Note: For information on a variety of civil law topics, including tort law and proposed tort reform, you may want to read a variety of printed materials or turn to the Civil Law section of the 'Lectric Law Library.

A tort is a civil wrong -- not based on contract -- for which the law provides a remedy.

A tort is different from a crime. A tort is a civil wrong against an individual or a business for which a court can award damages. A crime is a wrong against society which is prosecuted by the government. Penalties can include both a fine and imprisonment.

A tort is different from a breach of contract, because a breach of contract violates an obligation created by the parties themselves, while a tort represents the breach of a duty imposed by law and society.

Key Words and Terms

Duty: An obligation between parties created by law and society.

Breach of Duty: A failure to meet the standard of care expected by law and society.

Proximate Cause: The direct connection between the breach of duty and the injury or loss. For instance, speeding through a school zone and striking a child represents a breach of duty which proximately caused the injury.

Compensatory Damages: Money awarded by a court to a plaintiff who has suffered a loss due to the defendant's failure to live up to a duty. These damages are intended to make the plaintiff "whole" again (to the extent money can ever replace what has been lost), covering such things as medical bills, lost wages, and pain and suffering.

Punitive Damages: When a defendant has committed a particularly egregious wrong, a court may award punitive damages, that is, money intended to punish the defendant for its gross negligence. Punitive damages can also send a message both to the defendant and others similarly situated that they must meet societal expectations in the future or face the risk of grave financial loss.

Negligence: When a tortfeasor (the one committing a tort) does not intend to breach a duty owed another, but acts in such a careless way that a risk of harm is created, society declares that such action or inaction represents negligence.

Act of Commission: Acting in a way that an ordinary, reasonable, prudent person would not act, and in the process injuring someone or damaging someone's property, such as wet-mopping a floor during the height of business hours resulting in a patron slipping and falling.

Act of Omission: Failing to act when a reasonable person would have taken action, such failure leading directly to an injury or loss, such as failing to clean up a spill on the floor of a business establishment resulting in a slip and fall.

Key Concepts

Elements of Negligence: In order to establish a case based on tort one must prove the following elements: (1) A duty of care; (2) a breach of that duty; (3) proximate cause; and (4) personal injury or property loss.

Comparative Negligence: In most states both the plaintiff's and defendant's negligence is considered and damages are awarded accordingly. Therefore, if the plaintiff contributed 50% of the total negligence, s/he would be awarded only half the damages s/he was due.

Res Ipsa Loquitur: Generally, the plaintiff must prove the defendant's negligence. However, in some circumstances courts will presume negligence has occurred, and the defendant must prove s/he was not negligent. Res ipsa loquitur translates from Latin as "The facts speak for themselves." Hence, if a dead mouse is found in a soft drink can, a court may presume the bottler's negligence.

Negligence per se: This type of negligence occurs when a person violates a criminal statute and the violation leads to someone being injured. For instance, if a landlord fails to meet fire code regulations and a tenant is injured in a fire resulting from the code violation, the tenant will be able to prove quite easily that the violation led directly to the injury from which s/he was supposed to be protected by the statute.

Superceding Causation: Sometimes an intervening act breaks the connection between the defendant's negligence and the plaintiff's harm. Hence, an arsonist was not held responsible for the death of a firefighter who fell off his fire truck and under the wheels of a speeding car which was illegally chasing the fire truck. On the other hand, the arsonist would have been held responsible for the firefighter's death if he had been killed while fighting the fire set by the arsonist.

Foreseeability: The issue of proximate cause is always tied to the concept of "reasonable foreseeability". The court will ask, "Should it have been reasonably foreseeable to the defendant that his/her careless action or inaction would lead to the defendant's injury?" However, it is not necessary that the defendant could reasonably foresee the exact nature of the injury that would occur, just that some type of negative outcome was reasonably likely to occur.

Special Relationship: Certain parties are said to have a "special relationship" and those who reasonably place their trust in that special relationship are owed a special/higher duty of care. For instance, anyone riding on any form of public transportation is owed a special duty of care. Likewise, innkeepers owe their overnight guests a special duty of care.

Assignment 15

(1) The classic "foreseeability" case is a 1928 New York case known as Palsgraf v. Long Island Railroad Company. Justice Cardozo ruled that Mrs. Palgraff could not collect damages for her miscarriage after she was struck by a falling scale on a train platform. The scale fell due to an explosion. The explosion was caused by a bag of fireworks which struck the an electrified rail after it was dropped by a man who was attempting to get on a slowly moving train. The running man was being aided by a conductor on the platform and one on the train. Cardozo wote that the miscarriage a few days later was not a reasonably foreseeable outcome of the acts of the railroad employees of helping a man carrying a brown bag package onto a train. Trace the development of foreseeability law by contrasting Palsgraf with the 1980 case of Derdiarian v. Felix Contracting Corp.

(2) A college student was riding a bicycle on a street bordering her campus. She heard someone call her name and turned around to see who had shouted just as she was arriving at a corner. A car driven by another student pulled out in front of her (according to eye witnesses) without stopping at the stop sign. The bicyclist was badly injured and sued the motorist. Outcome?

(3) In North Carolina a woman was talking on a public telephone in a glass phone booth beside a road when an accident occurred. A truck veered off the road to miss the pileup and went right through the telephone booth. Under what theory can she sue the telephone company for her injuries, since the phone booth was too close to the road under North Carolina law?

(4) A woman's college in Boston advertised itself as a safe place to go to college in an urban environment. The school had an elaborate security system which included high fencing around the entire campus, roving guards with guard dogs, multiple lock systems, tight internal security of guests, etc. Nonetheless, a rapist got in, abducted a freshman woman, walked her all around campus before raping her behind some bushes next to the dining hall. Can the woman sue successfully? What would be the best legal theory under which to sue the college? Hill v. Safford Unified School District, a school shooting case, provides another perspective on these issues.

