White-Collar Crime:

States v. Anderson

Mail or wire fraud: See United

Summary judgement: Either or both

sides request for a judge to rule if there is no dispute of
facts. Rare, most time the judge says there is at least some
dispute of facts. Most types of cases will have a jury trial
right - either party can demand a jury. Only way to bench
trial is if both parties say so.

Class Action: Must be CERTIFIED to

proceed as class action standard

Other fraud: See below

Sarbanes-Oxley offenses
Act - bribing over seas

Bribery: Foreign Corrupt Practices

Computer crimes: Hacking;

Exceeding the scope of authorized computer use

RICO (Racketeer Influenced and

Corrupt Organizations Act): Originally targeted organized
crime; Necessary elements for a RICO violation establish a pattern of racketeering activity or conspire to do
so.
1.

2.

Discovery - in a civil case there are broad

discovery support to get information on items arguably
related to the case. One party asks for a set of documents
from the other where the documents are relevant. Other
party is compelled to provide them. Can be required to
answer questions under oath. Can request depositions to find
more fact on the issue and to find out what they would say at
trial

Regulatory offenses: Often

handled civilly; Tends to become criminal with repeated
offences; Things like insider trading

Pattern: defined at least

2 such occurrences consisting of any of more than 30
different offenses (many of which involve fraud); must be
related in some sense and pose a threat of continued
racketeering activity
defined

Arbitration: Has to be a clause in a contract and accepted

by both parties. IS outside the court system but is binding (f
freely and fairly entered). Most tort cases not subject to
arbitration.

Tort: Deals with personal injury and/or property

damages

Show injured in its

"property or business by reason of" RICO violation ->
direct harm to the party involved

4.

Can also be the base of

civil cases both by the govt or private individual: Treble
damages and attorney's fees for successful private
plaintiff

Negligence:

Enterprise very broadly

3.

Civil Liability: Standard of Proof: Preponderance

of the Evidence; Harm between two individuals - personal

Civil Litigation: Jurisdiction in civil cases: the Court

must have both Subject matter jurisdiction and In personam
jurisdiction

Subject matter jurisdiction

(SMJ) - In state courts there are courts with general
jurisdiction - have the power to decide almost any type
of litigation; In federal courts there needs to be
either federal question jurisdiction or diversity
jurisdiction

Harm: Physical harm, injury,

Damages

Compensatory - making the

injured party whole, eg: covering medical costs

Punitive - damages intended to

reform or punish the guilty party

Joint & Several Liability - damages

awarded in total, but could be collected from either
party held liable for the injury. So even if party 1 is
more at fault, party 2 may be charged more due to
ability to pay. Old style of damage distribution.

% approach - the jury decides the

percentage of the injury each party is at fault for.
Party 1 could be held 60% at fault and party 2 40%.
That would mean that the plaintiff could collect 60%
of the damages from party 1 and 40% from party 2.

Direct liability - held liable for

one's own tort - Must be at least 50% of the fault for
the injury

Imputed liability - held liable for a

tort directed by someone else. Most important from
is respondeat superior: employer liable for
employee's tort if committed within the scope of
employment

Federal question: case

arises under the Constitution, federal laws, or
treaties of the U.S.

Diversity jurisdiction:
case is between citizens of different states and
amount in controversy exceeds $75,000

Elements of a negligence
claim: Duty: Duty of reasonable care; Foreseeability of
harm. Breach of that duty: Failure to act responsibly
to prevent the foreseeable harm; Causation of injury

Corporate citizenship for particular states: state of

incorporation and principal place of business is
located

Principal place of business test decided in Hertz Co

v Friend that the Nerve Center test was the best
test to decide citizenship; Nerve Center test says
that where the main corporate HQ or main decision
makers are decides which state a corporation is a
citizen of

Premises Liability
Cases: Someone injured on your property and you failed
to use reasonable care with regards to a dangerous or
hazardous issue on the premises. Duty to invitee:
person has been invited to the premises for social or
business work - person is there with a legitimate
purpose - Customers, guests, workers, etc. Take
reasonable care to keep premises reasonable safe

Actual
Knowledge: the employees or company knew about the
hazard: Seen in Dick's Sporting Goods. Not required for
liability as that would lead to willing ignorance as a
strategy

