar, lower courts
granted injunction.

Facts: The Natural Resources Defense Council (NRDC) filed a preliminary injunction
against the U.S. Navy to stop the use of naval sonar in its submarine training programs.
The NRDC alleges that sonar adversely affects marine mammals. More specifically the
NRDC claims hearing loss, decompression sickness and major behavioral changes. The
federal Marine Mammal Protection Act of 1972 prohibits harassment of marine
mammals, but such actions may be exempted by the Secretary of Defense if he feels
they are necessary in the interests of national defense The National Environmental
Policy Act requires the Navy to conduct an Environmental Impact Study (EIS) before

35
 continuing with active sonar use, which would not be completed until the end of
training. NRDC filed a preliminary injunction which was granted by a federal district
court against the Navy (D) and this was upheld by the U.S. Court of Appeals for the
Ninth Circuit.
Ruling: The U.S. Supreme Court held plaintiff seeking a preliminary injunction must
prove that his case is likely to succeed on the merits, and if the relief is not granted, they
will suffer irreparable harm. Although injury to marine life might be substantial, the
Navy being prepared to deal with enemy submarines. Therefore, the injunction should
not have been granted.

Synthesis: Building off eBay and Willing, Laycock moves into prel and perm injunctions.
Introduces us to 4 elements P must establish for preliminary injunction.
o likelihood of success on merits (wouldnt make sense for permanent injunctions
bc they are issued after success on merits have been established).
o that irreparable harm is likely (not possible) without injunction. (combines 1 and
2 of permanent injunction)
o balance of equities
o in public interest
Highlights skepticism towards PI. Tighter standards to be met in order to grant
preliminary injunction. At preliminary relief stage, risk of injury must be sufficiently
great and sufficiently irreparable to override the risk of error and the shortcuts with Ds
right to due process, compared to after full trial. Balance of hardships also has different
meaning. At the stage of permanent relief, D is an adjudicated wrongdoer and P is his
victim. P wins unless the hardship to D is substantially disproportionate to the benefit.
At the stage of preliminary relief, no wrongdoer has been finally identified. Relative
hardships must be balanced in light of the relative probability of success. Permanent
injunctions seem easier to get than preliminary. Locks down status quo. Even if P could
show likelihook of irreparable harm, still lose bc balance of equities is in Ds favor and is
not in Public Interest. Talks about four factors, focusing on first.
Litigation Post Mortem: Do not think that there is an alternative that the NRDC could
have argued. Highly unlikely that the U.S. Supreme Court would maintain an injunction
against the U.S. Navy when there is so much reliance on national defense. Granted the
NRDC met the elements for injunction, substantial governmental interest in national
defense is more important.

COYNE-DELANEY CO. V. CAPITAL DEVELOPMENT BOARD

Facts: The states capital development board let a contract to replace the plumbing
fixtures in a state prison. Coyne-Delany received the subcontract for the toilet flushing
valves in the first phase of the project. The values malfunctioned, were replaced, and
malfunctioned again. The board announced bidding specifications for the second phase
of the project and required all bidders to use Coyne-Delanys main competitor. Coyne-
Delany sought an action to enjoin, claiming that it had a property interest in the
contract and was taken without due process. The District court granted the injunction

36
 and Coyne put up a $5,000 bond. Injunction was reversed, Capital asked for damages to
be paid out of the bond but district court refused. Capital appealed.

Ruling: J. Posner held that prevailing defendant is entitled to damages on an injunction

bond unless there is a good reason not to award damages. FRCP 65(c) posting a bond to
cover Defendants expenses if it prevails and FRCP(d) entitles prevailing party is entitled
to costs. Thus, the District court should not have awarded damages because an action
was filed in good faith. Reversed and remanded.

- Synthesis: Notice TRO holds status quo until court rules on prel inj which holds stat quo
until court rules on permanent injunction. Introduces us to 65(c) bonds. Damages must
be caused by the wrongful preliminary injunction; not enough that they were caused by
the litigation. If you want preliminary injunction, must post 65(C) bond. Points out that
in addition to elements, must post bond because of risk of error and P bears this risk.
Another way courts can dissuade party from seeking PIs (FRCP 65(c)). If you want to
enjoin, may have to post bond, some parties may not risk.
- It seems that this case is very different from the winter v. NRDC case., which was an
injunction that was a burden on the defendant, the U.S. Navy and the Hilander case the
injunction was a burden on the court. This case doesnt seem to match in that context.