(5) A woman in Chattanooga, Tennessee, was standing at an ATM speaking to an acquaintance. A group of youths pulled up in a car and threatened to kill the woman's young son unless she took $300 out of her ATM and gave it to them. When she turned to speak to her son, one of the men struck her in the face, presumably with a pistol, inflicting significant injuries. The woman sued the bank for not providing her with a safe place from which to transact business. The bank had experienced previous ATM holdups. However, the bank argued that the traditional common law rule is that it could not be held responsible for the actions of third party criminals, especially when the bank could not have reasonably prevented the crime. Outcome? What are the legal theory connections between this case and the previous one?

For additional information on this topic, read parts of "Intentional Torts" in West.net.

Key Concepts

Intentional Tort: An act, committed intentionally or recklessly, which interferes with the personal or business interests of another in a manner not accepted by society. Evil intent is not necessary. Hence, starting a false, negative rumor about a competitor's business when one intended the comment as a joke, may still be an actionable intentional tort known as "business disparagement," a form of defamation. Other intentional torts include assault and battery, false imprisonment, malicious prosecution, intentional infliction of emotional distress, invasion of privacy, unauthorized appropriation, misrepresentation/fraud, trespass and conversion.

Business Torts: These represent another set of intentional torts unique to business -- intentional interference with contractual relations, obtaining trade secrets, and unfair competition, which is comprised of false advertising, "palming off," and infringement of trademarks, patents, and copyrights.

Definitions and Assignment Questions

Assault and Battery: When an employee gets into a physical altercation with a customer, assault and battery have likely taken place. An assault is placing another in immediate apprehension for his or her safety. A battery is an illegal touching of another person.

Question: Can the owner of a nightclub be sued successfully if the club's bouncer physically removes a troublesome drunk from the premises?

Intentional Infliction of Emotional Distress: A battery to the emotions arising from outrageous, intentional conduct that carries a strong likelihood of inflicting unendurable emotional trauma.

Cases: (1) Revlon was sued by a female employee who repeatedly complained of unwanted sexual advances by her supervisor. Revlon took no action to prevent further occurrences. Eventually, the woman suffered hypertension, depression, and high blood pressure, and she attempted suicide. Only then did Revlon fire the male supervisor. Should the woman win her case?

(2) Howard Johnson was sued when one of its restaurant managers began firing people alphabetically until someone would admit to stealing money from the cash register. Debra Agis, the first employee fired, sued. Should she win her lawsuit?

False Imprisonment: When a person is detained for any period of time against his or her will, the tort of false imprisonment has occurred. Relatedly, people sometimes also sue for false arrest or malicious prosecution when someone has them arrested on bogus charges.
Exception: A shopkeeper has the right to detain a shoplifter until the police arrive, provided the shopkeeper acts in a reasonable fashion and has good reason to believe that the person being detained has shoplifted.

"Alleged Shoplifting" cases: There are a group of cases with similar facts. The victims are usually teenagers, often members of minority groups. A shopkeeper thinks they are shoplifting and detains them, sometimes employing force. In two cases they were locked in an office until the police arrived. Perhaps the shopkeeper refuses to let them call their parents and intimidates the youths, but...importantly...never finds evidence of shoplifting.

Question: Given the above cases, why aren't shopkeepers regularly sued for stopping suspected shoplifters? Might the shopkeeper above also be guilty of "malicious prosecution"? Why or why not?

Defamation: An untrue statement which injures another person's reputation and is communicated to a third party either orally (slander) or in writing (libel). The more public the figure, the more difficult it is to defame him/her.

Burnett v. National Enquirer, Inc.: The entertainer, Carol Burnett, was the target of a "gossip column" story in the National Enquirer. The story implied that Burnett was drunk, loud, and obnoxious at an upscale Washington, D.C. restaurant and that she got into an argument with Henry Kissinger. While Burnett had indeed been at the restaurant and had met Dr. Kissinger, the rest of the story was a fabrication. Burnett sued for defamation and was awarded $800,000 in damages. She later settled the suit for a lesser amount and used the money to start an "ethics in journalism" program at the University of Hawaii.

Questions: A man is chewed out by his boss. The boss makes a number of false allegations. The conversation is overheard by a secretary. Defamation/slander? Another man, angry at a major American corporation whose home office is located in his city, writes a "Letter to the Editor." The letter contains false statements about the CEO and the female mayor of the city. On his way to the newspaper to deliver his letter, the man changes his mind. On his way home he is involved in a serious accident and the police find his letter at the scene. Defamation/libel?

Invasion of Privacy: Privacy can be invaded in three ways. First, a person's name or image might be improperly appropriated for commercial advantage, a tort known as unauthorized appropriation. Second, private facts about an individual might be publicly disclosed. And third, someone (the paparazzi?) might intrude into a person's private life.

Assignment: Think of a half-dozen ways that a person's privacy might be invaded, given the previous definition.

Tortious Interference with a Contract: The law allows a remedy when someone intentionally persuades another to break an exisitng contract with a third party.

Texaco v. Pennzoil: Texaco convinced the board of directors of Getty Oil (once owned by the then-holder of Bill Gates' title, "The World's Richest Man," J. Paul Getty) that it should break a contract it had with Pennzoil to sell Getty Oil and its considerable oil reserves to Pennzoil for $110 per share. Texaco offered the Getty board and shareholders $125 per share. The board accepted. Pennzoil sued and was awarded record damages of $7.53 billion in compensatory damages and $3 billion in punitive damages! (Though no one who knows has ever confirmed the figure, it was later reported that Texaco actually settled the matter for $3.2 billion in cash.)

Questions: Why couldn't the Getty board change its mind and accept the much more lucrative offer from Texaco? Wasn't that in the best interests of Getty's shareholders? Also, why wasn't Getty Oil sued?

Trespass and Conversion: Trespass is entering another's property without consent to be there or to remain there. Conversion is the wrongful and unlawful exercise of dominion and control over the property of another.

Cases: (1) A cement plant repeatedly dusts a residential neighborhood in cement dust. Does this constitute trespass?

(2) Is it trespass to stay in a nightclub after you have been asked to leave due to your improper behavior?

(3) Abraham Lincoln once convinced a court that a stable owner had not converted a horse when he rode the plaintiff's stabled horse fifteen miles. Would you expect the same outcome today if a parking lot attendant took your new car out for a fifteen mile spin while you ate dinner at a nice restaurant?

