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CHAPTER 9
BUSINESS TORTS
For up-to-date legal and ethical news, go to mariannejennings.com
LECTURE OUTLINE
9-1 What Is a Tort? Roots of Law and Commerce (See PowerPoint Slide 9-1)
✓ Latin Word Tortus; Means “Crooked, Dubious, Twisted”

✓ Civil Wrong that is an Interference With Someone’s Person or Property such that Injury
Results
9-1a Tort versus Crime (See PowerPoint Slide 9-2)
• Tort is a private wrong
▪ Injured party seeks remedy

▪ Recovers damages from the one who commits the tort
• Crime is a public wrong
▪ Wrongdoer is prosecuted
▪ Pays fine to government or is jailed to pay debt to society
9-1b Types of Torts (See PowerPoint Slide 9-3)
• Intentional torts
▪ Done by parties committing intentional acts

▪ More than an accidental wrong
Example: Striking someone with your fist when you intend to is an

intentional tort; striking someone with your fist in exercise class when you
are working your arms is not
• Tort of negligence
▪ Accidental harms that result from the failure to think through the
consequences
184
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 9 Business Torts 185
▪ Still have liability but there are defenses
Example: Running a red light is not an act undertaken with the intent of
hurting someone, but if someone is injured you are negligent for your failure
to think things through
• Strict liability
▪ Liability is imposed because of the nature of the conduct

▪ Use of dynamite in razing a building
▪ Absolute standard of liability
▪ Used in product liability cases (see Chapter 10)
9-2 The Intentional Torts
9-2a Defamation (See PowerPoint Slide 9-4)
• Slander is oral or spoken defamation

• Libel is written, and in some states broadcast, defamation
• Elements (See PowerPoint Slide 9-5)
▪ Statement about a business’s or person’s reputation or honesty that is untrue

▪ Statement is directed at business and made with malice and intent to injure
 When statement is directed at company’s processes or its product, there

is defamation of a product
 Known as product disparagement
 Bose Corporation v. Consumers Union of United States, Inc., 481
U.S. 1016 (1984) – product got a negative review but it was not
untrue; product disparagement requires proof of a statement that
harmed that product that was untrue
▪ Publication – someone heard and understood the statement

▪ Statement about a particular person
ANSWER TO CONSIDER (Spears, p. 279)

The court held that because Ms. Spears had made a career out of sexual suggestion, she could not
be defamed because her reputation was not affected, i.e., no damages. Basically the court held
that Spears’ reputation is so bad that she can’t be defamed.
▪ Damages – economic losses such as damage to reputation (Britney Spears

would have difficulty with this)
• Malice required to be established for media
186 Part II Business: Its Regulatory Environment
ANSWER TO CONSIDER (NBC, p. 279)

NBC settled the case and changed the way networks referred to investigations. The language was
a close call, but NBC left the impression Jewell was a suspect. Sadly, Mr. Jewell passed away in
2007.
• Defenses to defamation (See PowerPoint Slide 9-6)
▪ Truth is a complete defense

▪ Opinion and analysis: the courts give commentators leeway in their analysis
of situations and use of various derogatory terms, see, for example, Wilkow
v. Forbes, Inc., 241 F.3d 552 (7th Cir. 2001)
FOR THE MANAGER’S DESK: DIRTY HOTELS AND DEFAMATION (p. 280)
The case is an important one because it does allow us to express opinions online about products
and services and not risk defamation suits. Anonymous postings are just that – anonymous and
they are expressions of opinion.
ANSWER TO CONSIDER (Allstate, p. 281)

Allstate defended its actions on the grounds that the average verdict in a defamation suit by a former
employee against his former employer for a job reference was $57,000. In one Florida case, a
former employee was awarded $25 million in damages. Allstate argued, unsuccessfully, that the
cost to businesses would be too high. As a result of this case and others, the quasi-privilege for
employer references now exists in two-thirds of the states.
▪ Privileged speech (See PowerPoint Slide 9-7)
 Absolute privilege in Congress and judicial proceedings

 Opinion vs. fact/analysis vs. reporting
 Qualified privilege on employment references
FOR THE MANAGER'S DESK: THOSE GLOWING LETTERS OF RECOMMENDATION

VS. TRUTH VS. DEFAMATION (p. 282)
Discuss the issues of defamation and liability in letters of recommendation. Discuss the issues of
privilege statutes on letters of recommendation. Based on this case: Randi W. v. Muroc Joint
Unified School District, 929 P.2d 582 (Cal. 1997).
Review the facts with the students: Randi W. is a 13-year-old who was molested by Robert
Gadams, the principal at her middle school. Gadams had the following employment history (See
PowerPoint Slides 9-8 and 9-9):
1985-1987 Mendota Unified School District – reprimanded for improper conduct with students
including touching, remarks and sexual situations (investigation and reprimand)
1987-1990 Tranquility High School, Golden Plains Unified District – parents’ complaints, led a
panty raid, sexual overtures (resigned under pressure)
1990-1991 Muroc Unified School District – sexual harassment; touching (forced to resign)
1992 Livingstone – touching and molesting of Randi W
Each time, Gadams was given outstanding recommendations from each school. Randi W. filed
suit against districts for negligence in providing information on Gadams’ background.
1. The various principals and administrators who hired and supervised Gadams provided the
letters of recommendations. The dismissals, the allegations, the nature of the allegations and
parents’ complaints were never disclosed. There were just glowing recommendations.
2. Employers should address whether they will give letters, who will be responsible for writing
them, what information will be included, balancing issue between liability exposure and
defamation.
3. Managers must use caution when speaking of former or current employees to potential new
employers; the tort of defamation can be established if false statements are made.
4. Most employers have adopted a policy of only confirming that the employee worked at their
company and the dates of employment.
5. States now have qualified privileges for reference letters and defamation.
Discuss reverse issue: Is an employer liable for not disclosing negative (and potentially
dangerous) information about a former employee? Laws are leaning toward encouraging former
employers to disclose, with privilege, issues regarding employees. You cannot give good
recommendations when there are issues. Liability and ethics have a break here – one causes
problems in the other.
 Qualified privilege for media – so long as information is not published

