LEB Exam 2 Review

Cases: * In re Sept. 11 Litigation (S.D.N.Y. 2003) (Class action lawsuit) – Negligence – Duty of Care * Families of people who died in the attack sued American Airlines and Aviation security companies who were responsible for on-the-ground security in the Boston airport on 9/11 * Argued that they were carless in screening passengers * D’s defense: no duty to the victims in New York because this type of event has never happened in the past * Verdict: Not dismissed * When a plane is hijacked, it is reasonably foreseeable that the plane may crash, making passengers AND OTHERS AT THE CRASH SITE reasonably foreseeable victims * Not overly burdensome (Factor 6) to impose duty because D is in the business of moving people SAFELY from place to place * Otis Engineering Co. vs. Clark (Tex. 1983) – Negligence Duty of Care * Two women killed by drunk driver (he worked for Otis and was sent home because he was drunk at work) * Is there a duty to control the conduct of another? * General rule: No (usually when employees are not following through with company practices, company not held responsible) * Exception: Employer’s exercise of control over INCAPICTATED employee = employer must do what reasonably careful employer would do under similar circumstances * Duty of reasonable care generally does not include a duty to control the activities of others to prevent the employee from causing an unreasonable risk of harm * State of Texas vs. Tidwell (Tex.App. 1987) – Negligence – Duty of Care * Two Game Wardens took P into custody (exercise of control) when he was caught hunting animals out of season. He was allowed to collect his stuff and when he did he consumed a lot of alcohol. When they saw rattlesnakes, P said “I’ll catch that snake.” The officers let P try and the snake bit P. * The wardens and the state (D’s) owed a duty to P * D’s liable (comparative negligence - % of carelessness looking at % of P’s negligence and % of D’s negligence) for damages * TX – 60% at fault and Tidwell – 40% at fault * Thapar vs. Zezulka (Tex. 1999) - Texas Supreme Court – Negligence – Duty of Care * Thapar had been treating his patient, Lilly, for years. He had delusional beliefs about his stepfather (“Henry Zuzulka”). Lilly had been institutionalized 6 times. Notes from these times included that Lilly had wanted to kill Z. After 7 days, Lilly was discharged and within a month killed Z. Thapar never warned any family member or police agency about Lilly’s threats against Z. Lilly’s mother filed a wrongful death action against Thapar. * Did Thapar owe a duty to Z? * No duty was owed to the third party (Z) * TX Doctor-Patient confidentiality statute * Disclosure of confidential information is generally prohibited * Disclosure to police permitted (not required, though) when threats = probability of imminent physical injury * Vedas vs. Anonymous (Ariz. 2003) – Good Samaritan General Rule * Vedas signs into Internet Chat room as “Ripper.” Bragged about all the medication he was taking for depression. Mixed medication with weed and alcohol and passed out. Several viewers figured out that he was in danger of dying. No chatter called Vedas parents or the police. Vedas died that night. If the parents of Vedas sue the chatters for failing to summon assistance, will they win (assuming that Ds could have summoned assistance in time to revive Vedas)? * Parents lose * Chatters owe no duty to rescue or help * Lindsey vs. Miami Development Corp. (also with Castile – Host) (Tenn. 1985) – Good Samaritan * Castile hosted a political fundraiser in a building owned by the Miami Development Corporation. Lindsey attended this event and sat on the edge of a balcony. She yelled at Castile. She ended up jumping off the balcony and hit her head on the stone steps. Castile told people to wait before calling the ambulance. Lindsey died soon after an ambulance was finally summoned. * Lindsey won – Castile Liable - Social host and guest qualify as a special relationship and there is a duty to help * Claims * Failure to summon aid claim against Castile * Negligent maintenance of building claim against Miami Development Corp. * Summary judgment for MDC – falls out of case * Cordas vs. Peerless Transport Co. (N.Y. 1941) – D breached Duty of Due Care * Cab driver abandoned moving cab because passenger was threatening him with a gun. The moving cab hit pedestrians, who sued for negligence. * D not liable: emergency situation (actions involuntary, taken against D’s will) * Ling vs. BDA&K Business Services, Inc. (Tex. App. 2008) – D breached Duty of Due Care * Accountant made mistake on client’s