Misrepresentation or Fraud: Mis-stating a material fact upon which a business person knows a customer is likely to rely to his/her detriment.

A woman bought a house for about 10% under the market price. After moving in with her children, the neighbors told her that the house had been the scene of a grisly multiple murder. The real estate agent knew about the murder, but did not tell the woman about it. Did the real estate company defraud the woman? Would it make a difference if the woman had paid, say, 25% below market price?

Unfair Competition: This tort can take numerous forms. Examples include "palming off," selling "look alike" counterfeit products which lack your competitor's quality (and which may breach patents, as well), selling your competitor's product as your own (placing your label on competitor's product), violating anti-trust laws, misrepresenting your product or a competitor's product in your advertising, or confusing the public by naming your product something that sounds like your competitor's product.

A crime is considered a wrong against society and is punishable by society. However, a crime may also give rise to a civil suit for damages brought by an individual who suffers a loss as a result of crime.

For information on criminal law, review appropriate textbooks or other library materials. Alternatively, read the section on criminal law in the 'Lectric Law Library.

Key Terms and Concepts

Actus Reus: a criminal act, an act which breaks the law

Mens Rea: criminal intent, intent to break the law

Felony and Misdemeanor: The most serious crimes are called felonies. They are generally punishable with large fines and long prison terms. Typical felonies include murder, rape, kidnapping, and theft of large sums of money. Lesser crimes are known as misdemeanors, and penalties are substantially lower. In order to convict an accused of either either type of crime, the state must prove both actus reus (a criminal act) and mens rea (criminal intent).

White-collar Crime: A collective term used to describe any crime committed without the use of force and by concealment or guile to obtain money, property, business, or personal advantage.

Consumer Fraud: Advertisements which intentionally mislead consumers who are likely to rely on the advertisement to their detriment.

Computer Crimes: Any use of a computer to carry out illegal activities, such as espionage, planting computer viruses in a competitor's system, embezzlement, and theft of money or data.

Mail and Wire Fraud: Using telephone, fax, e-mail, or "snail mail" to carry out illegal activities.

Assorted Other Crimes: Businesses both commit and are victimized by a variety of other types of illegal behavior. Among these acts are money laundering, larceny (theft), obtaining goods by false pretenses, receiving stolen property, forgery, arson, bankruptcy fraud, insider trading, embezzlement, and bribery.

RICO: The acronym stands for a federal anti-crime statute, Racketeer Influenced and Corrupt Organizations Act. This law, originally aimed at the Mafia and drug cartels but widely used against corrupt business practices, makes it illegal to conduct business by following a pattern of unlawful behavior. An illegal act under RICO is called a "predicate act." If the government can establish that a business took part in two or more (usually many more) "predicate acts" in a ten-year period, RICO has been violated. The law authorizes large fines and long prison terms. RICO also permits the government to seize any property (asset forfeiture) used in the criminal activity or purchased with funds secured through illegal means. RICO also permits civil lawsuits for substantial damages by injured parties. Most states have also passed RICOs.

Rights of Defendants: Our Constitution grants a number of rights to those accused of criminal acts including right to counsel, right to be free of unreasonable search and seizure, right against self-incrimination (but this does not apply to business records), the right to due process, and the right to a fair and "speedy" criminal trial.

Assignment 17

(1) Compare/contrast the following two cases.

(a) The EPA hired a commercial aerial photographer to take pictures of a Dow Chemical plant in Michigan after Dow refused to permit the EPA to make a second series of inspections. The airplane flew in public airspace and took pictures from 12,000 feet. Dow went to court claiming its Fourth Amendment right to be free from unreasonable search and seizure had been violated. The Supreme Court disagreed with Dow. The Court wrote, "The photographs at issue are essentially like those used in map-making. Any person with an airplane and a camera could duplicate them....Congress has vested the EPA with investigatory and enforcement authority....The EPA, as a regulatory and enforcement agency, needs no explicit statutory provisions to employ methods of observation commonly available to the public at large; we hold that the use of aerial photography is within the EPA's statutory authority.

(b) In a tax evasion case, G.M. Leasing Corp. v. United States, the Supreme Court wrote: "The seizure of the books and records of G.M. Leasing involved intrusion into the privacy of its offices. The government does not contend that business premises are not protected by the Fourth Amendment (freedom from unreasonable searches and seizures). Such a proposition could not be defended in light of this Court's clear holdings to the contrary.... The Court, of course, has recognized that a business, by its special nature and voluntary existence, may open itself to intrusions that would not be permissible in a purely private context. In the present case, however, the intrusion into petitioner's privacy was not based on the nature of its business or any regulation of its activities. Rather, it involves nothing more than the normal enforcement of the tax laws, and we find no justification for treating petitioner differently simply because it is a corporation."

(2) Jake Parker, a truck driver, loved to gamble. He decided to stop in Atlantic City on his way to New York City with a load of refrigerators. He attempted to sell three refrigerators for gambling cash. He broke the seal on the cartons and showed the refrigerators to Allen Olden, a kitchen appliance retailer. Olden called the police and Parker was arrested. Parker claimed at his embezzlement trial that he had not actually embezzled anything since the refrigerators had never actually left his truck. Result?

(3) David Ludvigson was hired as CEO of Leopard Enterprises, a company that owned funeral homes and sold "pre-need" funeral contracts. Under Iowa law, 80% of such contracts had to be set aside in a trust. However, when Leopard ran into financial difficulties, Ludvigson began using the trust funds to meet expenses. He was charged with theft stemming from misappropriation of funds. In his defense Ludvigson said that no one had ever been denied service who had pre-paid for a funeral. Is he guilty or innocent of theft?

(4) A man used a car he owned with his wife to solicit a prostitute. The police confiscated the car. The wife sought its return, since she worked four part-time jobs and used the car to go from job to job. Under what theory can the police confiscate the car? Does it matter that the man was not the sole owner of the vehicle? See Bennis v. Michigan.