with malice or reckless disregard for whether it is true or false, it enjoys
this privilege
See PowerPoint Slide 9-10.
CASE BRIEF 9.1
Trump v. O’Brien
29 A.3d 1090 (N.J. Super. 2011)
FACTS: Donald Trump brought suit against an author for understating his net worth.
DECISION BELOW: The court granted summary judgment for the author.
ISSUE ON APPEAL: Was there defamation or was there privilege for the author because of
adequate checking and verification?
DECISION: The court held that the author had done his job – he had checked on the figures and
they were elusive, but he did a thorough job of checking on those numbers and made a good
guestimate on net worth.
Answers to Case Questions
1. The court focuses on the fact-finding because that is the heart of the privilege defense to
defamation – the author/reporter can be wrong, but must show adequate research and review.
2. Others raising doubt serve to support the findings about his net worth being lower than the
numbers the author had uncovered.
3. Be sure to check your facts. Use multiple sources. Keep notes on your facts.
ANSWER TO CONSIDER (National Enquirer, p. 284)

Cover the tutorial on Mr. Eastwood. Mr. Eastwood did win his case against the National
Enquirer after a trial; the fake interview lost the paper the protection of the media privilege.
Invasion of privacy; possible defamation. There is reckless disregard for the truth or intentional
disregard because the reporter never interviewed Mr. Eastwood. Walk the students through the
reasoning steps provided in the book.
9-2b Contract Interference (See PowerPoint Slide 9-11)
• Valid contract
• Third party interfered by making performance difficult
• Third party knew of contract
• Third party intended to interfere
• Plaintiff is injured
Use and discuss as an extra case the Texaco, Inc. v. Pennzoil, Co., 729 S.W.2d 768 (Tx. 1987),
with the students (see PowerPoint Slide 9-12):
In January 1984, Getty Oil agreed to allow Pennzoil to acquire the interests of the Getty
Trust and Museum in the Getty Oil Company. The agreement was in the drafting stages
when Texaco made a competing bid with Getty. Pennzoil filed suit alleging that Texaco
had interfered with its contractual relationship with Getty. The trial court awarded
Pennzoil $7.53 billion in actual damages and $3 billion in punitive damages. The
appellate court held that Texaco had interfered with Pennzoil’s contractual relation with
Getty. Texaco had knowledge of the agreement reached between Getty and Pennzoil and
acted quickly to “stop the train” (the words of its counsel).
Also, discuss Anna Nicole Smith’s case on the relatively new tort of interference with an
inheritance (see PowerPoint Slide 9-13).
9-2c False Imprisonment (See PowerPoint Slide 9-14)
• Shopkeeper’s tort
• Custody of someone else for any period of time against their will
• Need not establish physical damages; just the fact that they are detained
establishes sufficient damages
• Defense of shopkeeper’s privilege
▪ Can detain for reasonable time

▪ Must have basis for detaining the individual
• Forty-three states allow civil fines for shoplifting
BUSINESS PLANNING TIP (Shopkeeper’s privilege, p. 286)

Covers the shopkeeper’s privilege.
9-2d Intentional Infliction of Emotional Distress (See PowerPoint Slide 9-15)
• Liability for conduct that exceeds all bounds of decency

• Difficult for plaintiff to establish emotional distress
• Has been used by debtors against collectors (see Chapter 14)
9-2e Invasion of Privacy (See PowerPoint Slide 9-16)
• Intrusion into the plaintiff’s private affairs
In Galella v. Onassis, 353 F.Supp. 196 (S.D.N.Y. 1972), Ron Galella, a

professional free-lance photographer, was primarily interested in photographing
Jacqueline Kennedy Onassis. After a series of incidents at school, the tennis

court, and in a restaurant, Mrs. Onassis had Galella arrested. Galella filed suit
for false arrest and malicious prosecution. Mrs. Onassis counterclaimed with a
suit for invasion of privacy asking for $1.5 million in damages and an injunction
against Galella. The court held Galella had invaded Mrs. Onassis’ privacy and
enjoined him from being closer than 100 yards to Onassis’ home, 100 yards
from the children’s schools, 75 yards from the children, and 50 yards from
Onassis. Galella also had to pay the costs of the suit.
BUSINESS PLANNING TIP (Internet privacy, p. 287)

