I. THE RULE DOESN’T MATTERWhat this means. When we look at the world from cloud view, after the decision in a case if the resulting action is the same then the rule doesn’t matter.

II. DAMAGES (A KICKS B, A PAYS)

A. Actual Damages (Tort Law)You pay for what you cause. This is the rule in torts!!! Other forms result in under or over deterrence.

1. Vosburg v. Putney – Pussy KneeLook to Medical bills to find cost, including pain and suffering. You pay for what you cause (take your victim as you find him)

B. Expectation (K Law)

1. AverageTake the most expensive, and the least expensive, and come up with a standard number. Further, if everyone received average payment, and the actual cost was less than the average, you only receive actual damage, and the overage gets rolled over into an insurance policy for those whose actual is higher than the average to be compensated the difference. Does not satisfy compesation.

2. Actual or Average (Hadley Rule)Hadley v. Baxendale

this is for contracts. It states that between actual and average damages, Π gets which ever is less. In torts, even with an “eggshell Π” the rule is actual damages. We are not merely compensating economic loss, we are also compensating personal damage. Hopefully the larger damage will also have a deterring affect (don’t sprey the pos computer, don’t kick, etc.)

o (which ever is less) If you harm someone beyond average harm – they still only receive average payment. If you harm someone below the average they get actual payment. A “thin skull” or “eggshell” plaintiff does not receive proper compensation.

o PROBLEM – This is under-deterring b/c

C. Disgorgement/Restitution (Kinko’s, Bagel Thruster, Mohr v. Williams, NBC) - MARS

Recovery is not equal to ’s damages, but instead are equal to ’s gain.Not usually allowed, except in emergency situationsMartian - on Mars, they might instead of having an A pays B rule, have an A pays according to the gain of her harm plus a fine. Kind of like a disgorgement and then some rule.

1. Emergency = Recoverya. Fire extinguisher cases – its an emergency, so recovery

I see your car is on fire, and use my fire extinguisher to put it out. Then I ask you for the $50 I payed for the extinguisher. Whether we allow recovery or not here really does not matter, b/c in either situation we are confident that you are going to put out the fire anyway. We want people to keep fire extinguishers in their cars.

2. Info Forcing, No Restitutiona. Kinko’s – don’t get the bonus as damages

Kinko’s and SU4: here there are an exhaustive list of hypos and sub hypos. The general idea is that the repair shop should not have excepted Kinko’s offer (which can be boiled down to a bribe) – and that according to the disgorgement rule, they should pay whatever benefit they received from Kinko’s to SU4. Info forcing comes into play because the whole thing would have neem avoided if SU4 simply explained to the repair shop how important the pos computer was to them, and how much business they would loose without it. This would allow the repair shop to adequately gauge SU4’s loss, and be able to make a more educated assessment as to which order to fix things. There was also the tangential hypo of a traveling repair man bursting into su4, and fixing the pos computer in 20 minutes, and then asking for payment. The rule must be that there is no recovery – otherwise people would go around fixing things, uninvited – this is the bagel thrusting uninvited improvement idea at work.

3. Thrust = No Recoverya. Bagel Thruster – don’t get money from unwanted thrusting

o Baker leaves bagels on counter, clerk finds them, café resells them: no recovery. We don’t want to encourage thrusting, b/c people will thrust goods and then come back later to recover

o Baker leaves delivery at wrong door – Recovery only if bagels were misplaced under the “watchful eye” of the café owner. Otherwise, no recovery.

4. Mitigate Damages, Prevent Over-recoverya. Mohr – Dr. gave benefit to , even though there was a battery, only paid harm minus benefit. Cross Recovery: you are both benefited and burdened. Doctor saves one ear, but hurts another, you receive the benefit on balance.After the woman was anestitised, the surgeon decided to operate on her other ear, and post-op, she decided to sue for assault. This is similar to the traveling repairman kinko’s example, in that the improvement to her ear was uninvited (caveot: the ct. in the last paragraph said that the benefit she receives should mitigate the damages, and in this way it can be construed

as a disgorgement issue – if it didn’t mitigate, then the Π would be benefiting from the surgery, and recovering for it as an assault claim at the same time see cross claims under damages above).

5. Choose To Receive Benefit = Recovery (Market Encouragement)

a. NBC/Quantum Meruit - NBC can be thought of in this light, we want the lawyer’s to adequately be compensated for their efforts regardless of whether an individual signs on or not (as long as they have above 80%). NBC can also be thought of as a disgorgement issue – we don’t want you to have to pay legal fees, if you did not sign on to the lawsuit. That would allow the lawyers to collect for a benefit that they did not provide.

D. General Average Contribution (Admiralty Law) – Mouse’s Case

1. Piano On Boat HypoRule for non-negligent causer. Admeralty rule. When one person looses property to benefit many who might have well equally have lost property, they divide the loss among the group. (harpsichord on the boat case) Pro-rata compensation from other parties. Pay according to the percentage of cargo they had the ship.

2. Ploof v. Putnam If the ferryman took on extra people to make more money, the he may be liable. The ferryman was unreasonable. If there is no surcharge, and the only fault is the storm, then everyone may be responsible. Pay according to your value.

E. Others

1. Capital Punishment

2. Proportional to IntentYou pay according to what you intend to do

F. Policy (and some Info Forcing) – HudsonWe want to put the responsibility on the people with the information to divulge at the beginning, so as to avoid loss in the long run. Our rules will work out to facilitate this end.

a. Hudson v. Craft - the illegal boxing match case, as modified through levmorian extraction to fit his purposes (touring pro, and starry-eyed kid, carnival, etc) Majority rule – winner pays, in an attempt to discourage the

touring pro from continuing his scam. High deterrence value.

Minority rule – looser does not collect damages, obviously when you enter into a boxing match you know that someone will get hurt, in hopes that this will discourage the kid (although, no one goes into a fight thinking that they will loose, this is why the majority rule is more deterring).

Information forcing, because these cases rarely go to court, b/c the touring pro, who makes his living through illegal activity – therefore we want the rule that deters the pro, who is harder to catch.

III. NEGLIGENCE V. STRICT LIABILITY

A. The Rule Doesn’t MatterIn almost all of the cases not on the Ryland’s list, the rule doesn’t matter (see the article in foundations pp.21 on coase), but the default rule in the US, is negligence via carrol towing/hand thoerm. It turns out that in most cases (absent recurring miss) this is the error minimizing rule. When negligence does not provide an adequate solution to the issues that arise, we turn to the Rylands/ Strict liability list. This list is made up of cases that, when you apply the negligence formula, do not come out with a favorable result. In order to bring about justice, we hold these few cases to the strict liability standard, in order to circumvent the shortcomings of a negligence based system.

a. Chart - $260 Dock Vincent (Even

Reasonable Pays) - SLCourvosier (Only Unreasonable Pays) - Neg

$100 boat NOT Tie to dock NOT Tie to dock$300 boat Tie it to dock!!!

Pay 260, Net 40Tie it to dock!!!Pay 0

SO IN TERMS OF ENCOURAGING PEOPLE TO TIE OR NOT TO TIE: RULE DOESN’T MATTER

B. Vincent & CourvosierCourvosier – no recovery for cop when guy shot him in self-defense. NEGLIGENCE (Only wrongful causer pays)Vincent – Boat tied on to dock against dock-owner’s will and damaged it. SL/WIN-WIN (Causer pays)

C. NegligenceThis is our default rule. The 4 choices, increase in responsibility as you progress downward. 1) Do Not Pay 2) Pay only When Unreasonable 3) General Average Contribution 4) Causer Pays All

D. Coase Theorem – IT TAKES TWO TO TORTIT TAKES TWO TO TORT

1. Bargain Around the RuleParties will often bargain around any rule, in order to get the best situation.

A ruling for either side will not result in a change in behavior because if they can bargain then either party can pay the other to do what is the cheapest option for both.In a crowded world – it takes two to tort. Giving a right to one party denies the right to the other party. (If by having cows, I damage your grass – then must decide, should I have the right to cows, or should you have the right to grass).

a. Stone v. Bolton – Cricket Case“Legislative Metabargain” – Woman gets hit by wayward cricket ball, and DOESN’T Collect, b/c court found the crickt guys only had a duty to prevent reasonably foreseeable consequences. IT TAKES TWO – legislature knew about field, knew about houses, knew about road. They put it all there. Were they wrong for playing, or was she wrong for choosing that house?b. Golf v. Home Depot HYPOParties can communicate and come up with the most cost efficient solution. You can bargain for the options. The screen is the cheapest option, so whoever losses will pay for it. So the same result, just who paid for it is different. BUT PARTIES WILL BEHAVE NO MATTER THE RULE

2. Info-ForcingWe want parties to communicate. Sometime this includes info-forcing. (See later for full list).

a. Madsen v. East Jordan Irrigation – Mink RanchersMink ranchers sue blasters. Normally SL for blasters. BUT, here the ranchers had special info about how to prevent the minks from eating their babies. The burden falls on the mink rancher, b/c that is most efficient.

3. Difficulties w/ CoaseMultiple Parties (creates holdout problems for bargains)Communication Problems (So we force info)Offer-Asking Problem: occurs when a party will pay one price for a right and would sell it only at a different price – wealth, or initial endowments affects the outcome of any bargaining

a. Endowment/Wealth Effects {This was discussed much later in the course}We want to allow people to bargain to find the best solution, but might have some rules to prevent strategic behavior. How much you value something depends on how much money you have. If the court makes you richer, you will want to spend more money on the view. The legal rule is itself a value, because it makes the value of the view increase or decrease.

