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CUSTOMER INJURIES: AN INTRODUCTION TO TORT LAW
[Pre-Publication Draft]
Lawrence J. Trautman*
Thomas J. Freeman**
Vanessa L. Johnson***
Lora J. Koretz****
* BA, The American University; MBA, The George Washington
University; J.D., Oklahoma City University School of Law. Mr. Trautman is
Associate Professor of Business Law and Ethics at Prairie View A&M University.
He may be contacted at [email protected].
** BA, Bellevue University; MS, MBA, & JD, Creighton University. Mr.
Freeman teaches business law at Creighton University. He may be contacted at
[email protected].
*** BS, Tulane University; MBA, New York University; JD & LLM,
University of Houston. Ms. Johnson is Assistant Professor of Legal Studies at the
University of Houston-Clear Lake. She may be reached at
**** BS, Western New England College; J.D., Suffolk University Law
School; MBA, W.P. Carey School of Business at Arizona State University. Ms.
Koretz is Clinical Associate Professor at W.P. Carey School of Business at
Arizona State University. She may be contacted at [email protected].
ABSTRACT
Sooner or later almost every business enterprise faces the unwelcome prospect of
injury to a customer. Even the smallest of businesses needs to be vigilant about potential
injuries. Common examples include: restaurant meals that cause illness to consumers;
shopping cart injuries; overcrowding injuries, and slip-and-fall injuries for almost every
industry. Employees also engage in intentional acts causing injury to customers.
While the study of tort (a French word meaning injury or harm) law may consume
a full year or more during law school, this essay is intended as a brief introduction to this
area of law. Therefore, while little more than an overview is presented, it is a very
important discussion of this complex subject for every student of business law.
This article proceeds in nine parts. First, we provide an introduction of tort law
arising in business settings by looking at popular cinema. Second, is a brief discussion of
the elements necessary to bring a successful tort action. Third, we look at intentional
business torts. Fourth is an examination of the important contemporary subject of cyber
torts. Fifth, we discuss environmental torts. Sixth, medical torts are discussed. Seventh,
torts arising in a global pandemic context are examined. Eighth, is the topic of risk
mitigation. And last, we conclude with a summary and recap of tort law.
Keywords: agency, breach, causation, cyberbreach, cyber torts, damages, duty, employee,
employer, insurance, intentional business torts, medical torts, proximate cause, risk, tort
law, vicarious liability
JEL Classifications:
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Words=6,066
CONTENTS
OVERVIEW…………………………………………………………………………………………………………………… 3
I. THE PROBLEM: INJURY TO CUSTOMERS & STAKEHOLDERS………………………… 3
Erin Brockovich (2000)………………………………………………………………………………………… 4
Class Action (1991)……………………………………………………………………………………………… 5
Dark Waters (2019)……………………………………………………………………………………………… 5
Hot Coffee (2011) ……………………………………………………………………………………………….. 6
The Rainmaker (1997)………………………………………………………………………………………….. 8
II. TORT LAW: THE ELEMENTS ……………………………………………………………………………. 9
Duty…………………………………………………………………………………………………………………. 10
Breach………………………………………………………………………………………………………………. 11
Causation………………………………………………………………………………………………………….. 11
Damages…………………………………………………………………………………………………………… 11
III. ELEMENTS OF INTENTIONAL BUSINESS TORTS ………………………………………….. 11
Battery ……………………………………………………………………………………………………………… 11
Assault……………………………………………………………………………………………………………… 12
False Imprisonment ……………………………………………………………………………………………. 13
Intentional Infliction of Emotional Distress…………………………………………………………… 14
Misrepresentation ………………………………………………………………………………………………. 15
Defamation……………………………………………………………………………………………………….. 17
Invasion of Privacy…………………………………………………………………………………………….. 19
IV. CYBER TORTS ………………………………………………………………………………………………… 21
Cyber Attacks Abound ……………………………………………………………………………………….. 21