2. The procedure for Obtaining Preliminary Relief

CARROLL V. PRESIDENT AND COMMISSIONERS OF PRINCESS ANNE

- Facts: Carroll as well as others were members of a white supremacist group who held a
rally near the courthouse in the town of Princess Anne and wanted to hold another rally
the following night. The Commissioners of the town applied for and obtained an ex parte
TRO (without notice) to keep Carroll and group members from participating in a rally the
second night. The trial court granted the injunction for a period of 10 months. Carroll
appealed. The Court of Appeals affirmed the TRO for 10 days but reversed the TRO for
10 months, reasoning that that the TRO for the 10 month period was unreasonable and
arbitrary in its assumption that the danger of civil unrest and a riot would continue for a
period of 10 months. Carroll and his group members appealed.

- Ruling: The U.S. Supreme Court held that ex parte issuance of the TRO is only proper
when it is not possible to serve or notify the opposing party. This case it was not
impossible to notify Carroll and his group members. The U.S. Supreme Court reversed,
finding ex parte TRO was an abridgment of the 1st Amendment.

Synthesis: Ex parte TRO designed to prevent irreparable harm that will occur even
before a preliminary injunction hearing can be held. Preliminary must give notice. TRO
no notice if: 1, can show immediate and irreparable injury will result and 2, show
sufficient attempts to give notice and why it should be issued. Another case like Willing,

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 court skeptical to enjoin speech. Case further shows how serious the courts take PIs and
their effects.

SAMPSON V. MURRAY
- Facts: Murray was a temporary employee of the Federal Government who was fired.
She filed a suit against the Government with the civil service commission seeking a
preliminary injunction to prevent her discharge pending an administrative appeal as well
as an injunction forcing the Govt to rehire her. The District Court granted the
preliminary injunction delaying her discharge for a 10 day period. The Govt refused to
produce the individual who fired her, and the District Judge extended the restraining
order until the Govt produced the witness. The Govt appealed and the Court of
Appeals affirmed.

- Ruling: The U.S. Supreme Court reasoned that a temporary loss of income and damage
to reputation falls short of the type of irreparable harm necessary to issue a
TRO/injunction. The TRO extended beyond the time permissible via FRCP 65 and must
conform to the standards of preliminary injunctions. Therefore, reversed Court of
Appeals.

Synthesis: Preliminary injunctions not proper in wrongful discharge suit. Why?

o 1. wrong termination leads to lost income - compensable , $ damages adequate.
o 2.no irreparable damage (even to reputation)
- Must give notice a hearing in which D is given a fair opportunity to oppose the
application and to prepare for such opposition. Court said issuing TRO, but extended
beyond 10 day limit, thereby forcing court to consider it as a preliminary injunction

- Apply this rule to PepsiCo? Could Pepsi have asked for a TRO? Brothel case?

UNIT 7 CHAPTER 7: Preventing Harm without Coercion: Declaratory

Remedies

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A. DECLARATORY JUDGMENTS; BACKWARD LAWSUITS

1. General Case

NASHVILLE RAILWAY V. WALLACE

Facts: Plaintiff brought suit in the Chancery Court Davidson County, Tennessee, under
the Uniform Declaratory Judgments Act of that state, to secure a 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. The State trial court found the tax constitutional, and the State Supreme
Court affirmed. The Railway appealed to the United States Supreme Court.

Ruling: The Court Held that Federal courts may issue declaratory judgments when an
actual controversy exists. There must be a case or controversy for the court to hear the
case. The court will look at the type of remedy sought, the nature of the proceeding
and the effect of the judgment. A declaration has the force and effect of a final
judgment or decree. The U.S. Supreme Court stated that there is a case and controversy
in this case. There is a dispute between adverse parties who are seeking a
determination of their legal rights, which will be affected by the decision of the question
of law. Just because the damages are not awarded or an act required to be performed
by the parties, does not mean that the issue is not justiciable issue. The controversy
needs to be real and substantial. The Court allowed the declaration to be entered if a
case was not pending.

Synthesis: introduction to declaratory judgments. Advisory opinions not permitted;

adjudiciation of actual rights must be made. However, adjudication of rights in and of
itself may be all that a case requires. Dec Jud a judgment of the court establishing the
rights of the parties. Difference between declaratory judgment that tax is
unconstitutional and an injunction ordering state not to collect tax. Both geared to
protect P from paying tax. Injunction would include personal command while
declaratory judgment would not. Declaratory relief is broader. No irreparable injury
needed. Existence of another remedy does not preclude Dec. J that is appropriate
(different from injunctions). Can ask for supplemental relief as compensation for
damages caused by Ds failure to comply with declaratory judgment.