E. Rylands List/Strict Liability

1. CasesVincent v. Lake Erie, Brown v. Kendel, ferryman Hypo, Army takings, rylands v. fletcher, common carrier freight, vicarious liability hypos, old English fires, blasters, innkeeper, Kingston case

2. ListWin-Win: A party wants to lose, in order to win in the long run

Vincent - this is our landmark win win case. Remember again that the reason that it is on the Rylands list is because the rule does in fact matter. We want the dock owners to build docs, and therefore we want them to collect – if they didn’t collect, then there would be no place for the boat people to dock Brown v. Kendall - This is interesting, because it can be argued 2 ways. In the actual case, the man intervening injures the dog owner, and we ssay that he is strictly NOT liable (win win, b/c the dog owner wants to encourage people to help to stop the 2 dogs from fighting so the man was doing him a favor), <<or>> if you go by levmore’s hypothetical version, where the intervening man gets injured himself, the dog owners would be held strictly liable because again we would want to encourage people from stopping dog fights. Government Takings - When the government in a time of war seizes (takes) crops from a farmer, it is win win. The troops need food, and b/c of the necessity, they will pay exceptionally well. The troops are happy, and the farmer is happy. Win win.

o (caveat) the government will not pay for troops. The government pays for food (and airplains) because the government wants you to continue growing food (making airplanes). If they simply took, and did not compensate, you would not continue producing. Even if the govt takes your children w/o compensating society, society will not stop having babies.

Straying Cattle – cattle-owner wants neighbor to not put up a fence, neighbor wants to be compensated.

Evidentiary ProblemsThe act itself conceals the evidence needed to prove negligence, hold the causers strictly liable. Otherwise, the wrongdoer would never pay.

Olde Fires – The fire engulfs itself and there is not evidence about how they started. Inn Keepers – Pre Vault. If someone’s room gets robbed, there is no way to find out who did it. Only way to prevent it is to give the inn keeper the incentive to have better security. SBPS

Blasters – (except Madsen/Info Forcing) – Blasters have the control and difficult to gather evidence to discover whether there was a negligent explosion. Common Carriers – If your package gets lost/damages, it would be very difficult to figure out why the pkg go lost/damaged. Only for goods/not for PEOPLE!!! Kingston – Fires that join with suspicious fires

Res ipsa loquitor: the thing speaks for itself. But really it doesn’t. All it does is shift the burden of proof from the Π to the Δ. Levmore hates this doctrine, and you should never put it on the test unless you are making fun of it. wins because the thing could not have happened with out the being negligent.

Wild Animals – 99/100 when a tiger gets out to do damage, the owner was negligent so the owner pays. Not worth the time and money to discover the 1% of the time where the owner is not negligent. Pfaffenbach – driver on the wrong side of the road Byrne v. Boadle – barrel flying out of the window (1 barrel, 1 bldg, 1 owner, or even 2 buildings – one owner) Colmenares – elevator lurching. Must have the confidence that the probability of injury is a lot greater with negligence than without

IF COULD HAVE DONE SOMETHING TO INCREASE OUR INFO… Rodeo Promoter – Promoter could have done more, so even though 51% wrongdoer, promoter can’t collect Gearhart Industries – exploding grenade Ybarra – all together.

Info Forcing Like Hadley, our take on Madsen, and Rylands itself.

If you know that the water is up there, then you might take precautions. Mink Rancher knew info.

Vicarious Liability: Absent a frolic and detour situation – an employer is responsible for the actions of his employee – regardless of whether the employer had any part of the negligence which caused the action itself. This is if the employment situation increased the risk of the tort. (see VL section)

Bushey – Coast Guard Liable

Products Liability

Workers CompensationSL but lower damages. People might not testify.

3. Wealth Distribution Effects w/ SLIf water company is SL to homeowners for damage, and rich gu has house worth 4, poor guy has house worth 1, usage is equalNeither will get insurance which saves the rich guy more than the poor guy. They will recover equally because they recover according to water use. Saves the rich guy more, he doesn’t have to get insuranceThus, the wealth is distributed from the rich to the poor???

F. Moral Intuition

1. CasesThe laptop hypo, the doctor/harvesting organs hypo, Bird v. Holbrook, innocent professor strapped to a Subaru hypo, human shield hypo, famine/stealing food in Bangladesh hypo, trespass / crystal statute in back yard hypo, Kirby v. foster, Daniels v. American Motorcycle (and following hypos), Breuning v. American Family Insurance Co., the Hammontree case, Roberts v. Ring, McGuire v. Almy

2. OverviewUnlike the behavioral analysis, this prediction is based on what people want to happen, the world we want to live in.What we think is good.

3. The RuleThe more nervous we are of the amount of discretion the actor possesses, the higher the potential discretionary abuse, so the more discretionary actor will have to pay.

1. Self Defense – OK2. Using C’s notebook for protection – OK3. Innocent People die to save city – OK4. Human as Victim’s Shield – Not OK5. Break into 4 Cars to Save 1 – May be OK, (if successful)6. Trolley Case (veer away from 5 to kill 1) – action v. inaction is

oversimplified (step on accelerator v. not stepping on brake). Emergency situation

7. Harvest One person to save Five – NOT OK8. Starvation in Bangladesh – steal food to send to starvation. NOT OK (the

actor is not the only person who can save Bangladesh9. SUV

4. Discretion or Not?The more people have discretion, the more we worry about abuse, so the more likely he is to pay.

a. Bird v. Holbrook – Spring GunNot so much of a problem with the spring gun guy (a trespasser takes the risk), but if a security guard shoots him – that is a problem. He has the

discretion on how to handle the situation best. Perhaps the spring gun guy should pay – a sign might do the same. The court may want discretion and so will rule against spring gun.

Airports have zero discretion, everyone gets checked. This is super deterrence.

Also, harvesting organs, Bangladesh, trespass, crystal statute in backyard

5. Self DefenseYou have the right to self defense, but not to redress. For example – if someone

steals your backpack and starts running away, you have the right to chase after him and beat his ass, in order to get your bag back – whereas when the store clerk at the 7-11 does not return your change, you do not have the right to jump over the counter, and kick his ass. You would have an alternative means of redress (suing him in court) – whereas with backpak man, you wouldn’t have redress, because you would never find him.

a. Kirby v. Foster Employment dispute/self help. Basically, to prevent someone from taking something (or your life), you can use self defense. But, once it is taken – then you must use the courts (do not go to Don Corleone for Justice)

6. IncapacityDaniels v. American Motorcycle, Breuning v. American Family insurance Co., Hammontre, Roberts v. Ring, McGure v. Almy,

there are certain people who we do not hold to the same standard of culpability that we hold adults to (children and crazy people). To decide how to handle these cases we balance moral intuitionism w/ behavioralism to see which yields the best result. For example: When you have a 4 year old walking down the street backwards, with his eyes closed on a crowded sidewalk, and he trips, and injures you moral intuitionism dictates no recovery, b/c we can’t hold a 4 year old to the same standard of reasonable behavior that we would hold an adult. Behavioral view doesn’t seem to work here, b/c when we make the kid pay this is not likely to force parents to make their children play more safely. This is the logic in Daniels v. American Motorcycle.

a. McGuire v Almy - Mental AssylumD locked in his room goes wack-o and threatens to kill everyone. P was a nurse in charge of taking care of D. P went in and was assaulted, then P sued. Court found for P, but OUTLYER – normally insanity is a defense to negligence. Ruled for P b/c had control over D, was his caretaker. Rule from this: the less we can control a mental incompetent, the less liability will be found against him.c. Roberts v Ring – Infants/Level of UnderstandigInfants are to be judged according to their relative level of understanding and care expected

d. Daniels v Evans – Exception to Rule of Infants: When undertaking adult activities, such as operating a car, a minor or elderly must be held to the same standard of care as a reasonable adult.e. Breunig v American Family – Liability is not imposed when the occurrence of the disability is not reasonably foreseeable.

HOLE IN OUTLINE – CITY OF ABERDEEN, WATER WORKS, ETC. 10/24-5

IV. NEGLIGENCE CALCULATIONS

A.A. Carroll Towing/Hand Formula – OUTCOME SYSTEMOUTCOME SYSTEMNeed to look at untaken precautions. Take the costs of the harm, and the costs of preventing the harm. If it is economic to take precaution – then you must.Imagine one person owned the whole thing: if it costs 3 to save 4, then you must do it Could have an upfront system, where people need to pay a tax, or a fee upfront. BUT the default in negligence is outcomeGOLDEN RULE – I WILL TREAT YOU AS WELL AS I TREAT MYSELF

a. Cooley v. Public Service Co. – NO RECOVERYHurt while placing phone wires undergound. Ours is system of negligence

B. Incremental/Cliffs

1. CliffsSL system has no cliff. You pay all along for the harm you caused and the cliff disappears.NEGLIGENCE has a cliff. If there is any uncertainty, then you want to stay away from the cliff. Pros and Cons to both. W/ cliff you may take too many cares (increase spending to prevent – not efficient). Or too little cares (exposes to tort liabilities). But SL may make someone say, I will be liable no matter what – so let me take my chances and do what is best for me right now.

When the optimal standard of care is not certain beforehand, under strict liability: a defendant has no incentive to prefer one type of error (taking too little care v. taking too much). But, under negligence the defendant has the incentive to take some additional care to avoid heavy liabilities

2. IncrementalThe more info we have, the more we do incremental. This is probably correct, but it takes lots of data and sureness to be able to do. This also takes away cliff problems.Logically attractive. GOLDEN RULE application is that if you own it, you will probably bring damaged goods to acceptable, not pristine condition. (You don’t build

a baseball team to win every game, you try to build to an acceptable World Series champ).You pay only the extra marginal damage you cuased.

a. Fishing – Go fishing and you are allowed to catch 3, but you catch 7. Do you pay for 4 or 7?

b. Exxon – total damage was $3 billion (to return it to perfect condition), $2 billion to bring it back to acceptable level.

c. Investment Banker – If you run over a 27 year old investment banker, then you pay more than if you run over a 99 year old investment banker (lost wages, Cal-Tex type argument). BEST CASE

3. Single Best Problem SolverSometimes we hold people liable because they are in the best position to solve a problem. We may say that they are strictly liable and the real deal is they are the SBPS.

a. Andrews v. United Airlines – Hit in the Head P hit on head by briefcase that fell from airplane overhead

compartment. For negligence, P needs to show untaken, Carroll Towing precaution. Untaken precaution: nets on overhead compartments.