Challenge of Technology ……………………………………………………………………………………. 22
The Hazards of Personal Information……………………………………………………………………. 23
V. ENVIRONMENTAL TORTS……………………………………………………………………………… 24
VI. MEDICAL TORTS ……………………………………………………………………………………………. 24
VII. GLOBAL PANDEMIC AND TORT RISK……………………………………………………………. 28
Sub Topic …………………………………………………………………………………………………………. 28
VIII. RISK MITIGATION………………………………………………………………………………………….. 28
Role of Insurance……………………………………………………………………………………………….. 28
IX. CONCLUSION …………………………………………………………………………………………………. 28
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Thomas J. Freeman, Vanessa L. Johnson & Lora J. Koretz
CUSTOMER INJURIES: AN INTRODUCTION TO TORT LAW
OVERVIEW
Sooner or later almost every business enterprise faces the unwelcome prospect of
injury to a customer. Even the smallest of businesses needs to be vigilant about potential
injuries. Common examples include: restaurant meals that cause illness to consumers;
injuries caused by shopping carts or falling merchandise; and slip-and-fall injuries either
in the store or the parking lot for almost every industry. Other actions may be intentional
acts by employees causing injury to customers.
While the study of tort (a French word meaning injury or harm) law may consume
a full year or more during law school, this essay is intended as a brief introduction.
Therefore, while little more than an overview is presented, it is a very important
discussion of this complex subject for every student of business law.
This article proceeds in nine parts. First, we provide an introduction of tort law
arising in business settings by looking at popular cinema. Second, is a brief discussion of
the elements necessary to bring a successful tort action. Third, we look at intentional
business torts. Fourth is an examination of the important contemporary subject of cyber
torts. Fifth, we discuss environmental torts. Sixth, medical torts are discussed. Seventh,
torts arising in a global pandemic context are examined. Eighth, is the topic of risk
mitigation. And last, we conclude with a summary and recap of tort law.
I. THE PROBLEM: INJURY TO CUSTOMERS & STAKEHOLDERS
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Popular culture provides us with numerous examples of injuries to customers and
communities. For example, in the compelling 1991 cinematic drama A Civil Action, actor
John Travolta plays the role of attorney Jan Schlichtmann, who undertakes representing
families of a Boston-area community as they attempt to recover for injuries and death to
their children resulting from chemical pollution of a nearby water supply. A class action
lawsuit is fought for years against a major U.S. industrial company over its leather
tanning operation that results in eventual bankruptcy of Mr. Schlichtmann. As Internet
movie review site imdb.com describes, attorney Schlichtmann and his three colleagues
set out to have the company forced to decontaminate the affected areas, and of course to
sue for a major sum of compensation. But the lawyers of the leather company’s mother
company are not easy to get to1 Other cinematic examples of tort actions, some
fiction, others based somewhat in fact, include: Erin Brockovich (2000); Class Action
(1991); Dark Waters (2019); Hot Coffee (2011); The Rainmaker (1997); North Country
(2005); and Wolf of Wall Street (2013). A tremendous amount of law can often be
absorbed from interesting movies. We will now present a brief teaser describing the plot
of each.
Erin Brockovich (2000)
Courtesy of IMDB, this storyline depicts unemployed single mother Erin
Brockovich-Ellis, as she begins to investigate a suspicious real estate case involving the
Pacific Gas & Electric Company She discovers [PG&E] is trying quietly to buy land
that was contaminated by hexavalent chromium, a deadly toxic waste and illegally
1
Julian Reischl, A Civil Action (Touchstone Pictures & Paramount Pictures, 1991),
https://www.imdb.com/title/tt0120633/?ref_=nv_sr_srsg_0 (last viewed Feb. 2, 2021).