For information on the topic of warranties, review printed materials found in textbooks, other library sources, or read the "Consumer Rights and Protection" section of the 'Lectric Law Library or review A Businessperson's Guide to Federal Warranty Law.

Key terms and Concepts

Strict Liability represents liability without fault. In other words, while negligence requires a showing that a departure from an established standard of care caused an injury or loss, recovery under strict liability requires no such showing since recovery is not based on fault. One could act as an ordinary, reasonable, prudent person and still be liable if the act caused someone else's injury. Originally confined to "abnormally dangerous" undertakings (such as setting off dynamite), strict liability now applies against makers and sellers of "defective" consumer products which injure the user who is using the product in its intended fashion.

Express Warranty: Oral or written representations concerning the quality, condition, description, or performance of a product.

Basis of the Bargain: An express warranty must come at a time in the purchasing process that the buyer could have relied on it at the time of purchase. The buyer does not have to prove that s/he actually relied on the promise or affirmation, but the seller can avoid liability by proving the buyer specifically did not rely on the warranty.

A seller is responsible for any misrepresentation of a material fact upon which a buyer might reasonably have relied to his/her detriment.

Implied Warranty of Merchantability: This warranty, which applies only to merchants, is imposed by law and requires that all products are reasonably fit for the ordinary purposes for which such goods are used.

Implied Warranty of Fitness for a Particular Purpose: If a seller possesses superior skill or knowledge compared to the buyer, and the buyer reasonably relies on that superior skill or knowledge in making the purchase, but the product fails to meet the stated purpose, this warranty is violated.

Assignment 18

(1) The first recorded strict liability case was a British case, Rylands v. Fletcher. The case arose when a coal company's large reservoir broke through into a working mine, flooding it, and killing miners. Even though the company had not maintained the reservoir in a a negligent fashion, the court ruled it was responsible, because the maintenance of a large body of water near an active mine was a disaster waiting to happen. Likewise, early courts held companies who employed dynamite in their work liable for any injuries or property damage the dynamite might cause, even when it was used correctly. The courts decided that such activities were "abnormally dangerous activities." How did the law get from strict liability for dynamite to holding the maker of a lathe responsible in strict liability when the machine, being used properly, inexplicably "threw" a rapidly spinning piece of wood, striking the user in Greenman v. Yuba Power Products?

(2) The difference between strict liability in tort and implied warranty arising from contract law is clearly spelled out in the case of Styles v. General Motors Corp., a case involving the rollover of a Chevy Suburban. How did the court distinguish between the Styles' claims based on strict liability and their implied warranty of merchantability and negligence claims?

(3) A man kept a pet coyote which he had raised as a foundling pup. A young neighbor girl was injured when she tried to feed the coyote and it bit her. Should the man be held liable in strict liability? Should the girl's parents be held responsible for part of the loss for their failure to keep the girl away from the coyote? Compare the coyote case and Daly v. General Motors Corp.

(4) Compare the pet coyote case to the following case. A man owned a pack of hunting dogs which he let roam freely around his farm. A couple, walking down a dirt road, suddenly found themselves faced with this dog pack. To escape, they jumped over a barbed wire fence. The man was then attacked by a bull who was kept in the barbed wire enclosure by another farmer. Who, if anyone, is liable for the man's injuries?

(5) The Yommers operated a gas station. Their neighbors, the McKenzies, discovered gasoline in their well water. They complained and the Yommers discovered an underground storage tank was leaking. They had it promptly replaced. However, despite considerable filtration, the McKenzies could not use their water for cooking or bathing. They sued the Yommers. Outcome?

For information on consumer rights and protection, review textbook chapters, other library materials, or read the appropriate section of the 'Lectric Law Library. A summary of consumer credit laws can be found in a Website maintained by the U.S. Department of Commerce.

Key Concepts and Statutes

Deceptive Advertising: Under the Federal Trade Commission Act of 1914 the FTC prevents unfair and deceptive advertising, advertising which would mislead most consumers. However, the FTC does not prevent sellers from "puffing the sale," the sales practice of making obvious exaggerations, such as saying, "This is the best doggone car money can buy."

Bait-and-Switch Advertising: Since 1968 the FTC has controlled "bait-and-switch" advertising, that is, advertising a very low price for a particular item that is unavailable when the consumer arrives prepared to buy it. The consumer is then encouraged to buy a more expensive product. The low price is the "bait" used to get the consumer into the store.

Cease and Desist Order: An FTC order telling a company to stop a particular form of advertising.

Corrective Advertising Order: An FTC order that a business spend advertising dollars to correct misinformation contained in a previous advertising campaign.

Multiple Product Order: A cease and desist order issued by the FTC against advertising for all of a business' products.

Truth-In-Lending Act: Requires sellers-on-credit and lenders to disclose clearly and conspicuously all of the terms of the arrangement plus the full cost of time payments so that a consumer can shop around for the best financing deal. Also under TILA, a consumer who loses a credit card is responsible only for the first fifty dollars ($50) worth of charges credited to the card by an unauthorized user of the card.

Equal Credit Opportunity Act: The ECOA prohibits the denial of credit based solely on the race, religion, gender, age, national origin, or marital status of the borrower.

Fair Credit Reporting Act: Passed by Congress in 1970 to protect consumers from inaccurate credit reporting, the FCRA requires credit reporting agencies to inform consumers of their negative credit status and to permit them to see a copy of their report, to challenge its contents, and to investigate inaccuracies.

Fair Debt Collection Practices Act: Passed by Congress in 1977 to stop abusive debt collection practices, the act restricts the time, place, and manner of debt collection activities, including harassing or intimidating threats.

Consumer Product Safety Act: Created the Consumer Product Safety Commission which establishes national standards for safety of products and can force unsafe products off the market. CPSC standards can be used as the basis for lawsuits (if failure to meet the standards lead to injury).

Assignment 19

(1) Sears Roebuck and Co. was sued by a consumer who alleged that it was employing "bait-and-switch" sales tactics. The consumer alleged that she went to the store to buy a washing machine for $99 as advertised in the newspaper, but discovered when she got to the store that the $99 machine lacked all modern features and was made quite shoddily. It was a true "ugly duckling" compared to the beautiful machines sitting on the showroom floor naxt to it. The salesperson tried to sell the consumer a machine costing $299. Was Sears guilty of "bait-and-switch"?

