I.        Incentives to Litigate

a.    Before going to court, questions to ask:

                                          i.    What is the remedy? Are you going to get something for your client?

                                         ii.    Where is the financing? How is the litigation going to get paid for? I

                                        iii.    If there’s nothing beneficial for yourself or your client, you won’t proceed.

b.     Facts and figures on the success of and composition of most cases

   II.        Two types of Remedies:

a.    Specific – compel someone to do something

b.    Substitutionary Remedies – are about money damages

                                          i.    Compensatory Damages - Damages sufficient in amount to indemnify the injured person for the loss suffered.

1.    United States v Hathaley (1958) – U.S. brought suit against Navajo tribes. Gov’t (federal agents) illegally seized and sold the Navajo's horses and burros to a glue factory before a lawsuit that they instituted against the Navajos for grazing on federal land had commenced. The Navajos then sued U.S. for tort of illegal seizure of their property, and the Supreme Court found for Navajo, and sent the case back to district court to determine damages. The Navajos then appealed, and the issue was whether the determination of the damages awarded was appropriately calculated. No.

a.    The rule of damages is that the injured party needs to be put in the position it would have been in absent the wrong of the injurer. Applying the rules of compensatory damages the following must be considered:

                                                                                          i.    The market value (or replacement cost) – the cost of the seized property at the time of taking. Here, cannot use fair market value b/c the animals were unique and trained to a particular purpose. So, The court should have considered the availability of like animals and all other value that go to make up market value 

                                                                                         ii.    The mitigation principle – (loss of use damages) – Court says determine proximate cause, then calculate the reduction based on the loss of profits; and the calculation of damages fall within the time frame of from the point of the loss until the point when a reasonable and prudent person would have replaced the items.

                                                                                        iii.    Individualized measures of pain and suffering – court had awarded each plaintiff same amount (b/c evidence showed that many families mourned the loss of the animals for a long time), but you can’t say everyone suffered the same amount of pain and suffering.  It is an individual thing, not a common injury.

  III.        Liquidated , Statutory, and Punitive Damages

a.    Liquidated Damages - An amount contractually stipulated as a reasonable estimation of actual damages to be recovered by one party if the other party breaches. (Black’s Law Dictionary)

b.    Statutory Damages - Damages provided by statute (such as a wrongful-death-and-survival statute), as distinguished from damages provided under the common law. (Black’s Law Dictionary)

c.    Restitution Damages - Situations where the wrong is worth more to the wrongdoer, than the injury it caused to the plaintiff.  Give plaintiff full benefit amount def got, even though it goes over the compensable damages for the plaintiff. This measure of damages is unusual - usually in torts.

d.    Punitive Damages - Damages awarded in addition to actual damages when the defendant acted with recklessness, malice, or deceit; specif., damages assessed by way of penalizing the wrongdoer or making an example to others.  (Black’s Law Dictionary)

                                          i.    How do you justify punitive damages, where plaintiff has been fully compensated with compensatory damages?

1.    Defendant must be punished. No one else to give damages to.  Court wants someone to bring def to court, so they offer punitive damages as a reason to come forth

                                         ii.    Problem - some arbitrarily large amount could be awarded in punitive damages, because jury can do what they want in awarding punitive damages. This is a due process problem.

1.    State Farm v. Campbell –. State Farm led Campbell believe he could win the suit (which there was a very slight chance) and not settle for $50k, the maximum policy amount that State Farm would have had to pay, hoping he would win and they wouldn’t have to pay anything at all. Instead, Campbell lost the suit, and he has to pay $100k in excess of what State Farm would contribute.  Campbell then sued State Farm for their fraudulent practices (there was evidence that this was deliberate) and court awarded Campbell   $1M compensatory and $145 in punitive damages.  State Farm appealed. The issue was whether the punitive damages were excessive.

a.    The Court used 3 prong test (from BMW v. Gore):

                                                                                          i.    the degree of reprehensibility

1.    State Farm’s conduct was reprehensible, to the extent that they made Campbell go to court with a losing case & then said they wouldn’t pay for it. But in terms of their reprehensibility of their nationwide scheme to cap payoffs, the court did not have a right to determine this because it would violate due process

                                                                                         ii.    The ratio between actual or potential harm suffered by the plaintiff

1.    Basically, to be fair there should be a 10 to 1 ratio for punitive damages to compensatory damages. Otherwise, it wouldn’t comport with due process. Single-digits multipliers ok, but above 10, probably not.

                                                                                        iii.    Criminal Sanction - the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases

1.    in comparable cases there was a $10k fine for fraud

b.    These methods of assessing punitive damages that the court used amounted to an irrational and arbitrary deprivation of the plaintiff's property, violating the Due Process Clause of the 14^th Amendment.

c.    Dissent – due process clause or the rest of the constitution doesn’t actually provide a basis for rule in giving punitive damages; it’s up to state’s discretion. Also, State Farm’s behavior warranted the damages (they also destroyed documents requested in discovery). 