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dumping and, in turn, poisoning the residents in the area.2 As Erin investigates, she
finds herself leading point in a series of events that would involve her law firm in one of
the biggest class action lawsuits in American history against a multi-billion dollar
corporation.3
Class Action (1991)
In this drama, actor Gene Hackman plays the part of Jed Ward an attorney who
specializes in whistle blower, David vs. Goliath, type cases. He finds a client who is
suing an auto company over a safety problem that has had a severe effect on his life after
the accident.4
The plot thickens as Hackmans character, must replace the current
attorney and be ready for trial quickly, and then he finds that the defense attorney will be
his estranged daughter.5
The safety problem was that the station wagons were at risk of
explosion if impacted while making left turns. The auto manufacturer had employed a
purely monetary system of risk management, which used actuarial tables to project the
costs of probable deaths and injuries to car owners as a result of the defect against the
costs of fixing the defect itself. The company made no effort whatsoever to value the
lives of those likely to be affected.
Dark Waters (2019)
2 Kenneth Chisholm, Erin Brockovich, imdb.com,
(https://www.imdb.com/title/tt0195685/?ref_=nv_sr_srsg_0 (last viewed Feb. 2, 2021).
3
Id.
4
John Vogel, Class Action, (Interscope Communications & Twentieth Century Fox, 2000),
imdb.com, https://www.imdb.com/title/tt0101590/?ref_=nv_sr_srsg_2 (last viewed Feb. 2, 2021).
5
Id.
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Based on an article titled The Lawyer Who Became DuPonts Worst Nightmare,
published in The New York Times Magazine, this movie tells the story of attorney Robert
Bilott who undertakes an environmental lawsuit against powerful DuPont chemical
company and their Cincinnati, Ohio subsidiary accused of polluting water for many
years with a chemical called PFOA that proves to be greatly dangerous to human health
and caused some deaths.6
The story begins with unexplained animal deaths and leads
to the discovery that DuPont has been using perfluorooctanoic acid (PFOA) to
manufacture Teflon and coat nonstick pans, despite knowing (and hiding) for decades
that PFOA causes cancer and other diseases.7
Hot Coffee (2011)
Dean and Professor of law Michael A. Mogill provides an excellent account of the
McDonalds restaurant injury to customer case of Liebeck v. McDonalds Restaurant,
8
wherein seventy-nine year old Stella Liebeck was scalded by a cup of coffee she had just
purchased while parked in the restaurant parking lot. As a result of the injuries suffered,
The jury returned a verdict for her of $200,000, which was ultimately reduced to
$160,000 due to the finding that Ms. Liebeck was 20% at fault for her own conduct. It
also awarded punitive damages of $2.7 million.9
Professor Mogill provides the
following facts:
6 Dark Waters (Participant, Willi Hill & Killer Content 2019), imdb.com,
https://www.imdb.com/title/tt9071322/?ref_=fn_al_tt_1 (last viewed Feb. 2, 2021).
7 Alejandro De La Garza, Dark Waters Tells the True Story of the Lawyer Who Took DuPont to
Court and Won. But Rob Bilotts Fight Is Far From Over, Time, Nov 25, 2019,
https://time.com/5737451/dark-waters-true-story-rob-bilott/
8
Liebeck v. McDonalds Rests., P.T.S., Inc., 1995 WL 360309 (N.M. Dist. Aug. 18, 1994).
9 Michael A. Mogill, Teaching Law Day: A Senior Moment, 1 STETSON J. ADVOC. & L. 34 (2014),
citing Andrea Gerlin, A Matter of Degree: How a Jury Decided McDonalds Should Pay a Woman
Millions for a Hot-Coffee Spill, WALL ST. J. , Sept. 1, 1994.