federal income tax return, and was sued for negligence. Trial court granted D’s motion for summary judgement. Reversible? * Yes, question of fact whether D (accountant) did what a reasonably careful accountant would have done under similar circumstances * Jury trial necessary by question of fact * El Chico vs. Poole (Tex. 1987) – Negligence Per Se * Texas Alcoholic Beverage Code Section 101.63a – offense if person knowingly sells an alcoholic beverage to an intoxicated person or a habitual drunkard or an insane person * Rene Saenz, an admitted alcoholic, and a friend met for drinks at El Chico restaurant in Houston. After spending three hours there, he left and killed the motorist (blood alcohol level 0.18) * Can Poole’s parents sue the restaurant for negligently selling alcohol to an intoxicated person * Yes, question of fact for jury to decide (whether restaurant breached its duty to general public be serving alcohol to customer, who it knew of should have known was intoxicated * More questions to ask – “Is Rene a regular customer, has he consumed alcohol there before? Etc.) * Boyles vs. Kerr (Tex. 1993) – Emotional Distress General Rule * Dan videotaped himself having intercourse with Susan. They dated and had sex previously. Dan showed the tape to friends and rumors spread. Susan switched to UT saying she was humiliated by the incident and the rumors and sued Dan for negligent infliction of emotional distress. * Plaintiff lost because emotional distress cannot be a stand alone case * Bedgood vs. Madalin (Tex.App 1979) – Bystander Parent * P was gardening and heard what was a car hitting his son, “thud that sounded like a watermelon being dropped onto pavement form a great height.” P ran around house and saw that son was run over by D’s car. Emotional Distress??? * Was near the scene * Distress from contemporaneous perception of accident (scene was intact) * P is close relative of victim * P recovered for mental anguish * Sanchez vs. Schindler (Tex. 1983) – Wrongful Death * Sanchez’s son was killed in car accident where Schindler was driving. Sanchez was notified of accident and went to hospital and saw son’s bloody legs. * Sanchez CAN recover for mental anguish due to wrongful death * Widlowski vs. Durkee Foods (Ill. 1990) – Proximate Cause * D sent its employee, Wells, into an industrial tank to clean it. The tank contained nitrogen gas and lacked oxygen to breath. Wells was not wearing protective gear and was overcome by the gas and became incoherent and delirious. Wells was transported to a hospital where P, a nurse attended to him. Wells bit off a portion of P’s right middle finger. If P can prove that D’s carelessness in safety procedures proximately caused Wells’ delirium, should she recover? * Did the employer’s carelessness cause proximately cause the nurse’s injury? * The likelihood of injury is minimal * D is NOT liable for “bizarre and fantastic” – It was just TOO weird * Bizarre and fantastic – an injury must “naturally flow” from the D’s act as a reasonably probable and foreseeable consequence * Public policy does not support imposing liability on the employer vs employee. The nurse better hope the hospital carries workers comp. * At time employee entered tank, risk of harm to nurse was not reasonably foreseeable, the D was not to control the P or any other medical personnel in the care and treatment of the patient * Brown vs. Philadelphia College of Osteopathic Medicine (Pa. 2000) – Proximate Cause * Mr. and Mrs. Brown give birth to baby and the hospital says baby has STD (Aug.) * November – family brings baby back and hospital says that they misdiagnosed * Husband (had affair) and wife had fight (wife used revolver) – November * Did the hospital’s misdiagnosis proximately cause the Brown’s Injuries? * D’s mistake was NOT proximate cause for P’s injuries (not reasonably foreseeable) * Error and injuries too remote in time (3 months had passed) * Other contributing factors – Mrs. Brown’s independent act of shooting gun was well beyond the point of reasonable foreseeability * D did not set in motion a series of continuous and causative events – the revolver broke the timeline * Riojas vs. Lone Star Gas (Tex.App. 1982) – Independent Intervening Causes * Ps sued D gas company for negligently turning off P’s gas for non-payment when Ps had really paid. Gas turned off, Ps cooked in outside charcoal grill in bucket. To keep warm, they brought bucket inside and both suffered carbon monoxide poisoning. Can they establish proximate causation? * Did the utility company’s carelessness (cutting off gas to house) proximately cause P’s