Could maybe argue that UA was strictly liable b/c of common carrier / innkeeper rule.Like the innkeeper or common carrier, UA is in the best position to figure out the Carroll Towing calculation (know how many people get hit on head each year). But in the computer age, this information is not difficult for P to get.Common carrier usually applies to freight, not passengers.

There isn’t an evidentiary problem – people can look after their own interests (Rylands)

But perhaps the fault resides with the passenger whose bag hit the P’s head. In that case, UA is the single best problem solver. It’s in the best position to find out whose briefcase whacked the P in the head.

Hold UA strictly liable b/c we want to encourage UA to gather info about its passengers. Make UA pay, then UA can make the individual passenger pay.

V. CUSTOM

A. A shortcut to Carroll Towing shows that wasn’t being reasonable by industry standards (sword) shows that he was reasonable by industry standards (shield)Shows a judge’s trust in markets

B. Not held to One’s Own Higher StandardsUA in previous case, is not held to a higher stadard because they were the first to make announcements. Further, Levmore is not held to a higher fire prevention standard because he obsesses about fire extinguishers. We want to encourage extra special behavior, w/o deterring them by saying that they are accountable to their own norms.

C. TJ Hooper – Don Juro Ha didn’t equip his tugbout with a radio. tried to use custom as a shield. It was not customary to equip the tugs with radios. BUT, where you are so grossly anti-Carroll Towing then you can not use custom.

D. Custom As A Defense:Need to have:

1) Communication (parties knew what they were getting into)2) Choice (they could have and did make a decision)3) Components (the thing in question is a major part of the choice)

E. Custom In Medicine (Lama v. Borras)

1. Use – Sword/ShieldCan use as sword. Customary for Dr’s. to order weeks in bed before surgery, this Dr. didn’t. Could use as a shield, this is what Drs. do in the world. Very difficult because its difficult to determine causation.CITE: Lama v. Borras – (cite for all)

2. Want to put on Rylands List, but problems…Would like to put medicine on Rylands list b/c of evidence problems (hard to get evidence of negligence b/c requires doctors to rat on their friends) (Olde Brit Fires).

But if doctors were put on the Rylands list, they wouldn’t accept really sick patients. It’s too difficult to determine incremental liability.

So we hold doctors to a negligence standard and rely on custom, but in return we expect them to disclose as much information as possible.

3. Locality RuleOn one hand, want to hold doctors to local standard b/c if held country doctors to same standard as city doctors, they’d all move to cities, where there the equipment is better.But information / equipment is better now, so locality is less of a problem.We say there is a national rule, but in subtle ways, we allow the differential.

F. Retroactivity (Updating Custom)

1. Overview/Pros & ConsPossible Rylands / innkeeper argument in a suit against the manufacturer:If hold the manufacturer liable, we force it to try to predict the future and anticipate technological innovations. We want to encourage the manufacturer to figure out what’s better as fast as possible. Want it to think of what we’ll want it to do today when we sue it in 20 years. Works best when the manufacturer has information the consumer doesn’t. The manufacturer is the single best problem solver – best predictor of future innovations (better than landlord).

Pro – operates like info forcing. Innovators should put safety measures in sooner rather than later. Makes lobbying against new regulations unprofitable – you will pay in the end anyway.Con – Manufacturers could keep innovation secret

2. Trimarco v. Klein – Shower GlassP slipped and crashed into shower door. Door was made of regular glass, which was the custom when it was installed. Subsequently, it became customary to install tempered glass doors.

VI. STATUTES

A. Shortcut to Carroll Towing (BUT Need to Show Connection)In cases where the Carroll Towing calculation is difficult, use statutory system as a shortcut. The fact that a law was passed shows that an action was negligent.MUST STILL SHOW CAUSATION

1. Martin v. Herzog – Car CrashThere needs to be a connection b/n the wrong and the harm. Was signal really the cause of the crash?

2. Brown v. Shyne – Unlicensed Dr.P injured by unlicensed doctor. P wants to skip Carroll Towing calculation; just wants to show that D violated statute that required medical license.Not enough to show that he was unlicensed. Must show causation. P must show that if he had know that doctor was unlicensed, he would have gone to a better doctor. Statute violation increases the probability of harm. (Martin v. Herzog)

HYPO: world class surgeon who is unlicensed in US. Must show that other Dr. would have been better (or that no Dr. would have been better).

3. Driver’s License – No ConnectionJust because your licensed expired yesterday, does not mean that you are a bad driver. Violating the statute has nothing to do with the tort. Just forgot to send in the check.

B. Why Both Upfront and Outcome?But we continue a torts system b/c occasionally we only find out about the violation when the individual sues afterwards.Fine-TuningCompensatory System – we like victims to be compensatedRegulations cannot cover everythingNot sure we will catch the statute breakers – have a tort claimShort cut to negligence

C. Statutory Purpose/Otherwise DeterredSometimes look into statutory purpose, sometimes don’t. Look into it, if we think that the party is otherwise deterred (or you will catch them another way). BUT, if we think that the statute is the only way to find out about that class of wrongdoers, then use the statute. Question – will the legislative purpose be fulfilled w/o recovery for negligence that is not w/in statute?

1. Gorris v. Scott – Otherwise Sheeped/Purpose Matters Guy overloads boat with sheep. The boat crashes and P’s stuff is lost. He

sues and points to statute that restricts how many sheep you can load on boat.

Reason for statute: prevent disease, not to prevent overloaded boats. P loses.

Law will find out about the statute violation. Diseased sheep will spread; can trace back to the boat.

The Statute is Self-Enforcing

2. Stimpson v. Wellington – Trucks/Only Way To Catch Statute limits weight of trucks. Overloaded truck breaks pipes along a

street. P points to statute. Reason for statute: protect the roads. P wins. Law will not find out unless people like P sue when their pipes break. It’s

impossible to find out which truck causes a pothole.

3. Ross v. Hartman – Keys in Car/Only Way is When Its Stolen Statute against leaving keys in car. Guy leaves keys in car; thief steals it

and crashes into second car. Statute purpose was for safety

Liability – want to enforce statute when can. More likely to reduce problem if put fine on guy who leaves his keys than on the thief. Only way to enforce the statute is when the car is stolen.

Car owner is the single best problem solver. Insurance premiums would go up if people were allowed to leave

keys in cars (insurance companies can’t tell which people leave keys and which don’t).

4. DiCaprio – Teenager/RR/Otherwise Deterred Teenager killed when attempts to rescue cow that strayed onto RR tracks.

Statute says that RR must build fence around track to prevent access by cows. P points to statute.

Limit recovery to cows, b/c will catch the RR anyway – the cattle-owner will tell when his cow dies. Teenager recovery not necessary to enforce the statute.

The Statute is Self-Enforcing

D. Civil Assault and Batteryo TAB

Threat: not actionable (except against public officials) Assault: intent with no contact Battery: intent + contact

E. False Imprisonmento Requires intent and unreasonable behavior. o Tiffany’s / Walmart (Coblyn v. Kennedy’s)

Power goes out, the people must stay unless willing to be searched If jewelry is stolen from Tiffany’s in blackout, Tiffany’s would keep

people in the store b/c would lose more in lost jewelry than in false imprisonment damages. The rule doesn’t matter.

Half the time, Tiffany’s will win. “Real” rule is no liability for reasonable imprisonment.

If Walmart keeps the people, Tiffanys should as well. But can turn it into a party.

G. Judge and JuryJudges don’t want to get overruled. If there is a chance that a jury can find negligence, then it goes. If no chance, then the judge rules.For juries, the different between SL and Neg is very small, if at all. They just go with what they think is right.

1. B&O Railroad v. Goodman – Stop, Look and Listeno P crossed train tracks. Statute said to “Stop, look, and listen.” No liability b/c P

didn’t.

o It doesn’t matter if the rule moves towards strict liability (against RR) b/c even if there is a negligence rule and only small probability of negligence, the jury will hold the RR liable (unsympathetic to RRs)

o Rule doesn’t matter. RR will not change its behavior. It will not pay to move the RR tracks away from houses.

2. Wilkerson – Send It To The Juryo Judges send more and more cases to the jury b/c if the jury decides it, it’s less

likely to get overruled (judges hate to get overruled).

VII. RES IPSA LOQUITUR – THE THING [DOESN’T] SPEAK FOR ITSELF

A. Shortcut to Liability99% of time, accident caused by negligence, so put burden of proof on D to prove it wasn’t negligent (D is more or less strictly liable).Mostly a burden of proof shift to . Often, P has a difficult task in proving his case b/c he has only circumstantial evidence or doesn’t have any knowledge of or access to the facts about D’s conduct. RIL allows the P to point to the fact of the accident, and to create an inference that, even w/out a precise showing of how D behaved, D was likely negligent.

B. Examples

1. Wild AnimalsIf tiger gets out, no matter what the reason, the thing speaks for itself. In all likelihood, there was negligence.

2. Banana Peel – Yellow or Brown If the peel is yellow, then judge will probably rule for supermarket

(probably wasn’t there very long, so probable that SM cleans regularly). If brown banana peel, we’re less certain. It was probably there a while.

RIL: let the jury decide.

C. Forces InformationForce info from (like Hadley, common carriers, Madsen), applied when the thing was within the ’s exclusive control. (so no Two-to-Tort)If there was the 1%, then not liable (so kind of on Rylands list).