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1. The plaintiffs argument was that the coffee was defective because it
was served too hot;
2. The coffee had been served at a temperature between 180-190 degrees;
3. This temperature was at least 20 degrees hotter than that of any
competitor in the fast food industry;
4. Coffee served at home has a temperature ranging from 158-168
degrees, and is held at 150-157 degrees after three minutes;
5. If coffee of the temperature of McDonalds is spilled, it can cause full
thickness 3rd degree burns in two to seven seconds, with these going
through the skin and subcutaneous (under the skin) fat to damage muscle,
tissue, and bone below;
6. The plaintiff suffered 3rd degree burns to her legs, posterior, and genital
area, with 16% permanent scarring;
7. The plaintiff remained in the hospital for eight days, while she
underwent whirlpool debridement procedures (surgical removal of foreign
material and dead tissue from a wound to prevent infection and to promote
healing) to remove necrotized (dead) and contaminated tissue and then had
several skin grafts. Both procedures produced excruciating pain and
disfigurement and were necessary to save her life;
8. McDonalds knew of the risk of injury for over ten years through 700
previous instances documented in their own files;
9. McDonalds did not warn of the severity of the burn potential;
10. McDonalds brewed at this temperature because doing so produces 10
more cups of coffee from a ten pound bag of coffee;
11. Mrs. Liebeck originally requested that McDonalds pay her medical
expenses not covered by Medicare, totaling approximately $11,000, and
McDonalds counteroffered $800;
12. The lawsuit requested $90,000 in damages;
13. This was the plaintiffs first ever lawsuit ;
14. A mediator recommended that McDonalds settle the case for
$225,000 but McDonalds refused to do so;
15. McDonalds witnesses testified that they did not intend to turn down
the heat on the coffee;
16. Doctors testified that this was one of the worst scald cases they had
ever seen;
17. Most consumers do not know that coffee this hot causes such severe
burns, nor of McDonalds practice of serving coffee this hot;
18. McDonalds daily revenue from the sales of coffee alone was $1.35
million;
19. The award of punitive damages represented two days of McDonalds
nation-wide coffee sales;
20. The trial judge, a conservative Republican, commented that
McDonalds acted with wanton recklessness and with an indifference to
the consequences of its conduct;
21. The trial judge ultimately reduced the total verdict, including
compensatory and punitive damages, to $640,000;
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22. The plaintiff never fully recovered her health after the injury.10
As is often the case, the facts in this case prove to be much more complex than
might appear at first glance. A documentary film feature produced by attorney Susan
Saladoff tells the story of how The McDonalds coffee case has been routinely cited by
the media as an example of how citizens have taken advantage of the legal system.11
However, attorney Saladoff depicts, how this case became so popular in the media, who
funded the effort and to what end.12 There is evidence that defense attorneys and
corporations themselves have manipulated the facts of the case in order to argue for tort
reform and limits on their liability.13
The Rainmaker (1997)
In the movie adaptation of the John Grisham novel of the same name, a story is
told of a young mans death from cancer and the corrupt insurance company that denied
medical payment coverage necessary to save the victims life.14 Rudy Baylor, the young
lawyer portrayed by Matt Damon in the film, exposes that the insurance company sold
policies to poor people and then routinely denied all claims as a matter of policy and
would only reassess if a client hired an attorney the company would have to take
seriously.
10 Mogill, supra note __ at 4.
11 Hot Coffee, (If Not Now Productions, The Group Entertainment, 2011), imdb.com,
https://www.imdb.com/title/tt1445203/?ref_=nv_sr_srsg_0 (last viewed Feb. 3, 2021).
12 Id.
13 German Lopez, What a lot of people get wrong about the infamous 1994 McDonalds hot coffee
lawsuit, Vox, Dec 16, 2016, https://www.vox.com/policy-andpolitics/2016/12/16/13971482/mcdonalds-coffee-lawsuit-stella-liebeck
14 John Grishams The Rainmaker, Constellation Entertainment, American Zoetrope (1997),
IMDb, https://www.imdb.com/title/tt0119978/?ref_=nv_sr_srsg_0.