Covers posting information on the Internet and the right of employers to look up that
information. There is no privacy on the social sites – it can be used by employers for screening.
• Public disclosure of private facts
▪ Statutory privacy issue: Health Insurance Portability and Accountability

Act of 1996 (HIPAA)
 Federal law that imposes requirements on medical care facilities and

providers who transfer/store medical records electronically
 Criminal penalties up to $250,000/10 years
 Requires patient permission to discuss records, case, send records, etc.
 Restrictions on postcards, calls, and discussions
 Complaint system for patients
• Appropriation of another’s name, likeness, or image for commercial advantage
▪ Appropriation (See PowerPoint Slide 9-17)
 Unauthorized use of someone’s name, voice, image, or likeness for

commercial advantage
 Even if manner of use is accurate, it is a tort because of the use without
authorization
CASE BRIEF 9.2
Midler v. Ford Motor Company

849 F.2d 460 (9th Cir. 1988)
FACTS: Ford and its ad agency, Young & Rubicam, began a “Yuppie Campaign” designed to
sell cars by advertising that would bring back college-day memories to yuppies. Young &
Rubicam approached Bette Midler to ask her to do “Do You Want To Dance” from her 1973
album, “The Divine Miss M,” as background music for one of the ads. Ms. Midler does not do
commercial work and turned down the request.
Young & Rubicam then used Ula Hedwig for the song. Ms. Hedwig had been a back-up singer
for Ms. Midler for ten years. When Ms. Hedwig did the demo tape, she was told to sound as
much like Ms. Midler as possible. After the commercial aired, Ms. Midler was told by several
people that it sounded just like her. Midler filed suit for appropriation.
DECISION BELOW: The District Court found for Ford and Young & Rubicam. Midler
appealed.
ISSUE ON APPEAL: Was the use of someone who sounded like Ms. Midler appropriation?
DECISION: Yes. A voice is as distinctive and personal as a face. Ms. Midler’s distinctive
voice was widely known and was deliberately imitated for the ad.
1. Ford sought Ms. Midler’s voice for use in an ad campaign known as the Ford “Yuppie
Campaign.”
2. Yes. There was a considerable amount of confusion. Even Ms. Midler’s friends were
confused as to who had done the singing.
3. Nancy Sinatra’s claim was based on the use of the song and not on the use of her image. Lahr
sued for unfair competition because the use of his voice oversaturated his market.
NOTE AFTERMATH: Ms. Midler’s case was tried and she did recover $400,000.
ANSWER TO CONSIDER (WKBN, p. 289)

Ms. Bosely got a preliminary injunction to have the pictures taken down because she established
a likelihood of success on the merits of her claim that licensor and licensee of video used images
of news anchor for a commercial purpose within meaning of common law and statutory rights of
privacy and publicity under Ohio and Florida law; (2) commercial use of anchor's images was
not protected under the First Amendment; (3) prior restraint doctrine did not preclude injunction
restraining use of image of anchor; (4) tacit consent was insufficient to establish consent defense
under Florida statute concerning right of publicity; (5) doctrine of laches under Ohio or Florida
law did not bar anchor's suit; and (6) balance of harms tipped in favor of granting preliminary
injunction. [Bosley v. Wildwett.com, 310 F.Supp.2d 914 (N.D. Ohio 2004)]
BUSINESS STRATEGY: PROFITING FROM AMATEURS (p. 289)

One court has ruled on the issue and held that the athletes are entitled to compensation for the
use of their image and that any agreements on use must be negotiated directly with the student-
athletes and not through the college or university’s agreements with the NCAA.
9-3 Negligence (See PowerPoint Slide 9-19)
9-3a Element One: The Duty
• All persons are expected to behave as ordinary and reasonably prudent persons
do
• Standard of the law is not always used
Example: The speed limit of 35 is not appropriate in ice and snow
CASE BRIEF 9.3
Van Horn v. Watson