Constructive Notice: NOT

SURE WHAT THIS EXACTLY MEANS: HRESIL V SEARS

economic injury

Fraud: Falsehood as to martial matters; Intent to deceive critical element, goes to criminal intent; Deprivation of
money of properly (or a similar detriment)

Are there common questions of Fact and Law that

dominate issue

Power of Removal: when a case could be brought in

federal court but is filed in state court, the
defendant (but only the defendant) can have the
case moved to federal court; Strategic move - only
done when the defendant thinks it is better off in
federal court

In personam
(IPJ) - Courts have districts, are the parties within that
district or area? If the person or corp defendant is a
resident or citizen of that district then the matching
court always has IPJ. You can always sue someone in the
court district where they live
o

Courts would not automatically have IPJ but can Long-arm statutes between states can apply

Can be invoked when a non-resident defendant: has

contracts in that state; does business in that state
generally; committed a tort within the state or the
harm occurred within the state. Separate due
process requirement - even if Long-arm applies is it
fair to be sued there? A question of sufficient
minimum contacts

Negligence per se:

When a plaintiff attempts to show negligence by violation of a
specific statute instead of the common law test of Duty of
Reasonable Care. In order to be covered under per se the
plaintiff must be: Within the class of persons the statute was
designed to protect. And the harm that the plaintiff experienced
was the type of harm that the statute was meant to prevent

Causation Element of
Negligence Claims: Actual cause and proximate cause. Actual
cause: But for cause or substantial factor. This injury would not
have happened but for the negligence act. Proximate cause:
Natural and probable consequences test: More common; Is what
happened to be expected from the breach of duty at issue?
Scope of foreseeable risk test: Lord v DJ - knew a crime streak
was happening and did not secure their invitees. Need both
actual and proximate
o

Intervening cause: When a major intervening cause

happens and is unforeseeable, then the liability of the

negligent party is only up till the moment of the intervening

cause. The murderer in Stahlecker v Ford

Defenses to
negligence claims: Sometimes the plaintiff shares some
amount of negligence in that the plaintiff also did not act in a
reasonable manner. This is handled by comparative
negligence/fault: Usually the award to the plaintiff is reduced by
the percentage of responsibility that the plaintiff shared. Eg:
plaintiff 40% responsible, defendant 60% responsible, then out
of a $100,000 award would be reduced to $60,000. Two forms of
comparative negligence: pure and mixed
Pure: percentages are followed exactly. If the split
was 70% plaintiff, 30% defendant - even though the plaintiff
was more at fault than the defendant. Mixed: once the
plaintiff is determined to be 51% responsible, then the case
is dismissed - because the plaintiff had a greater portion of
the responsibility

Assumption of Risk: Person knows the risk and chooses to

do it anyways. IS of two types: Express contractual and all
the risks explicitly stated (may survive adoption of
comparative negligence scheme). Implied voluntary
exposure to a known danger (needs to be specific
knowledge)

Uniform Commercial Code - law governing

product across most all states

Covers the implicit or explicit

contract for the sale of goods between parties

Covers economic loss - damages

based on the defective products

Elements in a UCC negligence

case are exactly the same: duty to reasonable care;
foreseeability; likelihood and severity (lower
likelihood can be offset by extreme severity); cost of
safer design or warning (monetarily and/or
efficiency of product); what have other in the
industry done; though may be affected by
regulatory compliance with government standards

Can be negligent in:

manufacturing; inspection; design; or
failure/inadequate warning of danger

Eg: problem within in a

manufacturing process that a company does
not catch or fix and sends out defected product
which results in personal injury or property
damage

Subsequent remedial
measures is a rule preventing evidence that
would provide a legal reason for manufactures
to ignore safety improvements as it is harmful
to society

Be conscious of the ways an offer may

terminate; Get the agreement in writing; Be the drafter if
at all possible; Beware of arbitration if not controlled by
you; Get legal advice whenever you are confronted with
a contract type you are not familiar with or when stakes
are high; Don't sign anything without reading it!; If you
don't understand something, get clarification - form a
3rd party!; Be truthful in negotiations misrepresentations can void the contract; Don't promise
anything unless you are willing to be bound by it

