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Remedies Outline: I. Introduction A. What is a Remedy Court enforcement of rights.

. Blackstone (scholar of American jurisprudence) said that every right withheld must have a remedy. There is no injury if there is no redress. A right is meaningless if it doesnt have a remedy. B. 3 Basic Remedies: a. Remedies at Law (damages) Damage law gives every person a choice: to behave as you should or pay damages. Normally compensatory, but can be used as a social regulator (torts usually, not K). b. Remedies in Fairness (equity). Some included rescission and restitution here. Developed from Chancery Court from England. When a claim didnt fit a writ but you still had an argument in fairness. c. Declaratory Remedies In a sense, not a remedy at all. It is a declaration of the court saying what someones rights are. C. Procedure a. Usually one court hears both damages and equity (except DE) b. The court decides whether the litigant has been wronged under the substantive law that governs primary rights and duties; it conducts its inquiry in accordance with procedural law. c. Courts are required to classify remedies as either substantive or procedural when state claims are heard in federal court and when federal claims are tried in state court. d. Erie doctrine: State law for substantive, but Fed law for procedural. No federal common law remedies. SupCt has held that the measure of recovery is substantive. II. Damages A. REMEDIES AT LAW a. Compensatory Damages to put the P back in their rightful position *torts+ or promised position [contracts] {2 approaches: What is P out of pocket? OR What is substitution value FMV? Can be different} i. Rightful Position o US v. Hatahley (page 11) The fundamental principle of damages is to restore the injured party as nearly as possible to the position he would have been in *but for* the wrong. Judge cannot arbitrarily award damages. There has to be some reasonable way of calculating the amount. Dont have to be precise, but must have some basis in fact. o Corrective justice Plaintiff should not be made to suffer because of wrongdoing, and if we restore P back to her rightful position, she will not suffer. (Aristotle, p. 16) o Efficiency a new approach to the rightful position rule. Scholarly approach rather than practical approach. Social efficiency (p. 16) - Each person exchanges something they value less for something they value more, and this in turn makes both things more valuable. Want to encourage economically efficient action, rather than actions based on morals or norms. It may be more efficient for someone to 'misbehave' than to behave. Ex. The damages may be more economic than to continue with K. Efficient breach. Does not take morality into account at all. Presumes equal bargaining power. Does not take into account intentional torts. 1

Calculating Value Sept. 11th Litigation case: Rule: NY Courts follow the "lesser of two" rule when property has been destroyed. A Pl whose property has been injured may recover the lesser of the diminution of the property's market value OR its replacement cost. Each is a proper way to measure lost property, thereby affording full compensation to the owner, and avoiding uneconomical efforts. (no windfall) - One exception to this rule is "special property." The test for valuing special property without market value: 1. Improvements must be unique and specially built for the specific purpose 2. Specific use for the improvement 3. No market for the type of property and no sales of property 4. Improvement must be an appropriate improvement at the time of the taking and its use must be economically feasible and reasonably expected to be replaced. (emhasized by prof.) - The test for specialty properties is not whether there are, or were, special or unique aspects to the property, but rather whether the use to which the property is put at the time of the tort is a unique use, suitable only to the owner, and without a fair market value. Fair Market Value (FMV) - the price which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. A recent sale price is the "best evidence" of the FMV. (classic standard definition - cited in many cases and in Restatements. KNOW THIS) Expectancy and Reliance Damages 1. Measure of rightful position a. Reliance (p. 40) the position P would have occupied if she had never made the contract; OR i. Everything the P gave up in reliance of the K. Including expenditures, other Ks, etc. incidental and essential reliance. b. Expectancy damages the position P would have occupied if the K had been performed. Only recoverable in K, not torts. The K creates rights to which the P becomes entitled, and this contractual entitlement is what the P loses when D breaches. See Notes for remedies under UCC, also p. 47. 4 factors for expectancy damages: i. Causation ii. Foreseeability iii. Reasonable basis for calculating damages iv. Mitigation. P must try to mitigate. 2. Efficient breach Posner, Economic Analysis of Law a. Battle between moral theorist (dont break the K because you made a promise) and economic theorist (breach K if its efficient to do so). 2