(2) Equifax, a collection agency, sent Donna Russell a notice about one of her debts. It said in the letter that if she paid the debt within ten days, the agency would not report her as delinquent to the credit rating bureau. However, on the back of the letter were the terms of the Fair Debt Collection Practices Act which said she had thirty days to either pay or dispute her bill. Can she successfully sue Equifax for violation of the FDCPA? What would be the basis of her argument?

(3) Compare/contrast these two cases.

(a) In the first case the Jensens traded in their old car for a new Ford. They were given $800 for their old car, but the dealer later realized the used car was actually worth $1,400. Unbeknownst to the Jensens, he rewrote their contract raisng the value of the trade-in, but also increasing the cost of the new car so the monthly payments came out nearly the same. Curious why their payments were slightly different, the Jensens asked for a copy of the contract and realized it was not the one they had signed. Did the Ford dealership violate TILA by not disclosing the terms of the second contract?

(b) The Semars took out a loan offering the bank a second mortgage on their home as collateral. Under TILA when a home is used as collateral, the contract must indicate that the borrower has three days to rescind the deal. The Semars' contract did not contain rescission language. Two years later they discovered the bank's oversight and insisted that they could now rescind the contract because of the bank's technical breach of TILA. Outcome?

(4) The Shelton's 14-year-old son, Rusty, was injured when the frame of his his mountain bike collapsed when Rusty struck a boulder on a turn along a mountain bike racing path. The Shelton's discovered that the bike they bought for Rusty did not meet the CPSC standards for mountain bikes, since it lacked appropriate reflective striping and the seat was not an approved style. Can the Shelton's sue successfully? What grounds might they use to support their suit?

Note: For general assistance on the topic of environmental law consult the 'Lectric Law Library or appropriate printed materials.

Key Concepts and Statutes

Common Law Restrictions: Even without state and federal regulation, businesses can be sued under at least three common law theories: nuisance (unreasonable interference with reasonable enjoyment of property), negligence (failure to meet duty imposed by society, sometimes called "toxic torts"), and strict liability.

National Environmental Policy Act: NEPA requires that the environment become a consideration in all governmental decisionmaking. NEPA also created the Environmental Protection Agency by combining the scattered efforts of fifteen federal agencies.

Environmental Impact Statement: An EIS is required under NEPA anytime a "major federal action significantly affects the natural environment." The EIS concept represents the "teeth" of NEPA, because such statements are time-and-resource-consuming and they provide the public (including opponents of the proposed action) with a wealth of information (including permanent environmental damage which will be caused, alternatives which could be pursued, species which will be harmed, etc.) at government expense. See Environmental Impact Statement Process.

Clean Air Act: A series of federal laws which set national clean air standards, known as NAAQS (National Ambient Air Quality Standards).

SIPs and FIPs: Each state is required to develop a SIP, a State Implementation Plan, to demonstrate how it plans to comply with the clean air standards (NAAQS). If a state fails to develop and submit an acceptable SIP, the EPA will develop a FIP, a Federal Implementation Plan, for the state.

"Bubble Policy": This policy, which can apply to a single pollution source, like a chemical plant, or to an entire region, like Jefferson County (Louisville), permits an increase in one type of pollution "under the bubble" as long as the level of that same pollutant is dropping by an even larger amount elsewhere "under the bubble".

Clean Water Act: A series of federal laws which set national clean water standards, known as NPDES (National Pollution Discharge Elimination System).

"Point Source": Any source of water pollution, ranging from a discharge pipe pouring waste into a river to a cattle feed lot which causes fecal matter and bacteria to run into streams following rainfall.

Safe Drinking Water Act: Requires the EPA to set maximum permissible levels of pollutants in public water systems.

Ocean Dumping Act and Oil Pollution Act: Prohibits dumping or spilling of pollutants into the ocean or navigable rivers and requires those who dump or spill to clean up the mess and pay large fines.

Resource Conservation and Recovery Act: Under RCRA Congress authorized the EPA to establish regulations to monitor and control the disposal of hazardous waste.

CERCLA and the Superfund: The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)is designed to require the party who improperly disposed of hazardous waste, or who transported the waste to the site, or the past or current landowner to remove toxic waste from the site and from the affected soil. Banks and other lenders (title holders) can only be held responsible if they actually participate in the management and operational affairs of the borrower. If no one can be found to clean up the site, the Superfund is supposed to pay for the cleanup.

Endangered Species Act: This controversial act has been interpreted to require the protection of all endangered species and their habitats. Hence, a small fish known as the snail darter could stop the building of a dam in Tennessee, the California coastal thrush could restrict development of seaside lots in San Diego, and the spotted owl and red-cockaded woodpecker could limit timbering operations in the Pacific northwest. See Babbitt v. Sweet Home Chapter of Communities for a Great Oregon.

Permit System: Anyone who wishes to pollute the environment must apply for a permit to pollute. S/he may be granted a pollution permit, but a limit will be placed on the amount and type of pollution permitted.

Pollution Credits and Allowances: A business which releases fewer pollutants than permitted, can sell the excess pollution allowance to a business which needs to be able to pollute more than permitted levels. Pollution credits and allowances are traded like any other commodity on the Chicago Board of Trade.

State Laws: In addition to the federal environmental statutes, every state has a similar set of laws and regulations controlling environmental degradation and pollution.

Assignment 20

(1) Del Webb is the developer of the Sun City retirement communities around the country. Webb's 20,000 acre Arizona community was located just over the hill from Spur Industries' large (20,000 - 30,000 head) cattle feedlot, a pre-existing farm operation. As Webb expanded Sun City, it eventually came within 500 feet of the feedlot, which was also expanding in Sun City's direction. The odor and flies from the feedlot made it impossible for Webb to sell its homes. What legal theory might Webb's attorneys use to attempt to force the feedlot operation to move away from Sun City? What will the feedlot's attorneys argue? Outcome? Read paragraphs nine and ten under the topic, "Private Nuisance," for a discussion of Spur Industries, Inc. v. Del E. Webb Development Co..