If there is a step that could take to make it apply to POE in the future? If so, then “RIL them” in that case. Shifts the burden to encourage them to take an extra step for future cases.

1. Rodeo Promoter – Force Info Rodeo promoter sees that 260 people at rodeo snuck in; 240 bought

tickets. If chose random person, it’s more likely than not that person snuck in

(52% chance) But naked statistical evidence on its own is not sufficient to establish

liability. Want to force information and minimize the error. Promoter will lose

unless he issued ticket stubs (ticket stubs provide better information). Want to encourage the promotor to issue ticket stubs.

What about second case of 900 paid, 150 snuck in? Could do POE. Could let him collect from 50, 100, 150 (over-recovery).

2. Gearhart Industries – Hand Grenade/Force Info Hand grenade exploded. Company was required by law to x-ray grenades,

but by trial time, it had destroyed the x-rays. Gearhart loses b/c they destroyed the evidence – want to force it to save its

records.

3. Colmenari – Escalator – Within ’s control Escalator throws people off. When 1) It is within the total control of the defendant and 2) a weird thing

occurs, then invoke RIL. RIL shifts the burden of proof

4. Ybarra – Dr. arms was paralyzed while being operated on for appendectomy. was unconscious, the Drs. were in the best position to know.

VIII. LIABILITY RULES

A. POEOur basic rule is a preponderance of the evidence rule. Meaning, 51% sure, then they are liable. Sometimes we stray from this (Incremental, Recurring Miss, Strict Liability, Forcing Info)

B. Likelihood of Liability

1. List of Liability(from Greatest 10, to least 1)Factors to consider: info forcing, w/in ’s control, negligent?

10- Vosburg9- Byrne v. Boadle – 1 barrel, 1 building (RIL)8.5- Two buildings, one owner8- Tiffany’s (Reasonable Intentional Tort) – pay, but not mouch

7.1- Summers v. Tice – both hit him, one did the eye, one did the cheek7- Ybarra – all in the room together (info forcing)2- Elevator/Pickpocket1- Ybarra one at a time1- 1 barrel, 2 owners.5- Hit and Run 1/1000- Lightning

2. Over-ExtractionThis would be ultimate info forcing, but system stays away from it. If there was $100 in the wallet that was stolen, make the 4 people each pay $150. The pickpocket would rather give back the wallet than pay $150.

C. Error Reduction/Liability Choices

1. Four Choices of Liability Ruleso 1. No recovery – Circumstantial, statistical evidence alone is deemed insufficient

to support the victim’s claim, so no recovery from either tortfeasor.o 2. Preponderance-of-the-evidence – recover entire amount from the tortfeasor

who is more than 50% likely to have caused the harm.o 3. Probabilistic – each tortfeasor pays in proportion to the likelihood that he

caused the injury.o 4. Hybrid probabilistic rule – the tortfeasor who is more than 50% likely pays in

proportion to his likelihood. The tortfeasor who, more likely than not, was uninvolved, pays nothing.

2. No Recovery RuleUsed when we want to find more evidence. We don’t want to rely on naked statistical evidence. Take more time to find out. BUT, if more research wont help at all, then give recovery (if POE).Make look different, drug companies all look different.

a. Smith v. Rapid Transit – Blue Bus P is hit by blue bus. 85% of blue buses are run by Rapid Transit. No recovery – want P to get more information. Hybrid rule sort of

accomplishes same thing (only get a partial percentage of your money).

b. Kaminsky v. Hertz – Recovery (No more Info) Guy is sideswiped by truck in a blizzard. Sees “PE” on side of

truck. Discovers that Pensky trucks are owned by Hertz. Court awards recovery, b/c there was nothing more the P could do

to get more information – it was a blizzard.c. Weedhopper – Airplane Crash (No more info)

Airplane crashes b/c of defective bolt. Find bolt on ground, but can’t tell where it was manufactured. Weedhopper distributes 90% of bolts to airplanes.

B/c of crash, P can’t get additional information. P recovers on naked, statistical evidence.

d. Garcia – Fencing – No Recovery (Get More Info) College team practices with sabers; saber splits and kid is hurt.

Manager cleans it up, so can’t tell which of 2 sword manufacturers was responsible (unlike

P can’t recover, b/c want P to get more information (really want the manager not to mix up the swords).

3. Probabilistic Rule (Market Share Liability)This will work with the more information that is around. The more you have good data, companies are around, they are all wrongdoers, the more the numbers work. (NOTE: This is also a way to get around recurring misses, with multiple wrongdoers)Error in Market Share would be close to 0.Repeating cases make this error minimizing.

a. Sindell – DES, Market Share Several manufacturers made drugs which caused birth defects.

Pill-takers couldn’t remember which drugs they’d taken. Couldn’t tell which manufacturer to sue in individual cases.

Applied probabilistic rule - market share liability. Held each manufacturer responsible for its share of the market sales.

The greater the number of cases, the smaller the error. Not all courts follow this rule.

b. Skipworth – Lead Paint, Not enough info House painted with layers of lead paint (from different

manufacturers). P can’t say which layer / manufacturer caused injuries. Each company has different lead ingredients in its paint and several companies are no longer around.

Need to modify the numbers to reflect not only the market share but the hazard of the lead. This drives the error up.

No market share liability. This case is more the norm than Sindell. The market share calculation is really only used in drug cases.

4. Joint and Several (Summers v. Tice)When probability is 50%, then POE and probabilistic have the same error calculation. So the tie breaker in Summers v. Tice is that they were both negligent. So you can choose probabilistic or full recovery from one (see Amoco Cadiz)

D. ConclusionWe use the POE in almost all cases since it is the error minimizing rule.BUT, we use no recovery when we want more from the (Rodeo, could have done moreWe use Probabilistic with Market Share Liability (recurring s lot of info)

IX. PLAINTIFF’S CONDUCT/MULTIPLE PARTIES

A. OverviewThe law was once “contributory negligence” which would bar a wrongdoing from collecting anything. Now we move away from the all-or-nothing approach and put the and in proportion to their relative degrees of fault. Where there is more than one wrongdoer, we do the same “comparative” negligence. If the tort is joint, the liability can be several.

B. Contributory Negligence

1. Overview/Old RuleA who is negligent and whose negligence is a proximate cause of his injuries, is totally barred from recovery.The tort system, and the “two to tort” idea is tough to work when both are negligent. So, we may deter one party with a statute and the other party with tort. (It will usually mean that the will fail in the tort, and the will be fined in the statute.)Solution to outcome and upfront problem.Look at who needs the deterrence in the tort system more (Gorris v. Scott). Who is otherwise deterred?

a. Butterfield v. Forrester – Speeding v. Pipes P speeds down road. D has pipes in road. If P hadn’t sped, he

wouldn’t hit pipes. Law is no recovery for P (contributory negligence):

o P is deterred b/c he doesn’t recover. Really, the rule doesn’t matter for the P b/c even if he collects, he is deterred by risk of injury and risk of hitting someone.

o D is not deterred but if there is a statute, then he is also deterred.

Tort system has trouble aiming at two guys. Look for the guy who is otherwise deterred.

b. Dersheim – Seat Belt Defense Seat belt defense will not encourage Ds to drive more slowly b/c

they won’t know if the person they hit will be wearing a seatbelt or not. CN will not matter for deterrence.

Seat belt cases are all over the map.c. Fuller – Old Guy

Old guy crosses railroad track. Train hits him. Old guy collects, b/c he is otherwise deterred. Fears injuries if

crosses tracks.

2. Experts are Otherwise DeterredIf we feel that one person is an expert, then we will deter the expert to make them behave better. But, only if we feel that the is otherwise deterred, in that others will bring successful suits against them.

a. Gyerman v. US Lines – All Experts P moves crates that he knows are negligently stacked. He doesn’t

tell his supervisor and gets hurts. No CN – P collects. No evidence that supervisor could help. Only

way to deter employer.b. Casino Arena – One Expert, Others Non-Experts

Skater tells owner that ice is too hard. She then skates and gets injured.

No recovery (CN) by expert. Want expert to get off the ice and warn non-experts.

Casino Arena is otherwise deterred b/c if a non-expert were injured, it would owe.

c. Gyerman & Casino Arena DistinguishedCasino – one expert and the rest novices. Deter the expert to make her behave better. The rink is otherwise deterred in case there are 7 year olds on the ice.Gyerman – they were all experts, so there is no deterrence other than paying experts.

d. Case ListKinkosGorris v. Scott (and Wellington)Hudson v. CraftGyerman and Casino

3. LeRoy Fiber – Rule Does NOT matter3 cases: either the hay stacks are 5 ft. from the train, 1 mile, or 70 feet.If 5 ft, doesn’t collect, the train is otherwise deterred in case the hay isn’t 5 ft.

The hay owner is being uncooperativeIf 1 mile, collects, he was cooperative, train was negligent

Man will behave well, he does not know if future train is negligentTrain will behave well, they don’t know if the man will put his hay close or notSo each party can’t count on the other side behaving badly or not, so the rule will not matter.

4. Imputed Cont. NegligenceBus: B is driver, A is passenger, C is speeding. B lets A out of the bus in a wrong place, C his AWho to sue?Old rule – By being on B’s bus, A was negligent for being with him. (Don’t like this unless they were colluding)C is otherwise deterred (speeding), so let A sue B (Wagon Mount)

5. Fireman’s Rule – DonahueOnce learned that if I cause a fire negligently and fireman gets hurt, then they can’t collect. This is NOT assumption of risk. Win-Win. Want people to call the fire dept.But, here, the fire marshall went on an inspection and slipped on the floor because of owner badly behaved. Ct. says that fireman here did not assume this kind of risk. Really its because it runs counter to purpose of fireman’s rule and the owner is not chilled from calling fire dep.