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b. Efficient breach only makes sense IF the additional amount you could make under the new K exceeds the amount of damages you will need to pay the non-breaching party. c. However, courts do not like opportunistic breach. 3. Neri v. Retain Marine Corp. (p. 35) lost volume seller when you are a seller who has something for sale, and plenty of them. If someone breaches a K to buy one, and you end up selling it anyways, you would have made 2 sales instead of 1. Rule you have to have more than one of whatever is for sale, and it has to be likely that you would have made another sale. (UCC 2-708) ii. Consequential Damages profit it could have made from other K if the original K had been sold. Direct damages come from initial blow, consequential damages come from anything as a result of that initial blow. 1. Called special damages in Tort law. a. P&S are general damages. b. Special damages are medical expenses, lost earnings, etc. 2. 5 factors of Consequential damages: a. Proximate cause b. Reasonable way to calculate loss (not speculative) c. Foreseeability i. Special Consequential Damages (different that special tort damages) 1. Hadley v. Baxendale naturally arise from the breach itself. Any reasonable person could foresee the potential damages. 2. The P has to put the D on notice that there are special consequential damages that could arise from the breach. d. Mitigation e. Pleading Rule FRCP 9(g) any special damage must be specifically stated. 3. Exceptions to Consequential Damages a. Wrongful failure to lend - a bank agrees to lend money and then decides not to. That is a breach of K. The direct damages would be the difference in the interest rate that they would have charged verses another interest rate. What if you can't get another loan? The damages would be consequential. b. Bad Faith failure to settle - D insures P in 3rd party liability for 100K. P gets in a wreck and injures T. T sues P and D. T offers to settle for policy limits, but D won't settle because it has nothing to lose (if D loses, it only has to pay 100K. Yet D hopes that the verdict will be less than policy limits). What is verdict is 200K, D only has to pay 100K. P has to come up with the deficiency. If P can show that D acted in bad faith, that is a tort. The consequential damages are the deficiency j'ment against the insured. Can also go for punative damages in tort.

b. Limits on Damages i. Mitigation Rule the law treats P as though they took reasonable steps to avoid further loss. D must raise failure to mitigate to pay only unavoidable damages. P cannot pile on damages that can be reasonably avoided. 3

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Disclaimers in K law, negotiation creates private law between parties, why shouldnt this private law include remedies? 1. UCC expressly permits disclaimer a. UCC limits as a matter of public policy Fair quantum of remedy. b. Unconscionability void if found to be the prevention of unfair surprise AND oppression. However, not to be used to police inequality of bargaining power. 2. Limitation of remedy a. Repair and replace, within a given amount of time. This remedy fails of its essential purpose when the seller is unable or unwilling within a reasonable time. b. Liquidated damages provision in the event of a breach by one of the parties, a provision will actually set the amount (or provide some formula or benchmark for setting amount) of damages to the exclusion of jurydetermined damages under the usual rules. i. Liquidated damages will likely not be enforced by the courts unless there is a probable loss. Probable loss is sometimes hard to predict and will not put P back in its rightful position. Too speculative, and doesnt solve the initial problem. Generally considered too high or too low, and discourages efficient breach. Can only be sought when demanded. ii. In Re TWA Liq Damages provision, lessor trying to put on TWA the depreciation of the planes. The court says this is a penalty because it brings into play damages that have no bearing on the lessors probable loss. They are not causally related. The plane will depreciate regardless. iii. Courts are leary of LD because it doesnt put P in promised position. Will not be enforced if penalty clause.

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Substantive Policy Goals 1. Treble damages statutory damages which are punitive in nature. Tripling of actual damages. Federal anti-trust violations also carry treble damage penalties Brunswick v. Pueblo (p. 118) In order to get treble damages, you have to have an injury that is the same injury sought to be prevented. P may have an injury but if it was not related to the to the inappropriate conduct of D, then causation link fails. 2. Requirement of Reasonable Certainty Bigelow v. RKO Radio Pictures (p. 124) leading case on uncertain damages. Have to calculate to a reasonable certainty, but not to the exact penny. Rule the jury may not render a verdict based on speculation or guesswork. But the jury may make a just and reasonable estimate of the damages based on relevant data, and render its verdict accordingly; Juries are allowed to act upon probable and inferencial, as well as direct and positive proof. (p. 127) 3. Damages Models a. Two basic kinds of financial models to calculate damages: i. Going Concern conceives of all of the damages happening at the time of the wrong. How much was business worth at time of injury (market value?) Commonly used if business was destroyed (In Re Sept. 11th) 4