  IV.        Specific Remedies

a.    The idea of specific relief

                                          i.    Specific relief could be (consider that the Campbells sold their house to pay for the damages)

1.    Injunctions to make them to do or stop doing something (most common)

2.    They sell the house, sign the contract, then decide not to sign the deed—the court commands them to leave under threat of contempt of court

3.    They sell the house, but don't leave—the court sends a sheriff to eject them

4.    They leave the house but forget some jewelry in it—the court sends the sheriff to retrieve it on act of replevin

5.    Specific relief solely cases are tried by a judge

b.     Equity and Specific Relief

                                          i.    Key point is that the accepted standard was that equitable remedies were available only if the legal remedy was inadequate

                                         ii.    Specific performance is an equitable remedy (equitable remedy - where money damages are not available). 

1.    If def doesn’t pay money damages - you can just seize their property and sell if off. If def doesn’t do the specific performance, then they are in contempt of court and can go to jail.

2.    So equitable remedy is secondary

3.    So if you can accomplish the same purpose with money damages, better to just use this. More efficient for the judicial system.

c.    Is there a Remedial Hierarchy?

                                          i.    Equitable remedies require a showing that money damages are inadequate

                                         ii.    But courts are more lenient these days to grant injunctive relief

                                        iii.    However there are situations where injunctions usually won’t be granted—libelous newspapers (because of infringing on the first amendment), or when it might be too hard on the defendant

                                       iv.    The Sigma case rejects the latter argument in this case

                                        v.    You can only get injunctive relief (permanent injunction) - requiring specific action, only if here is no adequate remedy at law.

1.    Sigma Chemical v. Harris – Upon employment at Sigma, Harris signed a non-compete agreement, where he was barred from working for a competitor for 2 years after leaving Sigma, and to never divulge trade secrets.  Harris ended up breaching agreement on both terms, and Sigma sued.  Issue is whether permanent injunctive relief sought by plaintiff is valid.  Competitor benefits from the wrongfully acquired knowledge.  Sigma doesn’t want money damages, but only for Harris not to disclose trade secrets.  Too hard to quantify the amount of profits received from the knowledge - no adequate remedy at law for this.  So injunctive relief valid.

a.    Harris breached the agreement - it is relevant because in equitable remedies, such matters as the relevant moral worth of parties are considered.  Compensatory damages not enough, so we need to prevent him from disclosing trade secrets.

b.    Why doesn’t court order him to work for Sigma? - may not be effective b/c both parties may not want this.

c.    Court can say that Harris can’t work at other places instead. More efficient to forbear them from working somewhere else. This is what they do.

d.    Injunctive relief - better to give a prohibitory injunction, rather than a mandatory injunction.

e.    Injunctive relief requires ongoing court supervision. 

f.     Normal thinking in equity is "can we effectively work something out that would accommodate all the interests involved?" as opposed to money damages

    V.        Declaratory Relief

1. Declaratory relief/judgment – declares the rights, duties, or obligations of each party in a dispute. It is typically requested when a party is threatened with lawsuit and the threatened lawsuit is not yet filed; or when it is thought by one of two (or more) parties that their rights under law and/or contract might conflict;

                                          i.    What problem does this try to solve? - there are cases where you want to get a declaration because it would be inefficient to incur damages after actions have started

                                         ii.    On the other hand - there is a constitutional limitation (article 3); there have to be actual cases or controversies. 

                                        iii.    Has to be within the context of an actual controversy in a jurisdiction – Can’t expand the jurisdiction of the federal courts.  

  VI.        Financing Litigation

a.    The “American” rule

                                          i.    There are all different methods of financing litigation. In practice, this question becomes increasingly important. How are we going to be paid?

                                         ii.    Under the American Rule, everybody pays their own lawyer. Under the English Rule, the loser pays all litigation costs.

1.    There is no incentive to file a totally frivolous lawsuit under the American rule.

2.    The marginal case is dropped in the English system, because it’s not worth the risk of incurring both your own costs and the defendant’s costs.

a.    Problem with this is:  you have to pay for both legal fees. Plaintiff may not bring a case if they think they would have to pay def legal fees as well as their own.

                                                                                          i.    Modification for this problem - statute will provide for loser to pay the winners legal fees, (section 1988) but a winning def doesn’t unless def can show lawsuit shouldn’t have been brought.  In favor of lawsuit being brought.

                                        iii.    Undercompensation problem

1.    Fees many times subtracted from winnings. Without compensation of legal fees, the winnings greatly decreased because of this.

2.    Ppl may not go to court because of the legal fees, because it wouldn’t be economic.

3.    Access to justice problem

a.    Without a lawyer, probably won’t be a recovery. This problem is solved if loser pays the winner’s legal fees.