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II. TORT LAW: THE ELEMENTS
Professors Shulman, James, Gray, and Gifford write, A central focus of tort law
is whether the costs of accidents should be shifted from the party that originally sustained
them to another party that caused the accident.15 As we will see, a subsidiary issue has
assumed considerable importance: the relevance of fault (in the sense of culpability) to
the allocation of accident costs.16
Professor James F. Morgan defines a tort as, an omission (failure to act) or a
wrongful act (other than a breach of contract) against a person or property.
17 As
Professor Morgan admits, The term is somewhat difficult to define, and, as we will see
later in this article, the word wrongful in the definition means a violation of ones
personal legal duty to another. The victim of a tort may recover damages for the injuries
received, usually because the other party was at fault in causing the injury.18 Observe,
To be tortuous, acts or omissions need not involve moral turpitude or bad motive or
maliciousness. Likewise, an act or an omission that does not invade anothers rights is not
tortuous, even though the actors motive is bad or malicious.19 In brief, the following
elements are necessary to prove a successful tort claim: duty, breach, causation and
damages.
15 HARRY SHULMAN, FLEMING JAMES JR., OSCAR S. GRAY & DONALD G. GIFFORD, LAW OF
TORTS: CASES AND MATERIALS 1 (4th ed., 2003).
16 Id.
17 JAMES F. MORGAN, BUSINESS LAW 164 (6th ed., 2019).
18 Id.
19 Id.
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One of the most efficient ways to explain the application of tort law is to examine
the following fictional fact pattern and then analyze it by use of the IRAC method of
legal analysis.20
Customer Overboard
Tort Analysis
The Following email is received at Headquarters of Wonderful Caribbean Cruise Ships,
Inc..
Dear CEO Neptune:
You will recall my previous emails expressing concern about the engine oil leaking onto
the passenger deck, resulting in passengers occasionally slipping on the deck and falling
overboard. This has resulted in revenue loss when passengers are no longer on the ship to
purchase more expensive beverages, food, souvenirs, etc.
Well, it has happened again. Last night, a 30-something year-old mother and young child
slipped on the oil-covered deck and went over the rail. Unfortunately, unlike many earlier
instances, 60 members of the University chapter of Mothers Against Drunk Driving
witnessed the whole thing. What should I do? Provide free drinks to everybody onboard?
Sincerely,
Captain Ahab
ps. Good news! Coast Guard tells me they just found the mother alive, evidently in
pretty-good condition except for a few shark nibbles. Unfortunately, the baby is lost and
presumed dead.
Please provide a legal analysis from the viewpoint of the surviving mom.
[An answer will be provided in the Appendix to this article.
Duty
20 Lawrence J. Trautman, Cathy L. Taylor, Janet Ford, Lora J. Koretz, Anthony McMullen & Erin
Isom, IRAC! IRAC! IRAC!: How To Brief Any Legal Issue, 29 SOUTHERN L.J. 317 (2019),
http://ssrn.com/abstract=2827285.
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Breach
Causation
Damages
III. ELEMENTS OF INTENTIONAL BUSINESS TORTS
Tort law not only compensates victims for their physical harm, but it also
provides compensation in particular situations for harm to a victims reputation or
psychological well-being. In this section, we will examine intentional torts including
assault, battery, false imprisonment, intentional infliction of emotional distress,
fraudulent misrepresentation, defamation, and invasion of privacy.
Battery
Battery occurs when an actor intentionally causes a harmful or offensive
contact21. In battery cases, plaintiffs must prove that the contact offends a reasonable
21 Restatement (Second) of Torts 18 (a) (1965).
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sense of personal dignity22 One common misconception concerns the difference
between assault and battery. Assault is intentionally causing another reasonable
apprehension of an imminent and harmful physical contact. Battery is the act of harmful
physical contact. In media accounts, for example, the actual physical contact is often
described erroneously as an assault.