ii. Lost Profit 2 main methods of proving (See Bigelow, p. 125) 1. Before-and-after method using profit information for just you during a certain period of time before and after harm. 2. Yardstick comparison to a similar business that was not injured. iii. Also Direct modeling for businesses that are too new for any comparison, or too unique (See Pennzoil) b. In SC, you have to bring in 3 different models, and the court will pick out which one they consider to be a valuable model, and give a percentage of each model. Extremely complicated and expensive. BATTLE OF THE EXPERTS. 4. Legislative Limits (Tort reform) a. Limit on non-economic damages (no functioning economic market) i. Non-economic loss nonpecuniary harm including P&S, loss of consortium, mental anguish, and other intangible loss. Many states have a statutory limit on these damages, with the exception for permanent or catastrophic deformity b. Cap on punitive damages i. Due process (State Farm case) issues. See Punitive Damages. c. Constitutional and Dignitary Harms i. Dignitary Harms list on p. 175 1. To get a remedy in tort, must show that P suffered an injury. 2. Recoverable in intentional torts, but not in negligence without some additional showing (physical manifestation). 3. Analagous to the economic loss rule (p. 250 if COA could be tort or K, the nature of injury often determines the duty, and if only economic loss, K remedy. But, if P can prove a distinct tortuous act in addition, then further tort recovery). Must show something more than negligence. Negligence + __ (the plus could be physical impact, physical manifestation, zone of danger, etc.) 4. Courts must defer to the jury unless the damages are monstrously excessive or so large as to shock the conscience of the court. Look to other awards similar in nature. Look to see if there are aggravating circumstances to justify higher award. ii. Constitutional Harm Tort liability for deprivation of rights guaranteed by Const. (See Imbler v. Pachtman) (State actions, look to Ex Parte Young p. 478) Carey v. Piphus (p. 181) sec. 1983 Must prove a right was violated AND that there was injury from deprivation of this right. Otherwise nominal damages. We hold that neither the likelihood of such injury nor the difficulty of proving it is so great as to justify awarding compensatory damages without proof that such injury was actually caused. However, because the right to procedural due process is absolute, we believe the denial should be actionable for nominal damages without proof injury. Punitive damages for Const. Harms Due Process Clause prohibits the imposition of grossly high awards d. Punitive Damages the purpose is to punish the D and to discourage D or others from acting in a similar way. (Retribution, deterrence, when compensatory are not enough, social justice) (dont 5

confuse with P&S, that is a P damage, punitives do not consider P at all, only D) (punitives not available in restitution cases) i. 3 Guidepost set up in BMW v. Gore (p. 233) 1. The degree of reprehensibility of the Ds conduct 2. The ratio between the punitive damages award and the harm likely to result from the Ds conduct, as well as the harm that actually occurred. 3. The civil or criminal penalties that could be imposed for comparable conduct a. Cant use punitive in place of criminal penalties because the BOP for civil is only prep of evidence, and the burden for criminal is RD. (See State Farm v. Campbell). ii. Due Process 1. Punitives can be over turned on procedural grounds lack of jurisdiction. NC cant punish for issues in SC 2. Punitives can be over turned on substantive grounds have to limit damages to harm to that P, not other Ps. (Scalia and Thomas do not believe there is any such thing as substantive DP). Ratio Many states have tightened BOP to clear and convincing evidence. Yet most have applied caps or ratios. General ratio is 1:1 (actual to punitives). Exxon v. Baker - a single digit maximis appropriate in all but the most exceptional cases. when compensatory damages are substantial, then a lesser ratio can reach the outer-most limit of due process guarantee (p. 224). Remedial statutes - With small damages cases (civil rights, etc.) its more expensive to bring the litigation than the damages amount. To encourage people to bring these cases for their social value, many statutes have doubled and trebled damages. (remedial/statutory ratio). Punitive in K still a general rule that punitives cannot be awarded in K law. But if an independent tort is committed in a contractual setting, punitives can be awarded for the tort (Economic Loss Rule). Ex. Bad-faith breach, fraud (inducement or factum), conversion, tortuous interference with K, negligence. Debate: Should wealth of D matter? (p. 232). Should P profit in excess of rightful position (vicious cycle of should P profit, or should D be deterred) What are sanctions for comparable conduct?