(2) Attique Ahmad owned a convenience store. A leak in the top of his underground fuel tank allowed water to seep into the tank, so Ahmad pumped the gas-and-water mixture out of the tank and into the city's storm drain and sewer system. The storm drain flowed into a creek. The gasoline killed fish, and the city had to clean the water. The gasoline which flowed into the sewer system forced the city to evacuate the sewage treatment plant and two nearby schools. The federal government charged Ahmad with knowingly discharging a pollutant without a permit, a felony. Is Ahmad a felon?

(3) The prevailing westerly wind carries smoke and airborne pollutants from Ohio across the Ohio River into West Virginia. Since West Virginia has to meet the new, higher EPA clean air standards as does Ohio, can West Virginia successfully sue Ohio for the additional cost of cleaning up the air in the Mountain State? Can all eastern states sue all states west of them for contributing to the eastern air pollution problem?

(4) The Sierra Club sued the FAA after it allowed two airlines which fly into Jackson Hole, Wyoming, to switch from propeller-driven airplanes to jets. The airport is the only one in the country located in a national park, Grand Teton. The Sierra Club insisted that before the EPA granted approval it should have filed an EIS (Environmental Impact Statement). What were the likely issues and the consequent outcome of the case? See Sierra Club v. United States Department of Transportation, 753 F.2d 120 (D.C. Cir. 1985).

(5) Grand Auto Parts Stores bought back used automotive batteries from customers who bought new batteries. Grand Auto Parts would then drive a screwdriver through the used batteries and sell them to Morris Kirk & Sons, who operated a plant which recycled lead from the batteries. The EPA found thousands of crushed battery casings on Kirk's property in violation of federal law and EPA regulations. The EPA sought to hold Grand Auto Parts partially responsible for the cleanup costs under CERCLA. Outcome? See Catellus Development Corp. v. United States.

For general information on employment and labor law, review appropriate printed materials or the employment law section of the Hieros Gamos Legal Directories.

Key Words and Terms

At-Will Employment: Most employees are "at-will" employees, meaning they can be fired at any time for any reason.

Exceptions to at-will employment: There are exceptions to at-will employment status. For instance, employees with contracts, union employees, and whistleblowers all have some (albeit limited) job protection.

Express Employment Contract: Some employees have a written or oral contract for a specific period of time. These employees can only be fired "for cause" during the life of the contract.

Implied Employment Contract: Implied employment contracts can be created via words, actions, course of dealing, and custom and usage. For instance, some employees have successfully established in court that wording in company documents, such as employee handbooks or corporate policies, established a contractual relationship between the employer and employee. One court ruled that policy language which referred to "probationary" and "permanent" employees created an implied contract with permanent employees that they would only be released for cause.

Implied Covenant of Good Faith and Fair Dealing: The newest exception to employment-at-will is the "covenant of good faith and fair dealing." This implied covenant has been used by a few courts to create a contractual relationship based on fairness. Hence, when a woman returned to work from an extended illness and was not permitted to return to her old job but rather was assigned a low-paying, part-time job, the court held that she had effectively been fired for taking her sick leave, a violation of the implied fairness covenant.

Public Policy Torts: Protection offered by the courts to employees who refuse to break the law or who carry out the law despite contrary action requested or demanded by the employer. Hence, a man who refused to take part in a price-fixing scheme and was fired got his job back, plus back pay and damages, since the public wants law-abiding employees protected from wrongful discharge. If public policy were otherwise, employees might feel they had no choice but to go along with illegal schemes.

Whistleblower's Protection Acts: The federal government and the states have passed laws which make it a crime to fire an employee who discloses to the public or to government agencies illegal behavior by the employer. Following the business scandals of the past few years, the federal Whistleblower Protection Act was amended by the Sarbanes-Oxley Act. This law, passed in the fall of 2002, protects whistleblowers who work for PUBLICLY TRADED companies. Sarbanes-Oxley...

1) Makes it illegal to "discharge, demote, suspend, threaten, harass, or in any manner discriminate against" a whistleblower;
2) Establishes criminal penalties of up to ten (10) years in jail for executives who retaliate against whistleblowers;
3) Requires the Audit Committee of the Board of Directors of each publicly traded company to establish procedures for hearing whistleblower complaints;
4) Allows the Secretary of Labor to order a company to rehire a terminated whistleblower without a court hearing;
5) Gives a whistleblower a right to a jury trial rather than having to go through months or even years of cumbersome administrative hearings.

Employee Pacts: Arrangements generally upheld by the courts under which both the employer and employee agree at the time of employment that all disputes between them will be decided by binding arbitration. To date, the only times courts have not upheld such pacts are those instances when the arbitration setup is "rigged" in favor of the employer, since arbitration is supposed to employ a neutral party to resolve differences between parties.

Right of Privacy: In the employment arena, this "right" is quite limited. For instance, an employer must not publicly disclose a private fact about an employee without the employee's permission. Even here, though, there is an emerging exception: If the employee is reasonably considered dangerous to himself or others, the employer may have a duty to warn others. Other privacy issues surround privacy of telephone conversations and e-mail, honesty testing, drug testing, on-the-job surveillance, and off-the-job activities, like dating co-workers or competitors or taking part in dangerous recreational activities. Employees lose far more of these cases than they win.

Assignment 21

(1) An employee of Pillsbury sent an e-mail to his boss on the company's internal e-mail system in which he threatened to "kill the backstabbing @#$%&%$#!" in the sales department. Two women working for Toyota sent e-mails to each other disparaging their mutual boss. In both cases the e-mails were intercepted and the workers were fired for insubordination. All employees believed the company e-mail was private, similar to sending a letter. In fact, Pillsbury told its employees that its e-mail system was confidential. Are e-mails confidential? Can employees be fired for what they write and send electronically on the company network? Read Smyth v. Pillsbury Co.(1996).