197 F.3d 164 (Cal. 2008)
FACTS: On October 31, 2004, Alexandra Van Horn (plaintiff), Jonelle Freed, and Lisa Torti
smoked and inhaled marijuana together at Ms. Torti’s home. They were joined there by Anthony
Glen Watson and Dion Ofoegbu, who also joined in on the marijuana. At 10:00 PM, they all
headed to a local bar where they drank until 1:30 AM. At 1:30 AM, Ms. Van Horn and Ms.
Freed left with Mr. Watson, leaving Ms. Torti to ride with Mr. Ofoegbu. Mr. Watson struck a
curb and then a light pole whilst going 45 mph. After Mr. Watson crashed, both Mr. Ofoegbu
and Ms. Torti stopped and got out of their car to render aid. Mr. Watson got out of the car by
himself, Mr. Ofoegbu helped Ms. Freed out by opening a door for her, and Ms. Torti pulled Ms.
Van Horn from the car. Ms. Van Horn said Ms. Torti pulled on her arm and dragged her from
the car like a “rag doll.”
Ms. Torti testified that the crashed car was smoking and that she felt she should save Ms. Van
Horn before flames ensued. Emergency personnel arrived moments later. Ms. Van Horn had a
lacerated liver and damaged vertebrae that rendered Ms. Van Horn paraplegic. Ms. Van Horn
filed suit claiming that Ms. Torti’s pulling her from the wreck contributed to her paralysis. Ms.
Van Horn also filed suit against all other party animals riding along in the two vehicles for their
negligence. Ms. Torti claimed immunity under California’s Good Samaritan statute.
Ms. Van Horn alleged that Ms. Torti was negligent in pulling her from the car and not waiting
for trained personnel. There were differing accounts on whether the car was smoking and if
there were flames. In other words, the danger to Van Horn was not clear. In fact, given the
evening’s activities, not a one of them was operating in anything less than a fog at the time of the
accident.
LOWER COURT DECISIONS: The trial court granted summary judgment for Ms. Torti on the
grounds that she enjoyed immunity from suit for negligence under the California Good
Samaritan law. The Court of Appeal reversed, holding that the Good Samaritan law applied only
to those rendering medical care, and that Torti had not provided medical care. Ms. Torti and the
others appealed.
ISSUE ON APPEAL: Are those who render assistance, not necessarily medical assistance, at the
scene of an accident protected by statutory immunity under the Good Samaritan law?
DECISION: No. The court held that the statute in California did not provide immunity for those
who simply render assistance. The court focused on the statutory language and history and
concluded that the protection was intended to be limited to providing medical care. The court
also held that the effect would be to immunize everyone and undermine the common-law rule
that no one has to help, that is, there is no duty to help and those who do so render help at the
risk of liability.
1. There is no common law duty to help and the legislature did not intend to provide blanket
immunity for those who provide assistance, only those who render medical care and make a
mistake.
2. This is an interesting argument – if she could establish that pulling her from the car was a
form of medical treatment, the case might have had a different twist. As it was, the court was
focused on the interpretation of the Good Samaritan statute, which was fairly straightforward
and did not help the defendant. However, her lawyers apparently felt it was a slam-dunk,
that she could easily be granted immunity. Indeed, the lower court agreed with the argument.
However, on appeal, the court went with straight statutory construction.
3. The court did not delve into the public policy implications of the decision which are that
folks will be hesitant to help because they will be second-guessed on the right type of
assistance to render when they happen upon an accident. Courts will look back and
determine whether the risk was real and whether they behaved reasonably rather than giving
them the protection of acting as best they could given the circumstances.
9-3b Element Two: Breach of Duty
• Failure to comply with established standard of conduct
• Often connected with element one as courts struggle to determine whether a

duty even exists
CASE BRIEF 9.4
Barton v. Whataburger, Inc.

276 S.W.3d 456 (Tex. App. 2008)
FACTS: Gregory Love, who had a criminal record for cocaine sale and failure to pay child
support, was hired as a night manager by Whataburger with a less-than-thorough background
check. Arthur Murray and Love were the managers in charge one graveyard shift, but Murray
left early. Love then called Murray and said he had to leave and wanted to put Christopher
Dean, a mentally impaired, but longstanding employee of the restaurant in charge.
Love, it was later discovered, along with two comrades went to the restaurant late that night and
asked Dean to open the safe. When he said he did not have the key, they shot him in the face,
killing him instantly. Rose Barton, Dean’s mother, brought suit on her own behalf and for her
son’s estate on the basis of negligence.
DECISION BELOW: The trial court granted summary judgment for Whataburger and Barton
appealed.
ISSUES ON APPEAL: Could Whataburger be held responsible for the wrongful death of Dean?
What duties did it have? Did it fulfill those duties? Was the crime an intervening and
superseding cause?
DECISION: The appellate court held that there had been no previous types of similar crimes at
the restaurant so that no duty to take additional precautions arose. The court also held that
Love’s previous run-ins with the law were not predictive of this type of crime even if
Whataburger had been aware of them.
1. The court spells out pretty clearly what she needed to prove: crimes like this one in the area
and at this location; similar criminal behavior on Love’s part; some advance notice about
Love’s tendencies.
2. The take-aways from this case are more careful and NATIONAL screening – looking at
records in states where they lived before. Also, there needs to be supervision of the
managers and what they are doing. The money, had it not been there, would not have been
an incentive. They should verify money pick-up and deposit. Can be done online now
through online banking. Another lesson relates to security, noting crimes in area, perhaps
periodic sweeps by security of all-night facilities to make sure single employees are alone.
3. See above – screen for past activities on a wider basis and also screen managers more
carefully. Observe managers in action and supervise their shifts.
ANSWER TO CONSIDER (Walmart, p. 295)

The court held that when there is knowledge of prior criminal activity and the need to take action
and no action is taken that the store can be held liable for the criminal acts of third parties. The
key issue is foreseeability in the form of prior criminal conduct and the special duty of store to
patron, or invitee. [McClung v. Delta Square Limited Partnership, 937 S.W.2d 891 (Tenn.
1996)]
BUSINESS PLANNING TIP (Security, p. 295)

Cover tips on security and see PowerPoint Slide 9-22 and 9-23 to discuss business liability
prevention tips.
9-3c Element Three: Causation (See PowerPoint Slide 9-24)
• Breach of duty caused the plaintiff’s injuries

• “But/for” causation test
• Restricted by the zone of danger rule
FOR THE MANAGER’S DESK: BARS AND DRAM SHOP LIABILITY (p. 296)
Discuss the dram shop acts with students.
ANSWER TO ETHICAL ISSUES (Bars, p. 296)

The issue of drunk patrons is a troublesome one, and the liability keeps expanding. Bar owners
would be better off making sure that there was a cab taking the patron home than entrusting them
to walk home – they might get their car anyway, but it is clear that bar owners must be more
vigilant in handling these patrons or cut off drinking.
9-3d Element Four: Proximate Cause (See PowerPoint Slide 9-25)
CASE BRIEF 9.5
Palsgraf v. Long Island Ry. Co.