The movie, North Country (2005),23 provides some examples of battery. The film
is a fictionalized account of female mine workers who were repeatedly harassed by their
male counterparts in an effort to force them to quit. One scene describes an unnecessary
pelvic exam for female employees that served no medical purpose and was used only to
harass them. In another scene, after one of the female workers used a portable toilet that
the females had demanded from management, some of her male colleagues trapped her
inside and then tipped the entire structure over, spilling chemicals and filth onto her.
Another worker had explained that she was raped when she was younger. All of these
occurrences are examples of offensive contact constituting battery.
Assault
As described previously, the tort of assault occurs when an actor intends to inflict
a battery upon a victim or an imminent apprehension of such contact and the victim
suffers from that apprehension.24
Note that an actual battery is not required, only the
apprehension of one.
22 Restatement (Second) of Torts 19 (1965).
23 North Country (2005), Warner Bros. IMDb, (a fictional account of Jensen v. Eveleth Mines, the
first (1984) major United States sexual harassment case),
https://www.imdb.com/title/tt0395972/?ref_=nv_sr_srsg_0.
24 Restatement (Second) of Torts 21 (1965).
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An assault can occur without a battery and a battery can occur without an assault.
If someone puts an intoxicating drug in the victims drink without his or her knowledge,
then this is a battery. Since the victim is unaware, then there is no apprehension, and thus
no assault. If someone threatens to punch or slap the victim and the victim fears an
imminent battery, as depicted by the recurring bullying inflicted on the female workers in
North Country, but the battery does not occur, then there is only liability for assault.
False Imprisonment
The tort of false imprisonment punishes people who intentionally deprive others
of the right to move about freely.25 The movie North Country provides an example when
a female worker enters a portable toilet and her colleagues, intending to harass her, hold
the door closed, preventing her escape, and then rock the structure until it tips over. The
defendant will be liable for this tort even if the actor does not use physical force or threats
to confine the victim.26
Most states provide some form of defense to false imprisonment called the
shopkeepers privilege that can be used by a shopkeeper to detain a suspected shoplifter
as long as the suspicion is reasonable.27 For this defense to apply, the shopkeeper must
use reasonable means28 to detain the suspected shoplifter and may only detain the
suspected shoplifter for as long as it takes to perform a reasonable investigation of the
facts.29
25 Restatement (Second) of Torts 35 (1965).
26 Restatement (Second) of Torts 40 (1965).
27 Restatement (Second) of Torts 120A (1965).
28 Restatement of Torts (Second) 120A, comment h (1965).
29 Restatement of Torts (Second) 120A (1965).
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Intentional Infliction of Emotional Distress
Victims are often unable to recover for all of the emotional consequences of
anothers wrongful actions. However, for especially egregious behavior, victims can
recover for intentional infliction of emotional distress under the Third Restatement of
Torts 46 (1965), which provides that:
An actor who by extreme and outrageous conduct intentionally or
recklessly causes severe emotional harm to another is subject to
liability for that emotional harm and, if the emotional harm causes
bodily harm, also for the bodily harm.
The extreme and outrageous conduct of the actor must go ..beyond the bounds
of human decency such that it would be regarded as intolerable in a civilized
community.30 For example, assume a debt collector deceitfully identifed himself as a
hospital administrator in a phone call to the father of a debtor, explaining that his
daughter has been in a terrible accident and is in need of emergency medical treatment,
but does not have any health or motor vehicle insurance to cover her treatment. The debt
collector furher explained that the father needed to pay the hospital for her to get
treatment so he could collect on the debt. Unfortuately, the father did not know that this
was a ruse to collect a debt and he was the one who had to be hospitalized after learning
the shocking news about his daughter because he had a pre-existing heart condition.
Federal law31 protects debtors from unfair collection practices. However, in this case, the
debt collectors behavior would be considered as a tort as well since the debt collectors
conduct was so far out of bounds and would be liable for the emotional harm and the
physical consequences.