6. Last Clear Chance - Frat PrankKids would tie themselves to tracks to make train stop. Train goes speed limit and kills kid. RR had “last clear chance.”For Liability – RR should take into account what happens, and they had last shot to prevent the death. Frats will be frats – but want to prevent rrs.Against Liability – want to stop the kids. The only way to get the kids to stop is kill 1 and then they will behave. (Like seatbelt defense)Don’t want to sue the frat, they are already grieving. It is not clear who wins. Law probably goes the way of liability

C. Comparative NegligenceFigure out how much harm every did and then apportion the damages

1. FactoriesDamages: $100,000. A could spend $15,000; or B could spend $20,000; or they could communicate and A-$8,000; B-$2,000 = total $10,000

Best solution is to communicate, but if they can’t…a. A pays $100k – the are the least cost avoiderb. A and B each pay $100k – not used, moral hazard, overpayment, anti-error minimizingc. A and B each ay $50k – Summers – but many problemsd. Divide damages other than 50/50 – comparative negligence

Rule 4 is most likely rule, which then asks hand or fingere. Finger – B pays 80% , because they could have done less. The less you should have done, the more you should pay. {using other numbers, A pays 20/35}f. Hand – A pays 80%, pay according to how much you should have paid to prevent. {other numbers, B pays 15/35}

This is the law but allocation doesn’t matter. There can be problems with games of chicken, so make the parties unsure who will have to pay more. Most likely is Hand (majority). Finger is the moral intuition. Usually someone will take the precaution (usually the lowest cost) and that will make everyone else follow the precaution.

RULE DOESN’T MATTER, AS LONG AS THE OTHER SIDE DOESN’T KNOW WHAT WILL HAPPEN IN THE FUTURE (LeRoy Fibre)

2. Kingston – Fires2 fires:

a. Both Natural – no suits. No one did itb. One human, one natural:

1) Natural, then Bad: Don’t Pay2) Bad, then Nat: Pay 4 seconds worth, a la Cal-Tex3) Same time – Nat, Bad: Logic suggests that there is no liability (the

destruction would have happened anyway)4) Bad and Bad together – like Summers v. Tice, but there if one

person didn’t shoot then chances are 50% to get shot. Here, if not for one fire, then the other fire.

Probably hold liable. On the Rylands list. Nervous about evidence, worried that one party couldn’t put out his own fire, so would start another one to mask his own. This is probably OVER-INCLUSIVE.

5) Human bad, human unknown – same like Bad-Badc. May be back on the Rylands list, if they are fires that we are afraid will

conceal their own evidence. Don’t want the perfect crime. Analogy to criminal law’s Arzon.

3. Numerical/Actual Comp NegligenceMovement away from cont. neg to comp neg. If wrongful , or 2 wrongful s or combo, make them pay according to the wrong. The most effective is always for communication.

a. V suffers 100, A suffers 100, B no damage.b. Fault – V 20, A 50, B 30

Damages Fault Pays(2F)

Gets (D-P)

V 100 20 40 +60A 100 50 100 -B 0 30 60 -60Total 200 100 200

4. Assumption of Risk (Primary and Secondary)a. No AOR – 2 people driving, deal for one to stay awake and speed, then

switch and speed. You can be goaded into bad decisions, it is no AORb. Primary AOR – Wipes away ’s liability. You consented to the situation, so has no duty to protect from a particular risk.

i.e. – Skiing down a black diamond as a novice, as one who should be on the bunny slope. You should not be there. Only the unbelievably outrages pays (like trespasser)

c. Secondary AOR - owes duty of care to , but knowingly encounters a risk. Only the outrageous pays.

i.e. – Knight v. JewettMale/Female co-rec football. She says they are playing too rough, then she gets hurt on the next play. She had last clear chance to not play. She agreed, so no recovery unless she consents to “super negligence” (a la Hudson v. Craft).

5. Li v. Yellow Cab Court judicially adopts comp negligence as the tort law

D. Joint and Several Liability: The Liability is SEVER -able and the Tort is Joint

Perhaps there is a judgment proof party, or there is settlement.

1. Single Best Problem Solver OR Sprinkling Approach3 options:

a. Sprinkle evenly – Share costs if you don’t know what to do. Diffuses responsibility and leads to chicken game (as seen in comp neg). The more you know, then the more you should focus.

b. Comp Neg – apportion to who did whatc. Focus – Single Best Problem Solver. Either someone who knows the

most and controls the most; or the finger mover. Knight in Shining Armour. They can get us to the best result.

2. American Motorcycle Assoc. (AMA) – Judgment ProofIf one of the parties is not around:

a. pays for missing - best argument for this is when one is in a position to know that other can’t pay. If you know the guy next to you is judgment proof then you should pay more attention. (AMA Majority)

b. absorbs the loss may not like this, because if this is the rule, will only go after the non-judgment proof to begin with. We want the truth and not strategic behavior.

c. Divide it between and . The wrongness is equally shared. (AMA Dissent)

3. Contribution Rules – Amoco CadizPro-Tanto – step by step: you set aside the absolute amount of settlement from amount can recovery – so no over-recovery. If gets $30, the lodestar is $100 so then the most that can get in trial is $70.Apportionment – the fair amount is $50, that is the lodestar.

a. No Contribution - Rule #1: may choose who he sues or collects from. If S sues T, T can not collect contribution from V. Either w/ or w/o settlement.

Pro- encourages settlement. No one wants to be left holding the bag. recovers full amount Con – Tempts collusion, (settle with me for less than 50, and I will only go after the other guy), may get over-recovery.

b. Contribution – Rule #2: may choose who to sue or collect from. But then the who pays more than their share, may collect from the other . If S sues T for 100, T can collect 50 from V.

Settlement – if S and V settle for 10, and then S sues T and wins 90 (100 minus the credit for the 10 in settlement), then T can collect 40 from V.Con – Fewer settlements, there is no finality in settling.

c. Contribution plus Settlement Bar – Rule #3: Can only get contribution from a party that goes to trial. Settlement is sacred. S settles with T for $30, then sues V. Can only collect $70 from V (pro-tanto), but V can not collect $20 from T (sacred settlement)

Pro – encourages settlement, buys peaceCon – higher admin costs to determine merits of settlement

d. Claim Reduction/Apportioned Set-Off – Rule #4: Proportional/Pro Rata rule. If injury is worth 100, then each side is 50 responsible. If S settles with T for $10, then he can only get $50 from V. May be under. Or S can settle with T for $80, and then collect $50 from V.

want to settle, but may not. High admin costs. Unlikely settlements as a whole.e. Other rules:

1) Release Rule – if one tortfeasor is released through settlement, all are released. No used in most jurisdictions.

2) Good Faith Requirement – exists to prevent collusion. High system costs

3) Comparative Negligence instead of Joint and Several. Or a combo. So if T is 80%, and V is 20%; then T could get a proportional contribution of 20% from V. This discourages settlement, problems of assigning fault, and admin costs.

4) May want to have a big bargain, or a big trial instead of both

E. Vicarious Liability/Respondeat SuperiorArgument comes from ideas in Causation. If the employer’s relationship increased the risk, then they will be liable. The possibility of doing harm is greatly increased by the fact that he is an employee. REMEMBER: always need to look at causation, even in SL. The more the actions are done in the realm of business, of furthering the business, the morethe boss is liable.

1. Employer’s NegligenceEasy case, we have seen this before. If the investigation of the postal employee gone “postal” would have turned up that he was a mass murderer. Straight negligence, Carroll Towing issues.

2. Strict LiabilityThe employer did nothing wrong. They took all sorts of precautions. They have the best info. SBPS approach. Not about info forcing. It is evidentiary issues that put it on the Rylands list. Especially applicable to the military. We do not want to, nor can we second guess the Carroll Towing decisions.

a. Bushey – military. Sailors on ship, they get leave, get drunk, play a game that causes lots of damage The military is in the best position to know how to control the sailors. The employment situation increased the risk. The military creates their own policy and we don’t want to mess with it. So, don’t want t mess with decision making so hold liable (issues of sovereign immunity

3. Independent ContractorsIf IC, then not liable, unless it is a “hazardous activity.”Example –tree cutters. Sporadic employment v. continuous employmentOld rule – no liability at all, but could get a homeless guy to cut your tree, he might do it wrong, he is judgment proof and you are not liable. BUT, now many tree cutters will use their own insurance and take the risk away.

a. HMO was not negligent and Dr. does something wrong. If HMO is liable then they will control the Dr. and the med treatment. If HMO is not liable, then its because of independent contractors. There was liability because of ultra-hazardous condition.

X. CAUSATION

A. But For…This is not our rule. Columbus is not responsible for everything. You are not responsible for things so distant. Only when you increase the risk.

The line may be on foreseeability (Marshall v. Nugent) – old fashioned way to think of it. We don’t use this anymore (Polemis)

1. Ryan Smokes in bed (wrongdoer), his house burns down and all other houses all along to Sears Tower. He could:

a. pay all, spreading fire rule – Old Englandb. Pay for just your house. Maybe want the other people to build their

houses further apart.

c. Just pay for the next door neighbor, sort of comparative negligence

B. Proximate CauseThis is our rule

1. Comp. Neg/OD Wagon MountThere is WM #1 (Pier owner sues oil spiller), and WM #2 (Other Ship sues oil spiller). Pier owner loses, other ship wins. WEIRD – other ship was further away in time and space. The court has two wrongdoers and is doing an allocation of blame. So, the oil spiller pays for one, and the pier pays for the other. So the pier owner is otherwise deterred. Note: different from Kingston because either one alone would not have caused itKind of a jump to comparative negligence.

a. Marble – if you move out of the way of a kick and slip on marbles, maybe it is not “proximate cause,” because you were a wrongdoer for leaving the marbles out. {wink, wink: its like comp neg}

2. Not Foreseeability/PolemisGuy drops thing into hole, it bounces around and starts fire causing injury.If you act negligently, you pay for what you cause, whether foreseeable or not.

d. Must ask - was it negligent? (or is thereSL)e. If it is bad behavior then even if something weird happens – still liablef. It’s not why your parents say don’t do it, but you shouldn’t do it anyway

3. Otherwise Deterred/PalsgrafMajor Case – seems to go against Polemis. RR pushes people on to the train. Pushers push person with bomb, the bomb drops and explodes injuring Palsgraf. Under Polemis, would think that RR was wrong so they are responsible for what happens.2 WrongdoersBUT, RR is otherwise deterred. Want Palsgraf to go after the bomb guy (otherwise no one will). Let the RR be deterred by someone who breaks their leg after getting pushed.