carbon monoxide poisoning? * P’s cannot establish proximate cause * P’s stupidity is intervening cause * Guarino vs. Mine Safety Appliance Co. (N.Y. 1969) – Independent Intervening Causes * Sewage company worker was fatally stricken by lethal gas present in the sewer when oxygen-type mask (manufactured by D) failed. Ps, two fellow workers, responded immediately to the cry for help by running into the dark tunnel WITHOUT oxygen masks – getting injured. Ps sued, showing that the mask was negligently made. Is D liable for rescuers? – Was the manufacturer’s carelessness when making the mask, the proximate cause of P’s injuries? * Failure of oxygen mask was reasonably foreseeable * D liable: “Danger Invited Rescue” Doctrine * When D’s negligence endangers another and 3rd party injured in rescue attempt, then D’s liability extends to imperiled victim AND rescuer. * Case by case review because we want to encourage rescues * Colaitis vs. Benihana (N.Y. 2006) – Independent Intervening Causes * P took family to Benihana for dinner where chef cooked food and flipped some to family. One piece landed on son and burned him. The chef smiled and kept tossing hot food onto patients. When the chef flipped a piece of shrimp at P, he ducked away and injured two vertebrae in his neck. Doctors told P that if he did not have corrective surgery, another injury to the same two disks might leave him paralyzed. After two surgeries, P developed a high fever and, five months after visiting the restaurant, died of a blood-borne infection associated with the surgeries. * Did D set in motion a series of continuous, causative events? * Should Benihana be liable for P’s death? * No, D NOT liable (not proximate cause of death) * 5 months had passed * Too remote * Other contributing factors – 2 surgeries * Lumley vs. Gye – Tortious Interference with Business Relationships * Wagner, an opera singer from Prussia, agreed to sing exclusively for P’s theater in London for 3 months. D persuaded Wagner to break contract with P and sing at his theater instead * 2 Legal Claims * P vs D – TIBR
P vs. 3rd party – Breach of Contract * Wrongfully lure away competitor’s employee * This case involved a 3-month TERM contract * There was wrongful interference with business relationships * The right to enforce the contract out weights the right to compete (mainly because it was for a set term) * However, with an at-will contract (no time period) parties may expect the contract to continue but no legal obligations – courts recognize the right to compete fairly (= offer better employment---- terms, better product/service/price) * D can never compete unfairly * Pennzoil vs. Texaco (Tex. 1987) – TIBR or Interference with a Prospective Contract * Pennzoil negotiated with Getty Oil to buy Getty. Had a HANDSHAKE agreement. A press release announced an “agreement in principle”. The lawyers went to draft the papers for signature. Someone at Getty approached Texaco to see if Texaco would be interested in paying more for Getty than Pennzoil had offered. They did. Getty scuttled the Pennzoil deal and sold itself to Texaco. Pennzoil sued for TIBR. Should it win? * Yes, Pennzoil won – Texaco liable even though Getty initiated talks and Texaco may not have understood legal effect of an “agreement in principle” (TX Supreme Court said this classified as an existing contract) * An informal handshake can be every bit as binding as formal document when both parties agree on ALL essential terms of the deal * Agreement in principle is a term commonly used and understood in business and that type of agreement can bind parties even before formal documents signed * $11.1 billion verdict was upheld on appeal but Texaco filed for bankruptcy and ended up settling for $3 billion. * Archives of America, Inc. vs. Archive Litigation Services, Inc. (Tex. App 1999) – TI Prospective Contract * Lone Star and CTU were involved in major litigation and needed a place to store documents. Signed contract with Archives of America. The contract set forth the amount Lone Star and CTU would have to pay. It gave either side the right to cancel the contract with 90-days notice. Archive Litigation Services approached Lone Star and CTU and offered them better storage rates (fair competition). They gave P 90-days notice and switched business to D. * No, D has strong, competitive defense (at-will contract) * There is no obligation to store the documents for any period of time * There is a right to move documents based on this language – no TIBR nor breach of contract * Walner vs. Baskin-Robbins Ice Cream (N.D. Tex. 1981) – TIBR * P – Walner