CARDINAL CHEMICAL CO. VO MORTON INTL

- Facts: Morton owned two patents on chemical compounds used in polyvinyl chloride.
Morton sued Cardinal chemical for infringing on those two patents. Cardinal Chemical
filed its answer denying the patent infringements and counterclaimed for declaratory
judgment for the court to find that the patents were not valid. The trial court held that
Morton failed to prove infringement and that Cardinal Chemical proved by clear and
convincing evidence that the two patents were invalid. The court dismissed the action
with prejudice. Morton appealed and Cardinal Chemical filed cross-appeal for fees. The

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 Federal Circuit affirmed the dismissal but vacated the declaratory judgment on the basis
that courts should refrain on mootness grounds from deciding the merits of a patent
validity claim when infringement action is dismissed. Cardinal Chemical filed a writ of
certiorari.
o Real lawsuit is that Morton is going to bring a claim against cardinal for patent
infringment

Ruling: The U.S. Supreme Court held that a party seeking declaratory judgment has the
burden of establishing the existence of an actual case or controversy. That the burden
could be met if the patentee has or has not filed an infringement claim. The trial court
as well as the Federal Circuit Court did have jurisdiction to hear Cardinals counterclaim
for declaratory judgment. The Claim for declaratory judgment of invalidity is
independent claim from the patentees charge of infringement. The per se rule that
validity declarations are vacated when the underlying infringement claim is dismissed is
inappropriate. For policy reasons a counterclaim for declaratory judgment should be
decided. The per se rule deprives the patent holder of appellate review of the decision.
The judgment of the court of appeals is reversed and remanded.

Synthesis: Risk of ever-expanding liability. Declaratory judgment P often sue bc they

face liability if litigation is delayed (backwards lawsuit). Cardinal is special case of the
problem of potential Ps who assert claims without filing suit. Such a potential P may
seek to control the potential Ds behavior or may seek settlement. In patent context, the
alleged infringer can sell the product only at the risk of liability. If the alleged infringer
pays royalties or quits selling product, the patent holder gets the benefit of a successful
lawsuit without the risk of losing lawsuit. A similar problem arose in Wallace. The
railroad sued for dec relief instead of not paying taxes. Likely because there were
penalties for nonpayment. The Dec Jud enabled railroad to find out its rights without
incurring the risk of additional penalties. However, potential Ds can sue to enjoin yhe
potential P from filing suit. Tactical advantage is usually a motive when potential Ds sue
for a declaration that he has no liability arising out of some completed event. Principal
purpose is to resolve uncertainty that future conduct might depend on. 2 pills better
than 1. In patent litigation, party may satisfy that burden even if there is no
infringement claim similar to injunctions (PepsiCo a court may enjoin the threatened
misappropriation of trade secrets. Doesnt have to be ACTUAL misappropriation.

2. Special Case of interfering with State Enforcement Proceedings

STEFFEL V. THOMPSON
Facts: Steffel and his friend Becker were passing out antiwar leaflets in a shopping
center. They were threatened with arrest and prosecution for trespassing if they
persisted. Steffel quit passing out leaflets; Becker continued and was prosecuted.
Steffel and Becker filed an action seeking injunction against enforcing criminal trespass
statute against them and a declaratory judgment that the statute was being applied in

40
 violation of their First Amendment rights. The court of appeals denied both forms of
relief and Steffel appealed only as to the declaratory relief and petitioned for a writ of
certiorari. The state court stayed its proceedings pending the outcome of the federal
court.

Ruling: The U.S. Supreme Court held that federal declaratory relief may be given when
threat of enforcement of a disputed state criminal statute exists. There is no threat of
contempt under declaratory relief therefore federalism concerns underlying the
limitations of federal injunctions against pending state actions would not apply. The
irreparable injury rule does not apply to declaratory relief action due to the fact that
declaratory relief has no roots in the chancery courts. The case is reversed and
remanded.

Synthesis: This case like Nashville and Morton, there was an actual case and
controversy. This case in particular there was a genuine threat of enforcement of a
disputed state criminal statute which violated First Amendment free speech rights. The
threat of imminent arrest followed by actual arrest of Becker created an actual concrete
controversy between Steffel and agents of the state.
-
DORAN V. SALEM INN, INC. (Strip Club Case)
Facts: Plaintiffs Salem Inn, Tim-Rob Bar, and M&L restaurant all featured topless
dancers. The town of North Hempstead passed a new ordinance forbidding topless
entertainment. All three initially complied. They filed an action in federal court seeking
a declaratory judgment that the ordinance was unconstitutional and a TRO as well as a
preliminary injunction against its enforcement. M&L resumed topless entertainment,
M&L as well as the dancers were served criminal summonses. The district court held
that federal restrictions on enjoining state criminal proceedings did not apply in M&L
case since the co-plaintiffs were also entitled to relief. The town of North Hempstead
appealed and the court of appeals affirmed.

Ruling: The U.S. Supreme Court held that a party cannot evade state restrictions via
obtaining federal injunctions against state criminal actions by joining parties not
affected by the restrictions. Reversed as to M&L and affirmed to Tim-Rob bar and
Salem Inn.

Synthesis: Further elaborates on restrictions on enjoining criminal proceedings.