Parol evidence rule: Prevents a party

from presenting extrinsic evidence that goes
against/contradicts the final written contract
Breach

If the product is clearly

dangerous and provides a much greater risk to
society than a benefit

If a party fails to perform under contract,

the court almost never requires that party to provide the
service

Material breach when one party

completely fails to perform the contractual duty

Unless the product or service is

completely unique, the court prefers to use
damages as the remedy instead of compulsion

Exception being the sale of real

estate, and the seller is breaching contract by
refusing to sell - courts considers each piece of real
estate unique

Most breach of contracts can result in

compensatory damages - very rarely are punitive
damages allowed

Damages in the amount

necessary to place non-breaching party in economic
position they would have been in if the contract had
not been breached

Consequential damages:
additional economic harm caused by the contractual
breach when further processes are harmed by the
lack of performance if foreseeable

Defenses:

Gross product misuse

(eg: trying to dry your dog in a clothes dryer)

Plaintiff's contributory
fault (eg: standing on top rung of ladder despite
the warning)

Preemption of claims like

safe design (eg: using FDA approval to defend
against strictly reviewed medical devices; eg:
brand name cannot be defended by preemption
but a generic can - advil vs cvs IB)

Warranty:

This is
an express warranty even if it is not
referred to as a warranty, as they are
public claims

Implied warranty does

not depend on any public claim, instead they
exist due to a contract for the sale of goodsonly when a merchant seller is involved
(professional/organization involved in sales as a
method of business (ie: not Joe selling his fridge
on craigslist))

Eg: building contracts

can contain these relating to speed of work; Eg:
coach contracts have a length and a buyout
clause, which is a form of liquidated damages

Duty to mitigate damages means

the party who has been breached on needs to take
reasonable actions to mitigate the damage caused
by the breach

If the seller makes claims

on their quality or performance of the goods,
then they must live up to those claims

Eg: manufacturer X
supplies goods to retailer Y who pays up front.
The goods delivered are defective, so X has
breached for the compensatory amount of the
sale, but Y could also claim consequential
damages due to lost sales that the goods would
have provided had they not been defective

Liquidated damages can be

included in a contract with clauses, which can award
damages based on failing to meet proper timelines.
If a party fails to either deliver by a certain time or
terminates the contract before a specified length

Regulatory compliance

Since tort is
only personal injury and/or property
damage direct dealing often falls outside these
areas - maybe ends up breach of contract

Strict Liability

Can be
disclaimed in writing, as long as the
contract uses the word 'merchantability'
and is highlighted in some clear way

a written or spoken agreement, especially one

concerning employment, sales, or tenancy, that is intended
to be enforceable by law

Product Liability

Contract Law

Intentional Torts: Assault; battery; false imprisonment;

intentional infliction of emotional distress; defamation; invasion
of privacy; right of publicity; trespass & conversion; other
property torts. Durham v McDonald's for intentional infliction of
emotional distress
o

The goods have

an implied warrant that the goods
meet fitness for ordinary purposes

Often the parties are

in privity with each other - meaning they dealt
directly

Eg: renter breaches

contract by failing to pay and abandoning the
apartment, the landlord cannot just sit and let
rent back pay to accrue and then claim all that
back pay for damages

Offer and acceptance

Ideally a meeting of the minds

Has three parts

Intent to make an
offer: If a reasonable person would interpret
your actions as a intent to make an offer, and
the offeree accepts, then you are bound by that
contract

Definiteness: The offer

has to provide details of the agreement. See
Armstrong v Haas in the case list

Communication to
offeree: Offers can be voided by
communication with the offeree

By terms of the
offer itself (failed drug test)

By lapse of time
(you must accept by X date)

By revocation
(they call and say they can no longer make
the offer)

Timothys have asked whether or not

someone else had an interest in the horse.
Keeches lied deliberately
Timothys loaned the money, but found out
the horse already had security interest
suing for legal relief
Arguing that the Timothys did not have
reasonable reliance because they did not
check the legal records
Court said that it was okay for the
Timothys to have made the agreement
without checking the records, but they
should have done so to protect themselves
better