bought an ice cream parlor franchise from D, Baskin-Robbins, Inc. The franchise agreement contained language requiring D’s approval before the franchise could be sold. Two years later, P contracted to sell the franchise to Garapet at substantial profit, but Baskin-Robbins refused to grant permission to sale P sued D for TIBR. Baskin Robbins used justification defense. * P lost – justification defense upheld (D had good business reason to veto the sale) * Bonenberger vs. Continental Ins. Co (Tex.App. 1996) – TIBR * Bonenberger (P), a nurse, was fired for what her supervisor, Dueno, viewed as misconduct while reviewing patient records at a hospital. P sued Dueno for TIBR, arguing that his decision interfered with her employment relationship with the company that employed both of them. Evidence showed that doctors had complained repeatedly about P’s conduct. * Argument – Manager’s privilege * P lost – Manager’s privilege (in best interest of business) defense upheld * NO malice in firing nurse (impersonal and unbiased) * Martin vs. American Medical Systems, Inc. (4th Circuit. 1997) – Express Warranty * P, an implant recipient, was injured when the implant, which proved not be sterile, caused a severe infection. P was hospitalized 5 times for surgery. P sued D, the maker, for breach of express warranty. D had given P’s doctor info stating that ‘the AMS Prosthesis is delivered to the hospital sterile’ (did not know about this until after the surgery) * D moved to dismiss – denied * Any description of goods, other than seller’s opinion, becomes a basis of the bargain * It is not necessary that P have actually relied on the representation, it is enough that P would be justified in relying on the representation * Klages vs. General Ordinance Equipment Corp. (Pa. 1976) – Express Warranty * D makes a mace weapon and advertises “it will instantly stop and subdue entire groups… instantly stops assailants in their tracts… an attacker is subdued instantly for 15 to 20 minutes (representation about the performance of mace). When P was confronted by a robber, used mace and hid. The robber drew his gun, followed P and shop P in the head * P sued D for breach of express warranty – P WON * D’s representation regarding performance of mace = assurance that mace conforms to representation * Lastovich vs. Ford Motor Co. (Minn. 1987) – Express Warranty * P sued Ford when it refused to repair damage to his pick-up sustained after P had driven the truck over rough terrain. P’s expectations for the truck’s ability to handle rough terrain exceeded the bounds of Ford’s written warranty. ON the other hand, certain TV and magazine ads said that the vehicle was “Built Tough” – advertisements showed the truck driving off-road. * P won – warranty was created with ads * This ad was a representation about the performance of the truck * Ad coupled with the truck shown being driven off-road = express warranty * Webster vs. Blue Ship Tea Room (Mass. 1964) – Implied Warranty of Merchantability * Restaurant won * Foreign substance test – substance natural to food/product * Consumer expectation test – consumer can reasonably expect to find fish bone, in fish chowder * Welch vs. Fitzgerald-Hicks Dodge, Inc. (1981) – Implied Warranty of Merchantability * P bought a new Dodge station wagon from D. During the next six months, the car required a large number of repairs too numerous to list. Although most repairs were satisfactory, the major continuing problem was a “shimmying” that could b felt when the car was driven. P left car with D and sued recover the purchase price. Question: Is shimmying causing the car not to be merchantable? * Test: pass without objection within the industry – fit for ordinary purpose * P won – Car NOT merchantable – not fit for ordinary purpose of driving * Catania vs. Brown (Conn. 1967) – Implied Warranty of Fitness * P went to D’s paint store. Told D’s employees needed to paint for a stucco house. Sold particular paint. Paint had major problems. Paint not appropriate for stucco house. Did D breach an implied warranty of fitness * D breach warranty – paint NOT fit for use on stucco house (particular purpose) * Paint would have adhered to any other surface (which is the ordinary purpose) * Dempsey vs. Rosenthal (N.Y. 1983) – Implied Warranty of Fitness * Dempsey bought dog from Rosenthal. A dog is considered a “good” and the seller is a merchant * Breach of Implied Warranty of Fitness – Purebred dog with congenital defect not FIT for P’s particular purpose (breeding show dogs) – passed on to future dogs – all value is diminished * Breach of Implied Warranty of