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B. REMEDIES IN FAIRNESS (Equitable Damages) INJUNCTIONS. Coercive and unusual remedy. Equity acts in personam and not limited to courts jurisdiction. Can issue an injunction to refrain from acts anywhere. a. Injunction a court order, enforceable by sanctions for contempt of court, directing a D to do or refrain from doing something. Considered a drastic remedy and is at the discretion of the court. 3 Requirements: i. Immediate and irreparable harm (Ripeness) ii. Substantial threat of harm (Propensity) (look to substantive law to see if violation) iii. No adequate remedy at law (money damages) b. Ripeness (immediate and irreparable harm) 6

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Individuation particular person under particular circumstances. Cant be too general, and the person under the real threat must be the moving party. (p. 268) Does not require that D already committed the act, but as long as there is a substantial and realistic threat. Can show propensity with prior bad acts. Probability of the harm is more important than its temporal proximity. Immediate should not be taken so literally.

c. Nature of relief i. Preventative seeks to prevent harm rather than compensate for harm already suffered. Seeks to maintain P in rightful position and not make worse off. ii. Prophylactic creates a type of due process. More broad and instructive to D than preventative inj. Ex. SEC can impose an injunction on a person from ever trading again if found to have committed fraud. Close relationship between prophylaxis and statutes. iii. Reparative compensatory type of injunction, issued after the wrong. Backed up by contempt power. Ex. D performed a wrong and threatened to do it again, court can issue reparative and preventative injunction. If nothing to be forbidden, go for damages. ,Undo harm. Or redo Election results from example in EE} iv. Specific Performance really similar to an injunction, but its really not. More like an order enforcing a K. Requires a person to do exactly what they said they would do. Lies on the idea of uniqueness of the thing. Cannot go out into the market and buy a substitute performance. If there is a market, then money damages is an adequate remedy. EXCEPTION personal services are not subject to SP. Limited by the 13th Amendment. Use an injunction for that scenario. d. Procedural Aspect of Relief FRCP 65 (p. 459) i. Temporary Restraining Order (TRO) designed to prevent irreparable harm that will occur before a preliminary injunction hearing can be held. Only appropriate when there is no other adequate remedy at all. Can be ex parte if atty can show that notice couldnt be given. Not appealable because there are no findings of fact and conclusions of law. Can become moot. ii. Preliminary injunction Only on notice to adverse party. Meant to be temporary until there can be a full hearing on the merits. If there have been findings of fact and conclusions of law, then a prelim hearing is appealable. Keeps the status quo until a more permanent solution can be determined. 1. Courts must engage in balancing: a. Probability of success on the merits vs. irreparable harm to either side during wait. iii. Permanent injunction final judgment on the merits, appealable. e. Contempt Power solely at the discretion of the court. Can be criminal or civil i. Criminal contempt Willful violation of a court order. The key is willfulness. ii. Civil contempt 2 types: 1. Compensatory failure to comply has created some injury to protected party 2. Coercive protected party brings violation to courts attention and asks the court to force them to submit (penalties and fines). f. Types of Reparative Injunctions (repairing the consequences of past wrongs) i. Double Recovery - Forster v. Boss: 7

Fraud for telling buyers they could get a dock permit when sellers already held permit. P received a double recovery: an injunction that makes them whole, plus damages to compensate them for the loss of the right the injunction guarantees. On remand, P had to choose which remedy they wanted: compensatory damages or the injunction. P could keep punitive damage because it was not compensatory, and therefore not duplicative. HOWEVER, can get injunction to prevent future harm, and compensatory damages for past harm.

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Trade Secrets Winston Research Corp. v. Mincom: Permanent injunction is the equitable version of punitives. Length of injunction can go to damages the longer the injunction, the less profits being made. How long is relative to how much in damages. Equitable Discretion: 2 competing traditions: 1. Rightful Position approach: restore the P to the position it would have occupied but for the violation. a. Justice Ginsburg adopted this approach in US v. Virginia (VMI) (p. 336) 2. Equitable Discretion approach: once there is a violation that brings a case into the equity court, there is a roving commission to do good and equity should be done to all within his jurisdiction. Class Actions exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only. Class cert saves resources by potentially affecting every class member.