Relief Available in Misrepresentation and Fraud

Offer cannot be voided

by these items once the offer is accepted

Misrepresentations & Fraud

Elements of misrepresentation:
o
One partys untrue statement as to material fact or
equivalent conduct creating false impression as to
material matter
o
Other partys reasonable reliance in entering into
contract; would likely not have entered into the
contract without this
Fraud same: Also includes Scienter knowledge of falsity &
intent to deceive
Fraud know that they are false, more legally reprehensible
Sometimes without the scienter, called innocent
misrepresentation, but there is still a victim
o
I.E. Receive financial statements that paint the
picture of the state of the firm when looking to
acquire a business rely on this information to
make the decision

Later, find out that there were untrue

statements in the financial statements

May have been an outside firm

that messed up the numbers, but
there is still misrepresentation
here because would have not
bought it without these figures

If knew the figures were false, this is fraud.

o
I.E. Informed business has 97 employees, but in
actuality, have 96. Unlikely to make decision on
other factors.
o
I.E. Old apartment building buyer mentions that he
likes Elvis. Told that Elvis stayed at this apartment
building.

Elvis was never there looking for legal

remedies

Saying it does not really matter

In this scenario, this is material,

because seller knows this is
actually important. a subjective
element to what is a material
matter

Likely influenced the

decision

Was it reasonable for you to rely

on this information?
Reasonable reliance Timothy v. Keetch
o
Keetches need financing, take out a loan from a
lender

Lender does not just want their promise to

repay the debt

Wants some security, wants to be able to

seize something they own to re-satisfy the
loan want them to use the horse as
collateral

UCC Article 9 deals with Security

Interests (like this situation)

With regard to personal property

First lender, had to file certain

documents showing the security
interest in the horse with the
consent of the owners.

Makes sure that they cannot use

the same property as collateral for
multiple debts.
o
Keeches then meet with the Timothys and asked
about the horse.

Keeches

Mispresentation remedy Rescission

o
Back to the status quo as if the contract was never
entered into
Fraud More options because this involves a FLAGRANT
wrong
o
Rescission option if the defrauded party wants this
o
OR, Damages, including punitive damages (just like
intentional tort wrongs that involve flagrant wrongs)

Fraud is considered an separate intentional

tort and not just a matter of contract law
Equivalent Conduct
o
Nondisclosure - where there is a duty to disclose

In some instances, have an obligation to

disclose.

Only telling have story.

What you can say would be

misleading.

Example: Selling a car

I have never had an accident

with the car.

Misleading to someone who asked

about whether or not the car had
been in an accident.

Need to disclose that someone

else had an accident with the car

Example: Want specific person in the plant

managers role based on information that
you have learned about that person. Do
you have any information that she would
be inclined to stay or leave?

Next week, make decision to

acquire, enter into the contract
and find out the plant manager is
going to leave

Between the original conversation

and the deal, the plant manager
informed the seller that they were
going to leave.

Keeping the plant manager was

important to the deal, therefore
the seller may have had a
responsibility to disclose. This
could be considered
misrepresentation.
o
Concealment active hiding

Example - Own a strip mall, have a

problem with water that was visible.
Strategically placed boxes to cover spots
when showing the property.

Active hiding element creating a

misleading impression.

Suggests the intention to deceive

If a seller describes the goods as doing something, these are
warranties. These become part of the terms of the contract
o
Example: IU music student buys a very expensive
violin, seller says it is X years old
o
Seller said it was old and made by so-and-so
o
Seller said that was given docs from person who
sold to him relevant if bringing misrepresentation
case, which would hold her to rescission
o
But, able to bring a breach of warranty case

Intellectual Property

Get some exposure to the major areas of intellectual

property
Slide 14 on Series of Questions that are good for companies
to ask about their intellectual property rights Review before
next class!
Types:
o
Nike name; TV commercial; New electrical device;
Just Do It
o
Computer program; Coca-Cola bottle shape;
Formula for food or beverage; Nike swoosh
Trademark
o
Supposed to make the consumer think of the source
of the goods or services

Nike name, Just Do It, Coca-Cola shape,

Nike swoosh

Trade-dress: product appearance

Trade name: company name