Merchantability – Dog not merchantable (would not pass without objection in the trade) – in the show dog industry, pure bred dogs are entered based on pedigree documents – defect would prevent documentation * Lewis and Sims vs. Key Industries, Inc. (Wash.App. 1976) - Implied Warranty of Fitness * P was installing water pipe in a town in Alaska. P ordered pipe from D, stating only the size and the quantity of the pipe and that the pipe be coal tar enamel lined. It turned out the pipe could not withstand cold and the lining pulled away from the pipe. P rejected the pipe and sued D for a refund, claiming breach of implied warranty. * P lost – no reason for D to know of P’s particular purpose * No evidence of P’s special reliance on D’s expertise * Cates Transmission Service vs. Dover Corp. (Tex. 1990) – Disclaimer by Language * P bought three vehicle lifts from D. The lifts never worked and P sued for breach of IWM. D pointed out that on the back of the contract was a disclaimer. P argued disclaimer was “undistinguished in typeface, size or color” and claimed not to have noticed it. Is disclaimer enforceable? * Disclaimer not conspicuous and not enforceable * Delta Air Lines vs. Douglas Aircraft (Cal. 1965) – Unconscionability * Delta bought plane from Douglas Aircraft. The contract, Douglas’ standard form, included elaborate warranties, followed by a conspicuous provision that the warranties were in lieu of all other warranties whether or not occasioned by the seller’s negligence. Clause also excluded liability for any damages other than the price of the plane. Plane purchased and the nose wheel malfunctioned, the plane veered off and causes $200,000 of damages. At trial, Douglas raised the disclaimer as a defense. * NO Disparity of bargaining power – both parties in the aviation industry * Disclaimer NOT unconscionable * Henningsen vs. Bloomfield Motors (N.J. 1960) – Unconscionability * P bought a new Chrysler from D. Car had 468 miles on it and steering mechanism failed. P was seriously injured and car was totaled. D’s defense revolved around a disclaimer in the sales contract that said: “The manufacturer warrants each new motor vehicle to be free from defects in material or workmanship under normal use” – obligation limited to making good at its factor any parts thereof which shall within 90 days after delivery… or before such vehicle has been driven 4000 miles, whichever occurs first – this warranty being expressly in lieu of all other warranties expressed or implied.” * Chrysler saying only liable for parts * Both personal injury and disparity of bargaining power * Disclaimer unconscionable – no remedy * Knight vs. Just Born, Inc. (Dore. 2000) – Strict Liability * Hot Tamales Case – burned inside of mouth * Arguing manufacturing defect – CONSUMER EXPECTATION TEST * P’s Claim: Due to manufacturing defect; D’s candy fails consumer expectation test. * P has enough evidence to go to trial * If P has evidence that a produce does not live up to the expectations of an ordinary consumer, then the jury may infer that there is a defect in the product * P does not have to identify how or when the defect occurred in the manufacturing process * Ford Motor Co. vs. Nowak (Tex.App. 1982) – Strict Liability * Family sued after a woman was run over by her own car. Evidence showed a defect in the transmission control system that allowed the sure to think she had placed the car in “park,” when in fact it was between park and reverse. Vibration could pop the car into reverse. Ford pointed out that there was a warning in the owner’s manual telling users to put the vehicle in park and se the emergency brake whenever they left the car running. * Ford is liable – inadequate warning of defect – consumers do have to memorize the owner’s manual * This warning would not get the attention of an ordinary consumer * This provision does not warn consumers of the nature and extent of damages * Patterson vs. Rohm Gesellschaft (N.D.Tex. 1985) – Strict Liability * D manufactures the Rohm .38 caliber revolver. One of D’s guns was used in a robbery, causing the death of a clerk at the grocery store. The gun functioned as it was intended: a bullet was fired with deadly force when the trigger was intentionally pulled. Clerk’s family is suing in strict liability, arguing that the danger of such guns greatly outweighs their utility. * Risk utility test (SKIPPED STEP 1) * P’s lost – although handgun may have been unreasonably dangerous, it was not defective so NO liability * Nevauex vs. Park Place Hospital (Tex.App. 1983) – Strict Liability * P was injured when a technician