RR is a repeat player NOTE: if there is recovery, it is because the bomb guy is otherwise deterred as well, that he can’t rely on there being another wrongdoer.

4. Recurring Misses/Lost Chance CasesWhere there will be a wrongdoer but they will never be more than 50% responsible. However, they will do this mistake over and over. This can be a Dr. who increases the risk of death. We move to a probabilistic rule where we think the negligence will happen over and over.

a. Solutions1) Ex Ante Regulation – go outside the tort system, but a fine

needs enforecement2) Probabilistic Rule – Usually this is not error minimizing, but

with recurring misses, shift. So in order not to have a broken system take the probability.

3) Pay some losses (judges can make them pay for kids and not adults) – like Wagon Mount

4) Could do comparative negligence – father did something wrong

5) Unjust enrichment – look at the Dr.’s gains for playing golf6) Recovery once in a blue moon – keep them honest. Get a crazy

judge and that will deter. Shifting the burden of proof.b. Herskovits

Dr. misdiagnosis. If was diagnosed correctly, then would have had a 14% better chance of survival. The chance was always less than 50%. says I pay nothing until 50%. BUT, is never deterred. So use one of the solutions.

c. Lone Palm HotelStatute says lifeguard or sign. Hotel had neither. The lack of the sign was much less than 50% (if there was a sign, maybe 2% of people would not swim). Need to figure out if the hotel would have the sign or the lifeguard and how much they would have helped. (Martin v. Herzog – no light on car, there was a crash. How much would following the statute have prevented the crash?)BUT - The hotel is never otherwise deterred, they will never be liable, unless use a solution. (unlike Martin v. Herzog)There are issues of causation – it is unknown how the father and son died

5. Incrementalism/Increase the Riska. Price and Hines Both have negligent rr. Price – rr doesn’t stop, she stops into hotel and it burns down

Hines – rr doesn’t stop, she get out and gets raped/assaulted on the way homePrice – no liability, Hines, liabilityThe hotel burnt down, but same chance as her house burning down

This is like someone detouring you, then driving and getting hit by a tree (Berry)

But getting assaulted and raped, would not have happened had she been let off at the right stop. Increased the risk

C. Intervening WrongdoerOld rule was that intervening wrongdoer would break the causal link. BUT:

a. BrowerTrain collision. Wagon was robbed when driver was unconscious. RECOVERY. Thieves were judgment proof. The more likely that a third party will do something wrong, the more likely to hold the negligent party liable.

b. WatsonGuy dropped match on an oil spill (from an accident). If it was done intentionally then no recovery from the oil company (not likely to normally happen). But if he did it un-intentionally then liability (likely to happen normally)

c. Con Ed I and IIDuring first blackout, pays for meat spoiling but not for looting (not foreseeable)Second Blackout pays for everything, it is more foreseeable.

BUT, the untaken precautions were: shopkeepers with steel shudders, and Con-Ed an $1 billion grid. Con Ed may want to pay for the looting instead of the grid. This is a big decision and the courts punt it to the legislature. Want the legislature to decide. Con Ed could change their rates based on the decision.The first time, the courts want to see what will happen, the second time, the courts have let the system run its course and may want to go further.

The thieves are the intervening wrongdoer.

I need help with the following stuff. I missed a day and don’t really understand some of this stuff. Including the handout with RKO, Moosejaw, Union Pump, Union Oil, etc.

XI. EMOTIONAL LOSS

A. Impact RuleThere was once the impact rule, you don’t get paid for being scared BUT, if you break your leg, then you can collect for the leg and the fear.Then, we expand it to the “zone of danger,” if you see your child get run over. (Dillon)

The courts are afraid that wrongdoers will get away with it.

B. Reader p. 141

XII. ECONOMIC LOSS

A. ???

XIII. RESCUE

A. General/Carrots & SticksThere is a choice between sticks and carrots. Penalties may yield activity problem. Reward may create moral hazard. General rule is no recovery, no reward.

1. Omission/CommissionDon’t want to be this kind of lawyer! (Think Bruno KIRBY). Is there a difference between driving 50 mph with your foot on accelerator to run someone over, or omitting to step on the brake. C’mon!

2. Problems with Large CarrotsLarge rewards lead victims/owners to take excessive precautions to avoid paying such rewards. Moral hazard of potential recuers creating demand for their own services. (False rescues, friend drilling hole in grandma’s boat).

3. Problems with Big SticksPeople will avoid rescuing, will avoid going to dangerous places (like the beach, or a class with a professor who has a heart condition).Discourages altruism (Landes & Posner)Encourages people who are not competent at rescuing to take a stab at it.

4. Levmore-Heart Attack HYPOLevmore has heart attack in classroom and no one helps. Intuition is liability for students via CT, but doctrinally, no liability because it’s an act of omission rather than commission. Why?1) Activity level problem. Ex ante, a rule requiring rescue might make people

avoid the situation in the first place.2) People might collude to fake emergency/rescue if there was reward for rescue.3) If reward were too big, people might rescue where there was no emergency.If rescue required, best case is against students closer to Levmore, door, phone, etc. because they are SBPS. (c.f. Skipworth.)

B. Single Best Problem Solver/Special Relationships

1. Special RelationshipsThis is actual a code word for SBPS. Not necessarily a special relationship (could have no direct relationship), but we believe the person in the ‘special relationship,’ is the best situated to solve our problem. If there are many people who can rescue, then we may be afraid of imposing a duty to rescue. Law looking for one out of many.

a. Kline v. 1500 Mass. Ave Apt. – Landlord100 tenants, 1 landlord, 1 tenant, 1 general precaution. Predict: No liability.Negligent apt owner(D) didn’t put in safety precautions after several complaints and attacks. P gets injured during attack in the hallwayCould say that landlord was SBPS, but issues of causation, etc.b. Tarasoff v. Regents of UC - Psychiatrist Don Juro HaiContrary to how most lawyers remember the facts, psychiatrist’s patient causes harm to 3rd party. Psychiatrist failed to warn. Predict: Liability. Why? Psychiatrist is more of a stranger than the landlord is, but is uniquely situated to solve the problem.c. Other Special RelationshipsInn-Keeper/Guest, Shopkeeper/customer, shipowner/crew, teacher/student, doctor/patient, husband/wife, parent/child.d. Interesting “Special Relationship” – they are really just SBPSInn-keeper/Stranger injured by guest, Landlord/Trespasser, Parol Board/Previously Threatened Victim

2. Once You Undertake rescue, you become SBPS/HYPOSa. Airport Terrorists Terrorists in airport bathroom discuss bomb in Tuvan, a rare language. The U.N.’s Tuvan translator is in the next stall but doesn’t tell anyone what she has heard. Who should you sue when you die in explosion?1) NY Port Authority? Difficult, since you will have to show untaken

precautions to prove N. Plus, if they are SL, won’t take any more precautions since the rule does not matter. We don’t have any reason to put in on the Rylands list. Probably custom and statute are on their side too.

2) Translator? Probably the SBPS (c.f. Tasaroff). Not too worried about activity level problem, i.e. not learning language.

b. Good Samaritan – Become a SBPSCars on interstate pass person in need of help. If don’t stop, no liability. If pick up but halfway to hospital, dump on side of road and he dies, liability. Why?By picking him up, driver makes himself SBPS, solves law’s multiparty problem. Bad arguments would be that it was a win-win, or better than

nothing, because will respond that you prevented someone else from rescuing him better. (c.f. Herskovitz)

Rule: Once you undertake rescue, if you are grossly negligent in carrying it out, you are liable.

C. Feminist TheoriesStudies have shown women are more likely to rescue. As more women enter legal profession, evolution towards duty to rescue. The danger is that pro-lifers will use “rescuing fetus” argument and that “rescuing the little lamb” is sexist too.

D. Care to Strangers & Guests

1. Worried More For StrangersIn general:1) A kicks stranger2) A kicks customerWe are more worried about stranger because customer will bargain around the rule. So, spectrum of likely liability is Vosburg—Tasaroff—Kline—Skipworth.Rule: Law is moving towards liability for SBPS, best/uniquely situated.

2. Old Categories/Pre-Rowland1) ordinary care to stranger2) ordinary care to stranger in K3) trespasser—no recovery for wrongdoer, but Levmore thinks it would not be crazy

for them to pay because will incent prevention of injury to innocent, ala Casino Arena.

4) social guest (licensee)—no recovery even though host could have warned5) business guess (invitee)—normal duty of N because almost a stranger, hard to

agree up frontOld Rule: Social guests take the premises as they find them – no recovery. The law thought that people would treat each other well when they are in each other’s home, so we don’t need extra law to make them behave better.

3. New Rule – Liable To EveryoneThe modern rule is a movement towards liability and dissolution of categories. Usually, the friend will not pay – his insurance co. will. The only way to get this money is to make liability. People forget to warn, etc.

a. Rowland v. Christian - SinkLandlord ordered spare part for broken sink but before it came renter didn’t tell guest who injured herself. Guest is friend of renter but should sue her anyway because friend has insurance.