162 N.E. 99 (N.Y. 1928)
FACTS: Helen Palsgraf was injured when a package being carried by two men jumping onto a
moving train exploded, and the resultant force and vibrations caused some scales to fall on her.
Mrs. Palsgraf filed suit against the railroad.
DECISION BELOW: The jury found for Mrs. Palsgraf and the Court of Appeals affirmed.
ISSUE ON APPEAL: Did the railroad cause Mrs. Palsgraf’s injuries?
DECISION: No. Proof of negligence in the air is not sufficient. There must be a strict
correlation between the injuries and the duty. Nothing suggested that the parcel was dangerous.
DISSENTING OPINION: The dissenting opinion uses a broader approach and fails to apply the
narrowing concept of proximate cause and would allow recovery for all injuries resulting from
negligence.
1. Another passenger who was being helped to the train was carrying the package.
2. Mrs. Palsgraf was at the other end of the train platform from where the accident occurred.
3. Justice Cardozo ruled that there was no causal connection between the accident and Mrs.
Palsgraf’s injuries. The dissenting judge worries that narrowing the zone of danger
eliminates the right of recovery for those who are legitimately injured.
9-3e Element Five: Damages (See PowerPoint Slide 9-26)
• Medical bills
• Lost wages
• Pain and suffering
• Loss of consortium (as between spouses)
9-3f Defenses to Negligence (See PowerPoint Slides 9-27 and 9-28)
• Contributory negligence – plaintiff is also negligent
▪ Operates as a complete bar to recovery
Example: You cause an accident that could have been avoided had you not
been drinking
• Comparative negligence
▪ Compare acts of plaintiff and defendant and assess blame for accident
▪ Reduces plaintiff’s recovery by amount of fault
▪ Some states have been passing legislation to limit jury verdicts, and there
have been court challenges
Example: If plaintiff is 30 percent responsible, verdict is reduced by 30

percent
• Assumption of risk – plaintiff knew of risk and went forward anyway
Example: Assume risks inherent in skydiving, skiing, roller skating, etc.
CASE BRIEF 9.6
The Landings Assoc. Inc. v. Williams

728 S.E.2d 577 (Ga. 2012)
FACTS: Gwyneth Williams was attacked and killed by an alligator while she was taking a walk
in her daughter and son-in-law’s neighborhood while she was house-sitting. Her daughter filed
suit against the association for wrongful death.
DECISION BELOW: The trial court denied a motion for summary judgment. The Court of
Appeals reversed. The parties appealed.
ISSUE ON APPEAL: Was there assumption of risk by Mrs. Williams when she took a walk at
dusk?
DECISION: Yes. When you take a walk in a neighborhood where there are wild alligators you
assume the risk of attack.
1. That she was aware of alligators and had been shown one in the subdivision.
2. The dissent finds that the association misled homeowners about the nature of the alligators
and their removal from the area. Those living there could have concluded that it was safe.
ANSWER TO CONSIDER (YMCA, p. 301)

The jazz class is the type of activity that may be subject to the doctrine of primary assumption of
risk. Falling to the floor is an inherent risk of the jazz class. There was no duty to protect a
plaintiff from this type of accident. There was no evidence that the studio did anything that
increased the risks inherent in the activity. [Winter v. Santa Monica Family YMCA, 2005 WL
1713936 (Cal. App. 2 Dist.)]
9-4 New Verdicts on Tort Reform (See PowerPoint Slide 9-29)
✓ State movement to limit verdicts

✓ Proposed reforms on recovery only to deter future wrong behavior, not pure accidents
✓ Judicial activism on reductions, see, for example, BMW of North America, Inc. v. Gore,
517 U.S. 559 (1996)
✓ Punitive damages should not be disproportionate to criminal penalties
✓ U.S. Supreme Court held in Exxon Case that punitive damages were limited to an
amount equal to actual damages (there were some maritime law peculiarities in the
case)
ANSWER TO CONSIDER (Bedbugs, p. 302)