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g. Constitutionality of injunctions i. Ayotte v. Planned Parenthood (p. 273) the rightful position principle 1. Court will try to limit the solution to the problem (ripeness) 2. Court will refrain from rewriting state law 3. Court cannot use its remedial power to circumvent the intent of the legislature. (They do this all the time; should they invalidate the whole statute or just certain part of it?) ii. Statutes can pass statutes to give the standing requirement. Ex. Civil Rights of Institutionalized Persons Act establishes the standing for AGs to bring constitutional cases. III. Declaratory Judgments an action to simply declare rights between parties. Non-compensatory and noncoercive. If you cant show irreparable harm, an injunction might not be the right remedy. No contempt power, only can use to help prove your case if right is violated. a. Contract cases often used to AVOID a compensatory action. Gets rights settled so you dont have to sue. Must have an assertion of rights, a challenge by D, and ripeness. This is the controversy. b. Constitutional cases i. Article III, sec. 2 - judicial power extends only to "case and controversy". ii. N, C, & St. L Railway v. Wallace P thinks taxes are unconstitutional, yet the worst thing P could do is not pay the taxes. Sought a DJ on the determination of his valuable legal rights. Must show with specificity what their harm will be in they don't get the DJ. 8

c. Uniform Declaratory Judgment Act SC has adopted. i. The federal act explicitly gives the courts the power to declare rights of any interested party, whether or not further relief is sought. ii. Fed cts cannot decide status, State courts can. Ex. Married. d. Scarecrow Patent cases: i. Party acts in a way that infringes on patent. Instead of suing for infringement, they threaten a suit against infringor. This infringor can be bullied into abandoning or paying licensing fees. A way around this is for the infringor to bring a DJ action. (See Cardinal Chemical v. Morton Int., p. 570) e. Preclusion i. Collateral estoppels (issue preclusion) if a party is involved in a proceeding, that party is stopped from relitigating the same issue. DJ is issue preclusive in subsequent litigation with respect to rights/issues already decided. ii. Claim preclusion is different. A request for further relief is not barred because it was not included in original request for DJ. Ex. Seek DJ and win, later sue for damages. f. Insurance INSURANCE COMPANY LOOSES. (**very important**) Policies do not insure against intentional wrong acts. The result of that is intentional underpleading. P will underplead as a negligence case, just to get insurance. i. If court refuses DJ by insurer, then insurance will have to defend the claim.

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Other Damages A. Restitution think in terms of unjust enrichment. Also called quasi-contract. Where there is an enforceable K, you are bound by those terms. Not applicable if K has been established. (Punitives not available in rest.) (similar to rightful position because it restores things to the status quo ante) (social policy dont want D to profit from wrong act) a. Very much like money damages. It is the Cause of Action that puts it in equity court. (Ex. Easier to prove restitution than conversion or fraud) b. Restitution is based on Ds gain, not Ps loss. Based on benefit received by D. c. Recovery: i. Mistake - A recipient who commits a wrong without fault, typically without being on notice that he is doing anything wrong, is not liable for consequential damages. (See Blue Cross p. 619) ii. Ill-gotten gains: Disgorgement of profits a remedy imposed upon the D which is more than injury to P. 1. Must show an intentional act. Therefore the elements of tort. Different than Sauer case, there was no intentional act. (See EE p. 254 for examples) 2. P must show: a. D earned a profit from the fraud b. Causation c. Amount of profit (NO requirement to show what D did with profit) 3. Orwell v. Nye: Court justified a generous benefit to the P, but at a high cost to D, by pointing to the Ds consciously tortuous actions. Look to Ds culpability. iii. Constructive Trust a fictional trust whereby the court separates beneficial ownership from rightful ownership. A CT must be imposed upon the thing at issue. Ex. Property, account, etc. 9

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Paoloni v. Goldstein (p. 695) - A CT is an equitable devise used to compel one who unfairly holds a property interest to convey that interest to another to whom it justly belongs. This equitable remedy may be imposed when property has been acquired in such circumstances that the holder of legal title may not in equity and good conscious retain the beneficial interest. The party holding the subject property need not have performed a wrongful act for a CT to be imposed. The purpose of CT is to prevent the D from being unjustly enriched at the P's expense. Equitable Lien A CT treats the P as owner; and EL treats the D as owner but gives P a lien. P gets the value of the use (rent). CT vests at the time of the wrong. The court is not creating a trust, but enforcing a trust that has already been created. Intermediate Balance Rule and Tracing Problems p. 714 26