4. No Need For Torts – K!!!Where activities are not formal, then we don’t need a law – parties will behave cooperatively (basis for K Law).

a. Study Group/Pizza IssueA to bring old exam, B to bring pizza, C to provide room. Among classmates, this isn’t really a K, but more a set of signals, as with Aunt Jane giving you a piano.

E. Wealth Distribution + Otherwise Deterred = No LiabilityWhere we think that SL will result in wealth distribution, and the entity is otherwise deterred, we may not have liability even when a “common carrier” is negligent. This is especially true when it is a 3rd party beneficiary.

a. Moch v. Resaalaer – Water Co./CARDOZOCardozo may be thinking:1) wealth distribution2) beneficial to enter K with City3) City negotiate with for upfront liabilityFocus on government because are SBPS, although there may be sovereign immunity and/or democratic check that they will be voted out of power.So, basically Moch should get insurance and they should pay.

This is Rare!!!b. HYPO – Raytheon ???U.S. buys defective missiles manufactured by Raytheon.1) Recovery for Tel Aviv? Looks good for recovery because of

strangers, but government inspects.2) Recovery for dead Americans?3) Taxpayers?[Editor’s Note: Obviously, I neither understood nor documented this hypo adequately. Sorry.] {I didn’t get it either – MS}

XIV. NUISANCE

A. Offer-Asking Problem/Endowment EffectThe idea is that initial endowments (wealth) affect our willingness to pay, or at what price

we value our preferences. Sometimes the rule does matt because it endows one side with a legal right that alters their preference pricing. Typically do not exist in commercial situations because businesses have no taste – only concern is maximizing profits.

a. Handout – Satellite DishWe want to allow people to bargain to find the best solution, but might have some rules to prevent strategic behavior. How much you value something depends on how much money you have. If the court makes you richer, you will want to spend more money on the view. The legal rule is itself a value, because it makes the value of the view increase or decrease.

B. Calebresi Article – Liability and PropertyA can make a choice of which result he would like in the case. Money? Injunctions? And how the court responds depends on what the large picture is. Perhaps there are times where we want to call a ’s bluff and make him pay for an injunction.

1. Rules1) B stops A (injunction)—property rule

Could do partial property rule. Could mix liability w/ property.Could do temporary, permanent.

2) A pays B (tort liability)—liability rule, where parties will bargain if judge makes mistake

Could do contribution, SL, Neg, Enrichment, Backward, Xtraction3) A okay—property rule

Like gvn’t sovereign immune4) B pays A for cost of stopping—liability rule

Opposite of #2.5) A okay, and stops, and collects B’s gain6) A stops and A pays gainsBeware moral hazard of factories hoping to get bloated claims.

2. Forward Looking/Backward LookingProperty Rules: legislatures – forward looking (where we want to put rights)Liability Rules: courts – backward looking (pay for damage done)

But sometimes, pay for anticipated damages as well

C. It Takes Two… (to tort) & (ways to protect people)There are the two ways to protect people, liability and property. Ideally, people will bargain. Things you do on your property affect others, at some point you must draw the line.

1. Vogel v. Grant-Lafayette Electric - CowsDealings with your neighbor. You can bargain (Home Depot), invite them to your party. Judge might worry about offer-asking differential.

2. Public/Private – In general we allow suits for private nuisances, but not for public. If it involves too many people, then we want them to go to the legislature. There are collective action issues, holdout problems.

a. Morgan v. High Penn Oil Co.Oil refinery injuring 4 houses. More likely the oil company will buy you out, although in a case this dramatic, judge would not let oil poison children. Damages? Might pay a lot to avoid being shut down.In general:1) Private nuisance—where there is just one house next to the refinery,

will want and get Rule 2 because likelihood of bargain is very high.

2) Public nuisance—where there are 10,000 houses next to refinery, will want Rule 1, but court unlikely to award it because:a) to avoid cost of litigation, people will play chicken, i.e. hold out

problemb) maybe not everyone agrees, so it will be hard to make it a class

actionc) can go to legislature (although Levmore argues 40 people more

powerful interest group than 10,000.Note the similarity to rescue—more people make rescue more likely but creates collective action problem.

3. Why Go With Property?If it is too difficult to evaluate damages, and the court is sure that the factory shouldn’t operate like that, then the court will go with rule #1. Parties can still bargain.

4. Bargain!!! FountainbleuOne way to look at this case is as a “coming to a nuisance” problem (but this isn’t the best cite for that). F was there first, and E should have realized the possibility of F building an addition. There is no offer-asking problem, they speak the same language (same biz)Solutions:

1) They will bargain since there are only 2 of them and they are neighbors. (Totally Home Depot.)

2) FB will go to City government and argue that the addition is in the interest of the City because will increase tourism, employ union contractors, etc.

3) Maybe ER will argue existing rules requiring permits before construction means they have already won in the legislature.

4) ER might be able to make a takings argument, that the government singled them out.

5. Idiosyncratic Behavior? Tough Luck!!! Rodgers v. ElliottChurch bell hurts next-door neighbor’s idiosyncratic ears. Court goes with Rule 3. A OK. Why?1) Afraid of fraud—people will start claiming they are extra sensitive.2) He might be lying, which church can’t afford.Note: This is different from Vosburg’s pussy knee and the concept that you take as you find him, because kicking was bad. We want to stop kicking, do we want to stop church bells?

6. Coming To A NuisanceSometimes, when you come to a nuisance, you are actually helping the nuisance. There are some nuisances that we want to prevent altogether. We value land, and

people living close to each other more than we value other nuisances that could go anywhere else.

a. Ensign v. Walls – Dog BreederHomes near farm raising St. Bernard dogs. Prefer Rule 1. Why?1) Maybe damages don’t suffice or are hard to individualize, or you are

idiosyncratic about dogs or are uncertain about future lawsuits.2) Maybe damages do suffice, but injunction right might be worth more

because reach win-win accommodation, or wait and see if get injunction and then it will be easier to get damages.

b. Spur Industries – Pig LotBasically the same thing. The developer needs to pay the moving costs, though. But, be careful of this. By selling the pig lot, they may be getting lots of $ because of the developer. Don’t want double compensation.

In general, you will be indifferent if they get damages exactly right. We want to encourage open negotiation, but not so much that people buy-out land and charge more for it later. The very reason that might cause judge to enjoin dogs, i.e. population increase in area, is the same reason land values are increasing. So, we don’t need to give dog owners money they have already gotten in the form of higher land value.

XV. SOVEREIGN IMMUNITY

A. HistoricalFrom time immemorial, there was sovereign immunity. U.S. finally passed Federal Tort Claims Act, agreeing to be sued but leaving major exceptions for military, law enforcement, discretionary functions. States mostly remain that you sue an individual for gross N.[Editor’s Note: We probably know plenty about this section from Bigelow. At least, our classmates seem to think we do.]

B. Making Public/Private More EqualOK, so here’s an example of saying the same thing in 20 different ways: Essentially, the gvn’t is immune for its discretionary functions. Or rather, they are immune for things that only the gvn’t can do. If the gvn’t is a competitor with private industries, then we hold the gvn’t as liable as a private company would be. (i.e. trash pick up). If the private sector can do the job and would be held liable for negligence then the gvn’t can be held liable as well.

States usually provide themselves with complete immunity

1. EmployeesIndividual government employees are liable for their own actions is they are far outside the scope of their work – the government is not vicariously liable for their torts (unless they fall into non-discretionary functions). A park ranger who give you bad directions – can’t sueA judge who shoots a witness – don’t sue gvn’t, sue the judge

2. FinaleWe want public and private entities to follow the same rules so they will be equal so that we can choose between them.

You know the difference btwn. discretionary and not. Oh, Molly Madison we love you.

C. Berkovitz – Polio VaccineInfant died from government licensed oral polio vaccine. Discretionary function. Whether monitoring of drugs will be public or private function is not at stake.

D. TakingsDon’t forget about takings law. Gvn’t pays for taking objects, not for people.

XVI. PRODUCTS LIABILITY

A. OverviewKind of SL (because of sampling defense not allowed), but you have to show the untaken

precaution. So its kind of like negligence w/o needing to show cost/benefit Carroll Towing analysis. Its mostly a movement towards SBPS, liability to those who have the most contractual ties. This is a movement away from sprinkling!!! Basically, there is payment when the manufacturer is at fault.

B. Privity of K

1. Basic IdeaOnce upon a time, you couldn’t bring a product liability suit because there was no privity of K between buyer and manufacturer. (c.f. Winterbottom v. Wright) In MacPherson, Cardozo did away with privity. But, in Levmore’s view, Cardozo should probably have gone further and eliminated the possibility of suing the middleman, i.e. the dealer. This would have been the logical next step. (c.f. Madsen) Privity creates a situation where you know who the SBPS is. Products liability for manufacturer makes sense because manufacturer has contractual avenues with various subcontractors, whereas dealer does not. So there is SL for products, but they are not really on Rylands list. Why?

2. Winterbottom v. WrightSo, we know this from elements, but just a refresher. P dies from a badly made carriage, which was made by some company, then distributed to and sold by another company. Person to person tort law – the P cannot sue the manufacturer, only the dealer he bought the carriage from.

3. MacPherson – CardozoEliminated privity requiremet. The manufacturer is the best problem solver. They are the best situated, see “Basic Idea”

C. K or Torts – Which Room?

1. Recover for personal injury, and what comes with itHYPO – Car Blows Up1) Car only – sue in K for expectation/value of car2) Car and You – traditional PL suit, personal injury giving court license to intervene in torts3) Car and Lichtman’s CD – case won’t move to torts because of a little CD4) Car and cello – states go both ways, but usually will have recovery in tort for valuable personal property

2. Casa Clara – No recovery for economic lossCourt rules no recovery for economic loss to homeowner from salty concrete because there was no injury to person or property.Car blows up and kills the person in the front seat.K said only limited liability for manufacturer. This is an example of the Death of the Contract – even though you can't sue on the K, you can sue in tort.BUT, there must be damage outside of the K - Recovery possible if no personal injury but there is damage to significant OTHER property (valuable personal possessions).(of course, no recovery for pure economic loss in tort)Recovery definitely in this case, b/c there was a personal injury claim (and they will also probably pay for the car)

3. East River Steamship – Federal CiteApplication of rule 4 of Casa Clara to admiralty. So if the car and valuable property blow up, then there is liability for both. Takes it out of K and into Torts.