The court held as follows: All things considered, we cannot say that the award of punitive
damages was excessive, albeit the precise number chosen by the jury was arbitrary. It is probably
not a coincidence that $5,000 + $186,000 = $191,000/191 = $1,000: i.e., $1,000 per room in the
hotel. But as there are no punitive-damages guidelines, corresponding to the federal and state
sentencing guidelines, it is inevitable that the specific amount of punitive damages awarded
whether by a judge or by a jury will be arbitrary. (Which is perhaps why the plaintiffs' lawyer did
not suggest a number to the jury.) The judicial function is to police a range, not a point. But it
would have been helpful had the parties presented evidence concerning the regulatory or
criminal penalties to which the defendant exposed itself by deliberately exposing its customers to
a substantial risk of being bitten by bedbugs. We can take judicial notice that deliberate exposure
of hotel guests to the health risks created by insect infestations exposes the hotel's owner to
sanctions under Illinois and Chicago law that in the aggregate are comparable in severity to the
punitive damage award in this case.
"A person who causes bodily harm to or endangers the bodily safety of an individual by any
means, commits reckless conduct if he performs recklessly the acts which cause the harm or
endanger safety, whether they otherwise are lawful or unlawful." This is a misdemeanor,
punishable by up to a year's imprisonment or a fine of $2,500, or both. Of course a corporation
cannot be sent to prison, and $2,500 is obviously much less than the $186,000 awarded to each
plaintiff in this case as punitive damages. But this is just the beginning. Other guests of the hotel
were endangered besides these two plaintiffs. And, what is much more important, a Chicago
hotel that permits unsanitary conditions to exist is subject to revocation of its license, without
which it cannot operate. We are sure that the defendant would prefer to pay the punitive damages
assessed in this case than to lose its license. [Mathias v. ACCR Economy Lodging, Inc., 347 F.3d
672 (7th Cir. 2003)]
➢ Go over various cases and verdict reductions – due process issues in State Farm for
excessive damages
➢ Discuss types of cases
➢ Discuss who awards punitive damages more and in what types of cases (Cornell
study)
9-4a Strict Liability (See PowerPoint Slide 9-30)
• Absolute liability
• A theory for recovery when product is defective
• Public policy is to encourage safety
BIOGRAPHY: THE KITTY GENOVESE STORY AND DUTY (p. 302)

Discuss these issues with the students:
Daryl Roberts, chief of police, Hartford, Connecticut, after seeing the videotape from security
cameras that showed dozens passing and driving by a 78-year-old hit-and-run victim wondered if
this was another Kitty Genovese – the failure to help another in need. Some social psychologists
wrote, 40 years ago, when Kitty Genovese died as others heard her cries for help, that the nature
of New York City, its crime, the pervasive fear, the wee hours of the morning, and other factors
explained the lack of help more so than the lack of a moral compass. But, Angel Arce Torres
was struck at 5:45 PM (daylight) by a hit-and-run driver. Motionless and helpless, Torres had no
one by his side for what seems like an eternity as you watch the video. Hartford traffic swerved,
bystanders stared, and some called 9-1-1, but no one got closer than a few yards. Someone on a
motor scooter is shown circling Mr. Torres before scooting away. “Like a dog, they left him
there,” was the sad observation of one man who viewed the tape. Mr. Torres will require
permanent hospitalization.
ANSWERS TO CHAPTER QUESTIONS AND PROBLEMS

1. Mr. Barnes was defamed. There was a media privilege, but the story about his lack of
knowledge was published by Michael Moore with reckless disregard for whether it was true
or false. In fact, it was printed, knowing it was false. He could sue now if the statute of
limitations has not run out.
2. The court held the hotel liable for Mr. Margreiter’s injury. There was only one security
guard who did not work that night due to illness. The hotel did not find a substitute. Hence,
there was no security. Margreiter’s assailants were thus able to remove him from the hotel.
[Margreiter v. New Hotel Monteleone, 640 F.2d 508 (5th Cir. 1981)]
3. A & N has stepped over the line with its public disclosure of private facts. The shopkeeper’s
privilege, even in New York, does not allow the public posting of the names of those who
attempt to shoplift. A & N can detain, refer for prosecution, and stop those who attempt to
shoplift, but it cannot make a public example of these folks. Interestingly, the NY Times
article that discussed the store policies did not emphasize the potential liability of the owners.
4. The Brown & Williamson threats appeared to be just that, threats. No actions were taken
against either CBS or Wigand. CBS eventually ran the story and interview with Mr. Wigand.
The story of Mr. Wigand, CBS, and Brown & Williamson was made into a movie, based on
the journalistic exposé of the events. The movie, The Insider, featured Russell Crowe as Mr.
Wigand, and the role earned him an Academy Award nomination. The movie earned protests
from many at CBS, particularly Mike Wallace, as an inaccurate depiction of his conduct. Mr.
Wallace’s producer, Lowell Bergman, left CBS and Sixty Minutes after the Wigand story ran.
He now teaches journalism at the University of California at Berkeley and, on occasion, works
as a producer for PBS’s Frontline.
5. The court held that there was infliction of emotional distress and that the conduct of the disc
jockeys was outrageous. The competition aspect made the conduct seem more outrageous.
Excerpts from the opinion:
Defendants contend that notwithstanding its characterization as a claim for the

intentional infliction of emotional distress, plaintiff's claim is in reality one of defamation
and that, as such, it is not actionable because the conduct in question qualifies as
constitutionally protected expression of opinion. Supreme Court held, and we agree, that
if plaintiff's claim was in fact for defamation, it would fail because under no
circumstances would it be reasonable to consider the content of defendants' broadcast as
anything but pure, subjective opinion. Since, however, plaintiff's complaint is based not
upon defamation but upon the tort of intentional infliction of emotional distress, albeit
arising out of the same conduct, it becomes necessary to consider the question of whether
such an action may be maintained.
We acknowledge that it is well-settled law that "expressions of an opinion 'false or not,