(2) Joan Leikvold was hired as the Operating Room Supervisor for Valley View Community Hospital. After six years in that position, she was promoted to Director of Nursing. However, unhappy in her new administrative role, she asked the hospital's director, Carl Nusbaum, to permit her to return to her previous position. He advised Leikvold that it was not advisable to go from a managerial position to a subordinate position. Nusbaum fired Leikvold from her director position later that year. No reasons were given. Leikvold claimed that she could only be released for cause, because the employee handbook distinguished between probationary employees and other employees in terms of receiving notice and pay after notice is given. Also, the handbook listed certain egregious wrongs for which any employee could be immediately terminated without notice, but none of the behaviors appeared to apply to Leikvold. How could Leikvold make her case? What would be the hospital's likely defense?

(3) The City of Los Angeles requires its police officers to pass a polygraph test before they can be considered for promotion. If an officer refuses to take the test, s/he will simply not be considered for promotion. City policy forbids any negative inferences due to such refusal. If the officers sued the city, under what theory might they win? If they lost, under what theory might they lose?

(4) Robert Adams was a truck driver for George W. Cochran & Co. Adams consistently refused to drive any truck which lacked a current inspection sticker. Cochran fired Adams, claiming he was an at-will employee. Adams sued for his job, back pay, plus $200,000 in assorted damages. Under what legal theory or theories might Adams successfully sue Cochran?

(5) Kevin Gardner worked for an armored car company. Company policy prohibited guards from leaving their trucks unattended. Gardner observed a man threatening a woman with a knife and rushed to her aid. While the press regarded Gardner as a hero, the company only saw a violation of policy for which it fired him. He sued to get his job back. If he were to win his case, on what ground would he most likely be successful?

For additional information on employment discrimination law, read appropriate printed materials or Cornell's Employment Discrimination Law Materials.

Statutes of Interest:

Civil Rights Acts: A series of acts passed and amended by Congress since the Civil War intended to assure similar treatment for all citizens, including citizens working for American companies overseas, regardless of gender, race, ethnicity, and religion.

Americans with Disabilities Act: The ADA expanded the Rehabilitation Act of 1973 making it unlawful to discriminate against people with handicaps/disabilities. The Act defines a person as disabled if s/he has an impairment of a "major life activity."

Equal Pay Act: This law amended the Fair Labor Standards Act to prohibit gender discrimination in wages of employees engaged in interstate commerce. The Act permits differential pay based on seniority, merit, or any other reasonable factor other than gender.

Age Discrimination in Employment Act: The ADEA prohibits discrimination in the workplace based on age and age stereotypes. Applies to people ages 40-70.

Executive Order 11246 (Affirmative Action): Requires all federal contractors to file an affirmative action plan with the Department of Labor. It also bars contractors from discriminating on the basis of race, creed, color, national origin, or gender.

State Statutes: Every state has a set of anti-discrimination statutes, some of which are more stringent than the federal standards. Each state has some type of Human Rights Commission to write implementation regulations and to enforce compliance.

Key Concepts:

Disparate Treatment: Intentionally treating one group of employees or job applicants better than another group based on a characteristic shared by members of the disfavored group, such as race or gender.

Bona Fide Occupational Qualification (BFOQ): A type of defense to a claim of disparate treatment. In effect, an employer is saying, "I am discriminating because only people of a certain type can do a particular type of work." For instance, a Baptist summer camp was permitted to hire only Baptists as camp counselors.

Disparate Impact: Policy which appears fair on its face but which has a negative impact on a group sharing a similar characteristic. Hence, if an employer required all management trainees to work on Saturdays and Sundays, the religious rights of some employees might be violated.

Four-fifths Rule: A means courts use to determine if discrimination has occurred in the hiring process. The courts ask, for instance, "Are African-Americans in the labor pool hired at a rate equal to (at least) four-fifths the rate at which white applicants are hired? If the answer is "no," the court makes a presumption (which the employer has the opportunity to rebut) that the company's hiring practices have been discriminatory.

Sex Discrimination: Treating similar employees differently based on gender-based stereotypes, such as assuming a police officer has to be at least six feet tall and weigh 180 pounds in order to be effective, or assuming that men lack the nurturing and caring skills to be good nurses.

Comparable Worth: The concept that two jobs, although quite different -- have similar value to an employer, and therefore, should be paid at roughly equal levels. A few courts have adopted this concept to rectify pay inequities based on gender.

Quid Pro Quo Sexual Harassment: Situation in which a supervisor bargains sexual conduct for favorable treatment of supervisee.

Hostile Environment Sexual Harassment: Pervasively discriminatory work environment based on gender of the victim which significantly impacts the terms or conditions of employment. Two 1998 Supreme Court decisions have minimized the previous importance of distinguishing between types of sexual harassment.

Defense to Sexual Harassment Claim: If a harassed employee has suffered what the Supreme Court termed a "tangible employment detriment" (such as a demotion or discharge, for instance), an employer can only mitigate damages by demonstrating that it made a good faith attempt to prevent such activities. However, an employer can avoid liability if no "tangible employment detriment" has occurred and the employer has in place a credible anti-sexual harassment policy and procedure which the harassed employee chose not to use.

Reasonable Accommodation: Expectation that employers will make reasonable attempts to accommodate the disabled, such as making doors, desks, bathrooms, and elevators handicapped accessible, or to accommodate the religious practices of employees.

Undue Hardship: An employer does not have to go to extremes to accommodate an employee, if the employer can prove it would represent an "undue hardship" to make the accommodation.

Assignment 21

(1) A woman quit her job after her boss repeatedly told off-color jokes, made sexually-oriented comments, and demeaned her because of her gender. The final straw took place when he suggested she had slept with a client in order to land an account. Although she complained about her boss' conduct, no corrective action was taken by her employer. Can she sue successfully even though she suffered no psychological or professional damage? See Harris v. Forklift Systems and later Supreme Court decisions.

(2) After eight pregnant female employees were discovered to have levels of lead in their bloodstreams which exceeded OSHA standards, an automobile battery maker established a policy that all women capable of childbearing would be barred from jobs building batteries (the highest paying blue-collar jobs in the factory) due to potential fetal damage. Some women sued for the right to continue to manufacture batteries and be exposed to lead. Under what law(s) did they sue? What was the outcome? Why? See Automobile Workers v. Johnson Control, Inc..