administering cobalt radiation to treat her uterine bleeding mis-calibrated the machine and gave too high a dose. * She sued saying strict liability claim * Hospital WON – Problem with service and not the product * Product is NOT defective in this case * Dutschke vs. Piper (La. 1983) – Strict Liability * P bought a Piper Airplane which had been constructed from the wreckage of two other Piper planes which had crashed and been sold as junk. P sued when the landing gear collapsed * D won – there was substantial alteration to the product * P failed to prove that Piper designed or constructed faulty landing gear * Two Rivers Co. vs. Curtiss Breeding Services (5th cir. 1980) * P cattle-breeding company bought semen for its cattle from D. The semen had a recessive genetic defect that resulted in some of the calves being stillborn and that lowered the market value of those calves that survived. P sued D in strict liability. * D won – no personal injury and economic loss only (“didn’t get what I bargained for”) * Loss of market value, in terms of calves is an argument for basis of the bargain case - contract claim * Pelman vs. McDonald’s Corp. (S.D.N.Y. 2003) – Public Policy * Eating McDonalds and gaining a lot of weight * D won – P’s failed to show that D’s food was SO UNHEALTHY as to be BEYOND a reasonable contemplation of consuming public * Advertising NOT misleading * Integrated Cash Management Services vs. Digital Transactions, Inc. (2d Circuit. 1990) – Trade Secrets * A secret “winning combination” of genetic utility programs CAN be a trade secret * A trade secret can exist in a combination of components, each of which is in the public domain (generally known), when the unique combination is not generally known and provides a competitive advantage * Numed vs. McNutt (Tex.App. 1987) – Trade Secrets – Secrecy * McNutt quit working for Numed and started a medical equipment leasing business of his own. He contacts many of P’s customers, trying to get their business. P sued, claiming that McNutt was unfairly using trade secrets it had learned working with Numed. * D showed that if you went to the hospitals and asked, they would show you copies of their contacts * D won – Not a secret (known to others) * Smith vs. Snap-On Tools Corp. (5th Circuit. 1987) – Trade Secrets – Secrecy * P invented a new ratchet. P showed D in hopes of marketing. D began to manufacture and sell tool without paying P. Misappropriation? * No liability – Smith’s voluntary disclosure forfeited secrecy * Snap-On did NOT know nor should they have known that the disclosure was made in confidence (no mention of compensation or licensing) * Morally defensible? * Hook vs. Perdue Farms (Fla.Cir.Ct. 1997) Trade Secrets – Secrecy * P invented a commercial method of preparing rotisserie chicken. Pizza hut agreed to co-develop process. Agreement required Pizza Hut to maintain the secrecy of the process and to obtain confidentiality agreement from all third parties. Pizza Hut brought D in to determine feasibility and the cost of the process. Pizza hut lost interest in the project, but 2 years later P learned that D was selling chicken using process. P sued for trade secret theft (under laws of Florida – CIVIL case) * P awarded $48.45 million – D willfully and maliciously breached a confidentiality agreement * Du Pont vs. Christopher (5th Circuit. 1970) – Trade Secrets – Reasonable Security * D took aerial photos of P’s new plant. The photos revealed P’s process for producing methanol. P sued D for misappropriation of trade secrets. D argued that P failed to take reasonable security measure. * No, P does NOT have to use anti-aircraft guns to preserve secrecy * EMPHASIS ON REASONABLE * Schalk vs. State (Tex.Crim.App. 1991) – Trade Secrets – Reasonable Security * D was hired by x Co., a computer company. D was hired to develop voice commands for computers. Had to agree to sign a promise not to disclose trade secrets. D worked in the speech lab, which was physically separate from the rest of the plant. Access to the lab was LIMITED. All paper copies of documents were locked up at night. Each person needed own computer code. D was charged criminally with theft of trade secrets. Argument against – not a secret. * D convicted – X’s measures to preserve secrecy were MORE than adequate. * Carter Products vs. Colgate-Palmolive (D.Md. 1955) – Trade Secrets – Wrongful Acquisition * D could NOT reverse engineer P’s product. D hired ex-employee of D and employee disclosed the precise formula to D. Misappropriation? * Yes, D wrongfully acquired information * D knew there was a promise not to divulge formula