libelous or not, are constitutionally protected and may not be the subject of private
damage actions' ". Likewise, we observe that the tort of intentional infliction of
emotional distress has received very little judicial solicitude.
Emphasizing that we decide this question in the narrow context in which it occurs, i.e.,
whether the complaint should be dismissed for failure to state a cause of action, we
conclude that under the unique factual circumstances herein presented, Supreme Court
properly denied defendants' motion, and we affirm.
Our analysis benefits from consideration of decisions in which the viability of this tort in
like contexts has been addressed. In Cohen v. Feiden, 213 A.D.2d 696, 624 N.Y.S.2d
448, dual claims of defamation and intentional infliction of emotional distress were based
upon a judge's ill-chosen remarks to parties in the course of a custody proceeding.
Holding that the remarks were "statements of pure opinion by the speaker and thus not
actionable", the Second Department went on to consider the emotional distress claim and
found it to be likewise without merit upon the ground that the threshold of
outrageousness was not satisfied by the remarks in question. Implicit in this
determination, of course, is that resolution of the opinion issue is not dispositive of the
emotional distress claim. Similarly, in Howlett v. Bloom, 239 A.D.2d 389, 657 N.Y.S.2d
433, the Second Department upheld a grant of summary judgment based upon the fact
that the alleged defamatory statement was pure opinion and therefore not actionable, and
it separately upheld the dismissal of the emotional distress claim as being without merit.
In Howell v. New York Post Co., 81 N.Y.2d 115, 596 N.Y.S.2d 350, 612 N.E.2d 699,
supra, the Court of Appeals undertook a task similar to ours in considering the
"relationship between two separate but potentially overlapping torts: intentional
infliction of emotional distress, and invasion of the right to privacy". After reviewing the
history and evolution of this tort, the court observed that "[t]he tort is as limitless as the
human capacity for cruelty.
The price for this flexibility in redressing utterly reprehensible behavior, however, is a
tort that, by its terms, may overlap other areas of the law, with potential liability for
conduct that is otherwise lawful". After deciding that the defendants' conduct did not
support a claim for invasion of the right to privacy, the court said that the "[d]efendants
would have our analysis end here – without considering whether plaintiff has stated a
cause of action for intentional infliction of emotional distress – arguing that the tort may
not be used as an end run around a failed right to privacy claim". This the court declined
to do, stating that "[w]e do not mean to suggest, however, that a plaintiff could never
defeat the privilege and state a claim for intentional infliction of emotional distress".
Turning to a consideration of the specific factual circumstances attendant to the conduct

in question here, we attach particular significance to several factors. First, plaintiff is a
private individual and not a "public figure". Second, the nature of the communications
made by defendants involved a matter of virtually no "public interest"; there is an
inference that defendants' conduct represented a deliberate intent to inflict injury upon
plaintiff based upon the claimed unprecedented expansion of its standard "routine" of the
"Ugliest Bride" contest to include particulars concerning plaintiff's name, employer,
supervisors and the like, and the fact that the parties are business competitors in the
radio broadcast industry.
We are not unmindful of the constitutional issues implicated in this case and in our
resolution thereof. In the quest for the proper accommodation between the right of
redress for infliction of injury and the freedoms of speech and expression protected by the
1st Amendment, we have determined that the State's relatively strong interest in
compensating individuals for harm outweighs the relatively weak 1st Amendment
protection to be accorded defendants. It is elementary that not all speech or expression
is to be accorded equal 1st Amendment protection; the most jealously protected speech is
that which advances the free, uninhibited flow of ideas and opinions on matters of public
interest and concern; that which is addressed to matters of private concern, or focuses
upon persons who are not "public figures", is less stringently protected. Moreover,
among the forms of communication, broadcasting enjoys the most limited 1st Amendment
protection.
As to defendants' alternative contention that their conduct is protected comedic

expression, we note that comedic expression does not receive absolute 1st Amendment
protection. Instead, it can be actionable where "humor is used in an attempt to disguise
an attempt to injure". The allegations of the amended complaint allege an intent to
injure, which satisfies the limited inquiry before us.
Finally, we note that our decision today does no more than permit plaintiff's lawsuit to
proceed. Whether and to what extent the allegations of her complaint ultimately satisfy
the stringent requirements for the tort will be determined upon further proceedings.
ORDERED that the order is affirmed, with costs. Esposito-Hilder v. SFX Broadcasting,
Inc., 665 N.Y.S.2d 697 (1997).
6. The use of the president’s image was without his permission and it was used for commercial
gain. The fact that someone is a public figure does not exempt those who use their image
from liability for appropriation. The difficulty of being president is the pursuit of litigation.
Also, the appearance of the president in the jacket does carry significant endorsement weight
and those who see it assume it was done with permission and approval. The same is true of
the First Lady.
While PETA and the jacket company did pay for the royalties for the photo, that’s not the
issue. The photos are being used for gain. The President and First Lady have the right to
decide who can use their images and when.
7. Walmart is fighting the fines because it is worried that there is a precedent when it believes
the events were not foreseeable. It also believes that regulators will try and outlaw blitz sales
and it is trying to prevent that. The company also feels that it has voluntarily fixed the
problem and it had no prior notice that such events could occur.
8. The critical element to focus on here is whether there really is appropriation because there is
no use of Ms. Lohan’s likeness. There is perhaps use of her image as an addict. But it is not
her specific name and the company is arguing that it used the name simply because Lindsay
is a popular name for babies in 2010. Also note why there cannot be defamation here because
there is only the name Lindsay – not a specific person. Also, there is the problem that the
addiction problem is the truth.
9. The trial court in this case has held that KSL did indeed interfere in Boca’s contract
relationship. KSL showed bad faith by faxing a copy of the suit before it was even filed.
10. Mosca’s injury was a result of assumption of risk which was one of the risks inherent in deep
sea fishing. The boating company was not negligent. According to the court, being struck
by a fishing line is a risk inherent in fishing. Injuries from flying sinkers is typical, but the
expert had never heard of this type of injury to the eye. Day-to-day activities don’t have
these kinds of risk. [Mosca v. Lichtenwalter, 68 Cal. Rptr.2d 58 (Cal. App. 1997)]
MANAGEMENT AND THE LAW: A PRIMER ON REFERENCES