iv. Floor and Ceiling There are 2 possible floors: (1) the fair market value of X (quantum meriut) when you dont have profits to disgorge, OR (2) a measure of damages for the use or rental of X. Injury can be loss of exclusive use of property, even if you werent using it B. Choice of Remedies a. Irreparable Injury Rule Equity will not act if there is an adequate remedy at law. Equity only acts to prevent injury that is irreparable. i. Modern application of Irreparable Injury Rule comparison between some equitable remedy that will prevent a threatened injury and money damages that will compensate for the injury after it occurs. If money damages will be adequate, then the injury is not irreparable and will not be prevented. o Modern Justification 1. Too troublesome for court to supervise specific relief. Easier for a one time award of money damages and then courts are out of the picture. 2. Injunctions are a greater intrusion on Ds liberty. 3. No jury trials in equity court. P should not be able to deny D a right to jury by asking for an injunction. b. Specific Performance specialized form of injunction an order for D to perform his promise in a K. Legal remedy would be inadequate. WILL NOT be inflicted on a person to perform, 13th Am. i. Advantages of SP certainly puts P in rightful position, Easier to get right, avoids under/over compensation of damages, takes remedy out of juries hands, social policy of fulfilling promise, time value of money (p. 401) etc. ii. Disadvantages of SP discourages efficient breach, coercive, requires judicial supervision, parties dont have time to wait for court, etc. 1. Efficient Breach the problem is that EB ignores transaction costs. TC are any costs associated with the K, other than the K itself. Every K has TC. Ex. Research into K, employees to negotiate K, litigation costs for K breach. iii. Factors of SP uniqueness of goods (not generally available in the market), fungibleness, scarcity, time constraints, sheer size of K. (See Campbell Soup v. Wentz) SP is more common in RE cases because of uniqueness of real property. iv. Undue Hardship Defense 1. Van Wagner v. S&M Ent - An independent reason, both doctrine and policy, for denying SP. An equitable remedy should not itself create an inequity. 2. Whitlock v. Hilander Foods If encroachment was deliberate, the court may issue injunction w/o considering relative hardships. Court acting in equity must act fairly 10

and approach with clean hands. If the equitable remedy is unfair, then there must be legal remedies. a. Similar to Redding Pipes case, where the breach is slight, but the forfeiture is great, then equity will operate. Balancing of forfeitures. Sometimes there is no remedy. Ex. The difference in the market value of the house with Redding pipes and the house without. c. Bi-lateral monopoly (p. 414) if court grants the injunction, P gets enormous bargaining leverage; if the court denies the injunction, D gets enormous bargaining leverage. No substitute, only one source for what they want. HIGH transaction costs. Court must look to whose sacrifices are the greatest (policy argument versus costs analysis) [both sides determined no taken advantage of.] i. Laches sleep on rights. Should have taken action sooner to avoid bi-lateral monopoly. Goes to mitigation also. d. Intellectual Property and Speech Choice of Remedy: i. Ebay, Inc. v. Mercexchange, LLC (p 423) 4 part test, P must prove: 1. That it has suffered an irreparable harm; 2. That the remedies at law are inadequate to compensate injury 3. Considering balance of hardship btw P and D, remedy in equity is warranted 4. Public interest would not be dissolved by a permanent injunction. o Ebay cont arent 1 and 2 the same? #3 in state court, would be an affirmative defense, but in fed ct it is part of the BoP. Also, just because you can prove your right and violation, it does not mandate what the remedy will be, no pro se rule. ii. Willing v. Mazzacone (p. 429) some kinds of speech is protected and others are not. 1. Defamation cant go into market place and buy a substitution reputation. Court presumes defamation damages because they are hard to calculate. 2. Judgment proof injunctions should not be issued just because D is judgment proof. But, without an injunction, what is to stop her from defaming? 3. Cant enjoin a possible defamation that is prior restriction on speech. Yet you also cant issue an injunction on speech that has already happened, money damages would appropriate. C. Ancillary Damages a. Enforcing Judgments i. 3 parts to an action: trial, judgment, then enforcement. Just because there has been an award of damages to P, the process does not stop there. The damages have to get to P. ii. Wise words: a bad settlement is better than a good settlement. Money in pocket is better than a right to money that may take years/money to recover. b. Contempt Actions: 3 basic distinctions: i. Criminal contempt criminal punishment for a past offense, the punishment is not conditional on future compliance. P can report the contempt, but cannot require or stop the contempt proceedings. *focus on Ds conduct to the court+. 1. Must have a trial, and double jeopardy will attach against separate trial for an underlying criminal offense subsumed in the injunction. 2. The collateral bar rule the offense is complete when D willfully violates an injunction, even if the injunction is later held erroneous. D cannot challenge validity of the injunction in a prosecution for criminal contempt. Does not apply to civil contempt. 11