2. Other ways to give access to lawyers rather than having loser pay fees.

                                          i.    Insurance - How do you defend yourself when you get sued for a car accident? You start out by calling your insurance company; your car insurance usually has coverage for legal representation when you get sued. So who becomes one of the parties in interest? The insurance company takes an interest in the outcome of the suit. Insurance companies bear a lot of litigation costs and therefore want to settle even frivolous claims.

                                         ii.    Contingency fees - The lawyer agrees to provide legal services with fees to be paid out of a percentage of the proceeds of the litigation. This is the chief way that plaintiffs are able to finance meritorious litigation. That’s because the costs per hour for attorney’s fees are simply too great for most individuals to bear except in certain contexts.

1.    Illegal in criminal cases and divorce cases - we don’t market to sort out those cases. Give lawyers incentive to do things you don’t want done.

                                        iii.    Public subsidies (legal aid) - There are agencies at all levels of government that provide legal assistance to needy plaintiffs.

                                       iv.    Professional Charity (pro bono) - Pro bono work is free work that regular old lawyers would do for needy plaintiffs.

c.    From fee spreading to fee shifting

                                          i.    Fee Spreading

1.    The common fund – plaintiff creates a fund for others to chip in for litigations costs, when the lawsuit benefits others, not just the plaintiff.

                                         ii.    Fee Shifting

1.    By contract – you can contract that if litigations arises, loser pays winners lawyer.

2.    By common law – a situation where by common law, the loser would pay winner’s fees is when plaintiff has groundlessly brought a suit (malicious prosecution)

3.    By statute – states enact statutes that will shift legal fees.

VII.        Provisional Remedies – decided before trial; if situation is not dealt with immediately it will result in irreparable harm to the plaintiff, you need preliminary relief; designed to maintain the status of the item in question from now until trial begins.

a.    Rules 64-66 – Rules of Provisional Remedies

                                          i.    Types of remedies – arrest, attachment, sequestration, replevin, etc.

1.    Replevin - repossession of personal property wrongfully taken or detained by the defendant

                                         ii.    Rule 65 (a) Preliminary injunctions – Need hearing first.  You’re going to order someone not to do something following a hearing.

                                        iii.    Rule 65(b) Temporary restraining orders

b.    Issue with provisional remedies.

                                          i.    In theory - provisional remedy only lasts until trial; and no harm done.

                                         ii.    In practice, this is not true. Many cases are disposed of in the provisional remedy stage.  Not because of what happens in the litigation, but of the resulting pressure.  Judge may say "you survived this long, so why shouldn’t I leave it as is?"  If plaintiff gets strong provisional remedy - strong settlement and even surrender is likely

c.    Justification for provisional remedy as state law – nothing on point in FRCP, so follow state.

d.    William Inglis & Sons Baking Co v. ITT Continental Baking Co - Some baking companies sued some of their competitors in an antitrust action.  Def says bread prices made in good faith to meet competition.  One plaintiff moved for a preliminary injunction. 

                                          i.    The district court denied the injunction.

1.    Said the plaintiff is entitled to a preliminary injunction if:

a.    P will suffer irreparable injury if injunctive relief is not granted

b.    P will probably prevail on the merits

c.    In balancing the equities, the defendants will not be harmed more than P is helped by the injunction

d.    Granting the injunction is in the public interest

2.    The court found that plaintiff probably would not win, and that's why they denied the injunction

                                         ii.    This was appealed. The issue now is if the district court applied the correct test in denying a preliminary injunction

1.    Court here says there is an alternative test which allows a preliminary injunction even when the chance that the plaintiff will win is uncertain.  Under that test, there need only be a “fair chance of success on the merits” so long as the damage that the plaintiff may suffer is “sufficiently serious”.  The Court of Appeals finds that the district court needs to consider this test as well as the one it actually applied.

VIII.        Provisional Remedies and Due Process - Before the government can take your property, you must have notice, and you must have a hearing of some sort. That’s procedural due process.

a.    Due process problem for plaintiff to seize property with the provisional remedy because if right to property is protected because then we are more likely to come to a just result. We want our provisional remedy to mirror the result of trial. 

                                          i.    Possible Loss - you don’t have your property (property deteriorating); irreparable injury continues; The more process, the more delay.

b.    Fuentes v Shevin - Fuentes bought from Firestone and later had a dispute over the property. Firestone went to small-claims court to repossess the property and got a writ of replevin before Fuentes was even notified of the proceeding.  Fuentes sued, saying that her 14th Amendment right to due process had been violated.

                                          i.    Fed court finds that state stature on replevin no good. It violated due process – item seized w/o notice.

                                         ii.    Originally, burden of proof that property was taken w/o merit on Fuentes, but the burden is on the wrong party. How can Fuentes know why they seized it if she had no notice? So, she couldn’t prove anything b/c she didn’t know what she had to prove.

1.    Also, no hearing to prove she didn’t make payment as Firestone said.

2.    The person who has the item has a right to keep it until the verdict, and whoever wants to displace it has the burden of proof. 

a.    Ultimate merits of who is entitled to the item is decided during trial