D. Sampling Defense/Strict Liability

1. Sampling No GoodEven if it is pro-CT to make a product such that only one of a batch will blow up, manufacturer still liable. Even if it is 1 in 1000. Even if it would be anti-Carroll Towing to make them better. Escola v. Coca Cola

2. The Rule Doesn’t MatterEither way, the manufacturer will not take the precautions. Matters as to wealth distribution, but not behavior. They will just raise prices. Rylands list (kind of) because the manufacturer has all the info.

3. HYPO – Toaster1) Toaster oven made by GE and sold by Bloomies blows up. Res ipsa or ant-CT to

show N. But SL for products allows recovery even without untaken precaution.2) Could be vicarious liability, in that GE pays even when it’s Bloomies fault. This

extends our previous understanding of VL.3) Inspection via random sampling is a defense, but Levmore thinks it’s a bad one

because it’s not enough to show CT precaution for SL, and they won’t inspect more if they are SL because the rule does not matter. (c.f. Vincent v. Lake Erie).

E. SBPS/Products v. Services

1. Basic IdeaBackground rule that, to the extent that there is liability, it is for products not services. Levmore thinks this is b.s.Again, we are looking for the SBPS, who has the contractual arrangements that can prevent the loss or allocate the liability appropriately.

2. Goldsberg v. Kollsman – American Airlines BoltAmerican Airlines goes down. Built by Lockheed Martin with parts from Kollsman. bought ticket from Travelocity. Who should sue?1) AA for N? Remember, no common carrier argument because is person.2) Lockheed or Kollsman for defective product?AA or Lockheed are the best cases, because they are SBPS in contractual relations with others, whereas Kollsman doesn’t have those connections.

3. SBPS? Who is it? Services/Products?Shaffer v. Victoria Station Not really SBPS, Most K relations, But Service Glass breaks at restaurant. Who should sue?1) Restaurant2) Glass manufacturer3) Waiter4) Dishwasher5) Maker of dishwasher, etc. sues restaurant and wins. Why?Restaurant is SBPS, but it is a service not a product, so this result is contradictory. Service/Product distinction is ify.Kind of like American Motorcycle, the “real” guy is away (or so many people have handled it that it is different now)

4. Service Provider is SBPS (again)HYPO – Bank Liable for injury on construction citeContractor working on house, guest is injured. Sues bank that loaned the money and wins, even though bank is providing a service. Why?Maybe because bank is SBPS because they inspect the site. Plus, they are more stable than the contractor, who is likely to be judgement proof.

F. Defects

1. Pouncy v Ford Motor Co – Blade w/ DefectsCar fan blade decapitates . No recovery. Why? Four theories of recovery1) Fan actually ok when made, and someone along the way bent it and eventually it flew off. No Recovery (Intervening wrongdoer)2) Bad metal in the blade and for an 8 cent inspection they could have found the defect. Recovery (CT Negligence)3) Impure/bad metal, but not detectable Still recovery, b/c it is a "construction defect" – no sampling defense4) Impure/bad metal, but all cars have this metal, and once in a while a fan flies off – an inevitable impurity. Maybe recovery – may not be considered dangerous, BUT could look like info-forcing, or techno-forcing where we would make Ford pay

2. State of the Art Defense/Asbestos ExceptionProduct was the “state of the art” when it was produced (i.e., glass shower doors). Law allows state of the art defense. If new safety features come out, you can go buy them.

Duty to warn by SBPS. In Trimarco-type case of retroactivity, should manufacturer who sold product 20 years ago send out a flyer updating consumers?1) Manufacturer will say I don’t have a duty to warn.2) Consumer will say they are the SBPS, as NJ court did in Beshada.

Exception: asbestos (Eventually law evaporated so that all they had to do was send timely warnings so the company could replace it. If the warning was timely, the asbestos mfr. could escape liability)Beshada v.Johns-Manville Products Corp argued asbestos made whole building bad. So, even though there was no actual personal injury, there was significant other property. This outcome is limited to asbestos cases.

G. Used Goods

1. Rule – No LiabilityWhere a could sue manufacturer for defects in new goods, can’t sue for used goods – company too far removed from the goods. They can reasonably say that

the product was modified since they distributed it. Can’t really sue dealer better – maybe negligence at best.

2. Why No Liability?SBPS is up front system. Bowing to market, people buy used goods b/c they are cheaper, if we make the seller SL hen prices would go up.

3. HYPO – Used Sewing MachineA bought new sewing machine from manufacturer then sold it to retail store, who sold it to B. B gets injured. Who should B sue?1) Manufacturer—easy case under SL products.2) Retailer—court doesn’t like this case.3) A—A would appear to be SBPS because knows product best after using it, but

maybe in a better position to bargain with B, doesn’t have as many K links to original manufacturer, price of used goods would go up and law thinks of used goods market as a social good.

In Levmore’s view, it looks like law took opportunity of used goods to move all they way from Winterbottom to McPherson, eliminating the middleman.

H. Duty to Warn – HOLE!!! I am confused HELP!!!Hypo—TermitesIf information about termites in the house gets transferred at time of sale, it’s a net gain because the wood stops crumbling, which reduces the value of the property.Ayers v. Johnson & Johnson (p. 817)Baby oil. Not unreasonable to warn.Vaccine casesRecurring miss (c.f. Lone Palm).Daily v. G.M. (p. 831) injured in car crash claims defective door lock. What if toaster blew up (SL) and there was contributory N too? GM can’t count on N, so it’s a perfect rule. Remember, SL is not absolute.

XVII. DAMAGES

A. ConcernsToo many damages (where we are), leads to moral hazard problems. Too low damages lead to under-deterrence, too much pollution, etc. If damages are too high, the restaurant owner will bribe the officials. If super corrupt then no incentive to have a clean restaurant.

B. Pain and SufferingIn torts, we allow P & S. Big reform in this area/capping rewards, etc.Why not pain and suffering insurance? Because we can’t measure it. And people have different thresholds, so market would be unpredictable. Moral hazard. Tort law accepts that in society overall, pain and suffering is balanced out (c.f. Moose Jaw).

1. McDougald v. GarberModern court trying to reduce huge tort judgements. ’s lawyers divide up the recovery, which usually increases total recovery.

C. Future Earnings/Economic LossEconomic losses are OK. Calculate now for the future earnings. These can get highly speculative, but show minute by minute earnings lost. Include raises, taxes, inflation, etc. Look, if they gave up $120,000 job to work elsewhere for $60,000 – where did the $60K go? Include that? Don’t want to be taxed on that though.

1. O’Shea v. Riverway TowingPresent discounted value of lost wages has to take into account inflation rate, which is partly does, and interest rate, if allow for raise. Law is trying to equalize all this. In a sloppy sense, they all offset each other.Imputed income.

D. Collateral Source Rule, Controlling Judgments, Duty To MitigateLaw does not allow to double collect from both and insurance company. But it’s not defense for the to say, “go get it from collateral source.”

Firestone v. Crown Center Redev. Corp. (p. 873)Remittitur and additur is judge’s way of bargaining with lawyers to avoid retrial.Structured settlements wait to see conditions as they unfold, but can create moral hazard.

Duty to MitigateTort duty to mitigate complicated by religion, etc. (c.f. McGinley) so reasonableness standard applies. In Levmore’s words, the fancier the job, the less likely the court will make you find another.

E. Fees (US v. Britain)

1. US v. Britain/RiskAversion/SettlementAmerican Rule: each party in a dispute bears its own legal fees and costsBritish Rule: (more common) two-way fee-shifting rule, wherein the losing party pays all the costs of both parties. Winner-takes-all rule.

Risk Aversion: if a plaintiff is risk-averse she is more likely to be dissuaded from bringing suit by the British rule.Encouragement Effects: if D’s costs are greater than P’s (fishing expeditions), we really don’t know which rule will encourage more suits. There are too many factors involved.

When P and D are equally optimistic, the rule doesn't matter

If both are equally optimistic, even though they see the world in the opposite way, it is really hard to find room to bargain. If they are NOT equally optimistic, then the American rule allows more room for settlement than the British rule.

2. Donohue: (Foundations Reader)The nominal legal rule will not affect the rate of settlement b/c the parties will agree to litigate under a self-imposed British rule if it is in their best interest. The parties will assess their preferred fee-allocation standard and shift to it if it’s not already in place. Thus, the settlement rate in the absence of transaction costs will be the same under the British and American rules. The Posner/Shavill analysis suggests that the settlement rule should be unaffected by the fee-allocation rule as long as the parties are free to adopt their preferred rule.

3. Contingency FeesContingency Fees: the rule in America is that an injured plaintiff (or potential plaintiff) cannot sell their personal injury claims. However, contingency fees look much like sold claims. Therefore, the highest percentage recoverable by the attorney in most states is 50%. (although other countries allow no contingency fees at all)

Contingency Fees and the British Rule: we would not expect contingency fees under the British system (and, indeed, Britain forbids contingency fees) b/c lawyers would require plaintiffs to pay a bond, since they know they will pay the other side’s costs in the event of loss. If P doesn’t have much money, the lawyer will have to post the bond. Therefore, if P wins the lawyer will want a much bigger share (up to 80-90%) to compensate for those cases they lose. The lawyer would essentially be buying the claims, which is not allowed.