Another P filing injunctive and declaratory relief. Federalism > Efficient Judicial
Administration
o ie, Steffel, both he and companion were warned, Steffel ceased and brought
action, companion continued and was prosecuted.
Shows opposite of Steffel. Here, ongoing crim prosecution against M&C, t/f federal
courts cannot enjoin said crim pro. However, 2 other Ps not barred by Young and could
seek a declaratory judgment. Case all about injunctions and declaratory relief. M&L

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 cant evade restrictions on federal injunctions against state crim pro by joining 2 other
Ps not affected by Younger. If I were MLs attorney I would have just stopped topless
dancing and filed for injunction and declaration. That way, could have enjoined
enforcement of statute and not been barred by Younger, continued dancing and waiting
for decision from Court. Doing so would have prevented the risk of losing substantial
business versus my competitors who are allowed to continue because they have
injunctions against statute. Covert Ps? Punish those who break laws, discourages
lawlessness while benefits those that follow law and proper procedure. Practical effect
of declaratory and injunctive relief was virtually identical.
Synthesis 2: Here the outcome was very different then the one in Steffel v. Thompson.
In that case the Federal injunction or more correctly the U.S. Supreme court allowed
declaratory relief over state criminal statute due to the fact that it was a violation of
First Amendment speech. Here, the Supreme Court found that federal relief against
state law enforcement was not valid because it interfered with state police power as
well as that injunctive relief would be more appropriate.
-
B. QUIET TITLE AND THE LIKE

NEWMAN MACHINE CO. V. NEWMAN

Facts: Defendant Newman owned 65% of shares in the Plaintiffs corporation. He made
a gift of shares to himself as a trustee for his children, which made him an owner of 53%
of stock. He also owned 65% of 3 affiliated corporations. He sold the stock for $135 per
share. Newmans attorney notified the plaintiff via mail that they were investigating the
sale of stock. Newmans attorney informed the plaintiff that he was defrauded and the
price for the shares was grossly inadequate. Newman was entitled to either rescind the
transaction or sue for damages. The plaintiff wanted the court to enter a declaratory
judgment that it had a good title to the 11.47% of stock as it was purchased from the
trustee. The trial court overruled the defendants demurrer, and found in favor of the
plaintiff.

Ruling: The Court of appeals reversed holding Demurrer determines whether one is
entitled to a declaratory or declaration of rights with respect to the matters alleged. If
the complaint has a genuine justiciable controversy, then it cannot be demurred. There
is a cause of action in equity to quiet title to property.

- Synthesis: Intro to quiet title (equitable action to resolve conflicting claims to an interest
in property; Another backwards lawsuit to prevent D from later suing to rescind original
transaction, P brought action to quiet title as to shares. Quiet Title removes uncertainty
by declaring rights older and engrained in system even though practical effect of two
are the same. As legal remedies appear inadequate, a quiet title action is proper.
Pardee

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C. REFORMATION

HAND V. DAYTON-HUDSON
- Facts: Hand was employed as an attorney for Dayton-Hudson from 1967 to 1982. Hand
was subsequently fired and Dayton-Hudson agreed to pay $38,000 if Hand agreed to
release the firm from any claims. Hand refused initially, but then agreed. The release
was drafted and Hand asked to take it home for review. Hand apparently prepared or
drafted another release that was identical to the one he was given except that it
provided that Hand could bring an age discrimination and breach of contract claim. He
apparently tricked the firm into signing the new release as well as accepted the $38,000.
Hand subsequently brought a suit for age discrimination and breach of contract. The
trial court held that Hand committed fraud, reformed the release to conform to the
original meaning, and dismissed Hands action. Hand appealed.

Ruling: The Court of Appeals held that reformation is allowed despite the lack of a
mutual mistake if there is fraud by the other party. The general rule is that a party is
responsible for contracts that they sign, if it is not applicable that the signing was not
induced by fraud. Hand was aware of the firms intent with regards to the original
release and therefore the decision of the lower court is affirmed.

- Synthesis: reformation equitable remedy whereby the written terms of an agreement

are altered in order to reflect the true intent of the parties. NOT RESCISSION. Hand,
release could have also been rescinded for fraud.
o Reformation leaves release in effect as reformed
Hand gets to keep $38K
Dayton-Hudson is released
Hand cannot sue for breach of K.
o RESCISSION reverses entire transaction
DH gets $38 K
H gets release back
H could sue for breach and age disc
- Only reason court had choice between 2 was Hands Fraud. (covert punitives
reformation) Some say reformation is resitutionary because it deprives D of unjust
enrichment. Laycock says declaratory because it can be brought to resolve the potential
claims created by the mistaken writing before those claims give rise to any other
justiciable dispute. No ripeness or irreparable injury requirement for reformation.

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