(3) A California social services administrator by the name of Hersante was demoted. He was 52 years old and claimed he was a victim of age discrimination. When the court talks about "burden shifting," what does it mean? What does it take to win a case based on a claim of discrimination? In Hersante's case, would it have mattered if he had been replaced by someone 45 years old? 35 years old? 25 years old? See Hersante v. Department of Social Services.

(4) A middle-aged man was fired from his job with a vending machine company. After he was replaced by a younger man, he claimed age discrimination under the ADEA. What does it take to prove such a claim in court? Would it matter if a 55-year-old were replaced by a 50-year-old? a 40-year-old? a 35-year-old? See O'Connor v. Consolidated Coin Caterers Corporation.

(5) In Boyd v. Harding Academy of Memphis a pregnant, single pre-school teacher in a private Christian pre-school refused to marry the father of her child-to-be. Therefore, she was fired due to engaging in sexual conduct outside of marriage, a violation of the school's principles. Can she successfully sue for pregnancy discrimination or for gender-based discrimination? Why or why not?

In the business world, wealth includes "intellectual property," the unique product of someone's mind.

For additional information on cyberspace law, read appropriate printed materials or review Cyberspace Law in Jurist, a product of the University of Pittsburgh College of Law.

Key Words and Terms

Trademarks, Service Marks, and Trade Names: Any distinctive name, motto, mark, insignia or other device that a business uses in connection with a product or service. The Lanham Trademark Act of 1946 provides for protection for all distinctive, registered marks and names. No other party can use a similar name or mark for any commercial purpose. The idea is to avoid consumer confusion; hence, Koka Kola would be too close to the "real thing" to escape a successful trade name suit.

Trade Dress: The overall appearance and image projected by a product is known as its "trade dress." Hence, the Wendy's restaurant chain sued a rival chain which patterned its decor after Wendy's, right down to the color scheme and lighting. Likewise, Abercrombie & Fitch is suing American Eagle for "trade dress" infringement. However, Kendall-Jackson Winery was unsuccessful in its suit against E & J Gallo's look-alike bottles of "Turning Leaf" wine. The court said a grape leaf design was "generic" to the wine industry and beyond trademark protection.

Patent: A patent represents government protection given to a unique invention or design. Inventions are protected for twenty years, designs for fourteen years.

Copyright: Any type of literary or artistic production is protected by federal copyright law. Since 1978, works are the sole property of the author or creator for as long as the person lives, plus fifty years. Rights held by publishing houses are good for seventy-five years from the date of publication or one hundred years from the date of creation, whichever is longer. Forms of protected expression include writing, artwork, software, videos and movies, architectural plans, music, and similar works.

Trade Secrets: Trade secrets, which can be anything that makes a company unique (research and development information, marketing plans, production techniques), are protected under federal law and the laws of many states. Theft is both a criminal and civil wrong. Employees are often required to sign binding nondisclosure agreements before commencing employment.

Cyberlaw: The rapidly emerging area of the law dealing with cyberspace, the Internet, and electronic commerce. All patent, trademark, and copyright laws apply in cyberspace.

Trademark Dilution: Since 1995 it has been against the law for anyone to register a company's protected name or mark as a domain name on the Internet. Hence, a pornographic site could not use the name "mmmgood.com", since this slogan has been used for decades by Campbell Soup.

"Cybersquatting": The registration of an Internet domain name of a well-known company or product name by someone whose sole purpose in registering the domain name is to sell it at a high price to the natural user. For instance, if a private citizen had beaten Ford, General Motors, and Chrysler to the punch and registered "Ford.com," "GM.com," and "Chrysler.com" before the "Big Three" did, that person would be "cybersquatting" for the purpose of selling the rights to the auto makers. The courts have taken a dim view on "cybersquatting," often holding that the practice infringes on the rights of the businesses, diluting the mark's distinctiveness.

Infringement: Whenever an idea, product, or service is copied or an idea "stolen" without the creator's permission or payment for use, actionable infringemnt has occurred. One exception: under the "fair use doctrine" small portions of copyrighted material may be used in teaching, research, news reporting, and similar uses.

Assignment 23

(1) If you are an avid golfer, you know that a Texas company called "Tour 18" has developed some golf courses which feature replicas of eighteen of the most famous holes in golf. One of the holes they copied was the famous eighteenth hole at Harbor Town on Hilton Head Island. The replica hole even features a lighthouse similar to the one at the eighteenth green at Harbor Town. Tour 18 used the famous lighthouse in its advertising. Several of the famous courses sued Tour 18. On what specific ground(s) might they sue? Can they win? What would be an appropriate remedy?

(2) Jim Henson Productions, creators of the Muppets, created a new pig character, Spa'am, a high priest of the wild boars who worship Miss Piggy. Spa'am was a character in the movie, Muppet Treasure Island. Henson also sold Spa'am stuffed animals. Hormel Foods, makers of Spam, sued for trademark infringement. Is it? Read the judge's decision in Hormel Foods v. Jim Henson Productions.

(3) Was it infringement when Roberts Motors created a Ferrari look-alike car, since the Ferrari name -- but not their design -- is registered? What about when Hogg Wyld came out with a line of jeans for the not-so-svelte called Lardache? Or when someone put Leslie Nielson's head on Demi Moore's famous pregnant nude magazine cover picture?

(4) Some days it seems as if just about everything is copyrighted, patented, or otherwise protected. For instance, Excedrin PM has the sole right to use light blue in its packaging. NBC trademarked the musical notes G, E, and C, which happen to be the N...B...C chimes. The double "eyes" of Hooters is a trademark. Even the roar of the MGM lion is protected. Now Harley-Davidson wants to trademark the sound of its motorcycles. They claim "nothing sounds like a Harley." What are the pros and cons of allowing such protection?

(5) UCLA maintains the Online Institute for Cyberspace Law and Policy. Part of the site includes a synopsis of the "top cyberlaw cases of the year," although the case reports are no longer kept up to date. Review these cases. What trends do you detect?