ii. Coercive civil contempt Prosecuted in the name of P and largely controlled by P. [focus on effect on P.] iii. Compensatory civil contempt Like an action for damages or restitution. Once an injunction is violated, it awards compensation after all. Solely putative.

c. Attorneys fees and costs i. Introduction 2 approaches to fees, American and English Rule 1. American Rule each party bears their own fees and cost. It is thought to encourage litigation, but in actuality it discourages it because Ps would be discouraged by the risk. Viewed as an ancillary remedy, separate on its merits. a. Exceptions remedial statutes, bad-faith litigation exception, etc. (p. 882) 2. English Rule loser pays. Purpose is to discourage litigation. More of an encouragement to settle before ever filing an action. ii. Fee-shifting statues Courts have the power to shift fees; but remedial statutes can also give the courts power to shift fees and costs. Ex. Civil Rights Act, Anti-trust Act, Securities Law, etc. 1. All are one-way shifting statutes, where only the P can ask for fees. 2. Rationale prevailing Ps vindicate federal policy (encourage private parties to enforce statues by suing), and losing Ds are adjudicated wrongdoers. 3. City of Riverside v. Rivera attys fees exceeded damages. Should D pay reasonable attys fees (Hensley rule) or pay an amount proportionate to award? a. Reasonable fee see Hensley lodestar number of hours reasonably expended multiplied by a reasonable hourly rate. Johnson 12 factors of reasonableness (p. b. Encourage civil rights litigation, even where amt of damages at stake is low. Where broad public interest IS in fact vindicated, then large fees can be awarded. But, where principally only money damages, then no large unreasonable fees. 4. Prevailing Party Requirement - most fee provisions authorize fees to a prevailing party. a. But what about partially prevailing parties unrelated claims should be treated as separate lawsuits, with fees only for hours spent on successful claims (Hensley). b. Requirement of relief on the merits material alteration of the legal relationship of the parties in a manner in which Congress sought to promote in fee statute (See Texas State Teachers Assn v. Garland) (p. 890) i. P must win, defeat D, and get something. ii. Buckhannon: must get an enforceable judgment on the merits, either litigated or consent decree. Normally no fee shifting in settlements out of court. iii. Fee from a common fund typically class actions. 1. Lodestar a reasonable number of hours multiplied by a reasonable billing rate. a. Reasonable hours courts will award fees on based on carefully reconstructed time accounts. Hours spent unnecessarily or inefficiently do 12

not count, although it is hard for courts to make informed decisions about this. b. Reasonable rate what is the market rate for attorneys with comparable skills and experience? Should be based on market rates even if atty charges less than market rates (See Blum v. Stenson) c. Multiplier when the court multiplies the lodestar by some number greater than one to account for the risk of nonpayment. To get a multiplier, you will have to bring in an expert to testify about the reasonableness and exceptional aspect. i. Perdue v. Kenny A. SupCt overturned a DistCt multiplier. A strong performance can lead to enhancement, but only in rare and exceptional cases. 2. Percentage of fund - percentage of settlement to be deducted from the common fund settlement. Rewards for success and penalizes failure. Many judges choose POF because they dont want to evaluate the lodestar.

3. In Re Cabletron Systems: a. It is now common practice to use the lodestar as a cross-check on the POF award. ethical imperative because the court acts as a fiduciary to the class. b. Common approaches to cross-check: i. Multi-factor test compare time/labor, complexity and difficulty of case, quality of representation, benefit obtained for class, risks. ii. Benchmark percentages, 20, 25, 30% - court cant know whats reasonable. iii. Market Mimicking Approach market price for legal services, in light of the risk of nonpayment and the normal rate of comparison c. Court concludes that the best way to determine the reasonableness of a fee award is to assess what the fee arrangement would have been had it been determined by an open, competitive process at the outset. (auction of right to be counsel).

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