You might consider having the students write a letter based on an actual case study. That is, give
them information about an employee who has left the company and the
employment/performance history (some of it problematic) and have them write what they would
disclose and what they would not disclose if asked by a new employer for information.
INTERACTIVE/COOPERATIVE LEARNING EXERCISES

1. Have the students purchase a National Enquirer, Globe, or Star and analyze the paper for
defamatory articles.
2. Ask students to observe their residences and the campus and prepare a short report on
hazards, dangers, and problems that could result in negligence cases.
3. Have students draft letters about each other (used in a business context) that contain
defamatory information. Letters of recommendation/nonrecommendation would be
possibilities.
4. Ethical issue letter:
April 15, 2013
Wheel Construction, Inc.

J.W. Snyder, Owner
111 Ogden Road
Springfield, Ohio 45503
Dear Sirs:
I write to you so that you may be informed of fraud and “kick-backs” that are presently
undermining your operations.
In August of 2012, Jeff Hurley approached Mike Grace, MG Electric, concerning a grave
personal problem. Jeff’s brother was in big trouble with the law and needed cash to pay
attorney fees in an attempt to keep him from going to prison.
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Legal Environment Today Business In Its Ethical

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Business Law Today Comprehensive Text and Cases Diverse

For up-to-date legal and ethical news, go to mariannejennings.com

✓ Latin Word Tortus; Means “Crooked, Dubious, Twisted”

9-1a Tort versus Crime (See PowerPoint Slide 9-2)

• Tort is a private wrong

▪ Injured party seeks remedy

• Crime is a public wrong

9-1b Types of Torts (See PowerPoint Slide 9-3)

▪ Done by parties committing intentional acts

Example: Striking someone with your fist when you intend to is an

▪ Still have liability but there are defenses

▪ Liability is imposed because of the nature of the conduct

9-2 The Intentional Torts

9-2a Defamation (See PowerPoint Slide 9-4)

• Slander is oral or spoken defamation

▪ Statement about a business’s or person’s reputation or honesty that is untrue

 When statement is directed at company’s processes or its product, there

▪ Publication – someone heard and understood the statement

ANSWER TO CONSIDER (Spears, p. 279)

▪ Damages – economic losses such as damage to reputation (Britney Spears

• Malice required to be established for media

ANSWER TO CONSIDER (NBC, p. 279)

• Defenses to defamation (See PowerPoint Slide 9-6)

▪ Truth is a complete defense

ANSWER TO CONSIDER (Allstate, p. 281)

▪ Privileged speech (See PowerPoint Slide 9-7)

 Absolute privilege in Congress and judicial proceedings

FOR THE MANAGER'S DESK: THOSE GLOWING LETTERS OF RECOMMENDATION

1992 Livingstone – touching and molesting of Randi W

 Qualified privilege for media – so long as information is not published

See PowerPoint Slide 9-10.

CASE BRIEF 9.1

Answers to Case Questions

ANSWER TO CONSIDER (National Enquirer, p. 284)

9-2b Contract Interference (See PowerPoint Slide 9-11)

9-2c False Imprisonment (See PowerPoint Slide 9-14)

▪ Can detain for reasonable time

• Forty-three states allow civil fines for shoplifting

BUSINESS PLANNING TIP (Shopkeeper’s privilege, p. 286)

9-2d Intentional Infliction of Emotional Distress (See PowerPoint Slide 9-15)

• Liability for conduct that exceeds all bounds of decency

9-2e Invasion of Privacy (See PowerPoint Slide 9-16)

• Intrusion into the plaintiff’s private affairs

In Galella v. Onassis, 353 F.Supp. 196 (S.D.N.Y. 1972), Ron Galella, a

Jacqueline Kennedy Onassis. After a series of incidents at school, the tennis

BUSINESS PLANNING TIP (Internet privacy, p. 287)

• Public disclosure of private facts

▪ Statutory privacy issue: Health Insurance Portability and Accountability

 Federal law that imposes requirements on medical care facilities and

• Appropriation of another’s name, likeness, or image for commercial advantage

▪ Appropriation (See PowerPoint Slide 9-17)

 Unauthorized use of someone’s name, voice, image, or likeness for

See PowerPoint Slide 9-18.

CASE BRIEF 9.2

Midler v. Ford Motor Company