30 Restatement of Torts (Second) 46 comment d (1965).
31 Fair Debt Collection Practices Act 15 U.S.C. 1692.
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Another example of this tort took place in The Craft, a movie that depicted four
teenage friends who developed an interest in witchcraft.32 When one of them attempted to
leave the group, the others decided she needed to be punished. They called and left her a
message telling her that her parents had been killed in an airplane crash. In such a case,
the girls that made the call would be liable for the physical and emotional harm the victim
could prove that it led to.
Misrepresentation
When someone is deceived by another fraudulently, negligently, or innocently,
the victim may recover damages for misrepresentation if all of the elements below are
met33:
1. Someone makes a false statement of material fact or opinion;
2. That person intends to induce the victim to act or refrain from acting;
3. The victim justifiably34 relies on the misrepresentation35; and
4. The victim suffers a loss as a result.
A statement is considered to be material if a reasonable person would, attach
importance to its existence or nonexistence36 or the person making the statement
knows or has reason to know that the victim is likely to regard the matter as
important37
32 The Craft (1996), https://www.imdb.com/title/tt0115963/
33 Restatement of Torts (Second) 525 (1965).
34 Restatement of Torts (Second) 537(b) (1965).
35 Restatement of Torts (Second) 537(a) (1965).
36 Restatement of Torts (Second) 538 (a) (1965).
37 Restatement of Torts (Second) 538 (b) (1965).
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A misrepresentation is fraudulent when the person making the representation
knows or believes that it is not as he represents it to be38 or he does not have the
confidence in the accuracy of his representation39 or he knows that he does not
have the basis for his representation that he states or implies.40 For example, a false
statement about the safety of the water supply by a company spokesperson who had
knowledge that the statement is false has committed fraudulent misrepresentation.
A negligent misrepresentation results41 when a statement is made the speaker fails
to exercise reasonable care or competence in obtaining or communicating the
information. For example, if the company spokesperson gives a statement about the
safety of the water supply but mixed up the safety reports and read the wrong one, this
would be negligent misrepresentation. Another example of negligent misrepresentation
occurs when an individual has a duty to ascertain the facts, fails to do so, and presents
incorrect information to someone who relies upon it. So if a prospective home buyer asks
a real estate agent whether a particular home is in a flood plain, she assuming but not
knowing tells her it is not, and the prospective home buyer proceeds with a home
purchase while reasonably relying on the real estate agents representation.
An innocent representation of material fact also creates liability to the victim who
justifiably relies upon it42. For example, a company spokesperson who relayed a false
statement about the safety of the water supply has committed innocent misrepresentation.
38 Restatement of Torts (Second) 526 (a), comment h (1965).
39 Restatement of Torts (Second) 526 (b) (1965).
40 Restatement of Torts (Second) 526 (c) (1965).
41 Restatement Torts (Second) 552 (1) (1965).
42 Restatement Torts (Second) 552 (1965).
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Defamation
The tort of defamation arises when someone makes a false statement about the
victim that is communicated intentionally or negligently43 to a third party44 and causes
injury to the victims reputation.45 The written form is libel and the spoken form is
slander.
46
In cases of slander, the victim does not need to prove harm to his reputation if
the statement either falsely claims that the victim has been convicted of a criminal
offense47, has a venereal disease or other loathsome communicable disease48, would
cause the victim to be viewed as unfit for his occupation, business, or public office,
49 or
has committed serious sexual misconduct.50
In all of these situations, it is easy to see
how these types of false statements could cause lasting reputational harm. Defamation
laws do vary by state.
Recently, several lawsuits51 have been filed relating to the depictions of characters
in docudramas52, notably the Wolf of Wall Street (2013). In that film, Andrew Greene,
nicknamed Wigwam, was the toupee-wearing general counsel and corporate finance
chief of Stratton Oakmont in the book version of the Wolf of Wall Street. The toupeewearing character in the film with the same title that appeared to depict Greene was
43 Restatement Torts (Second) 577 (1965). See also Gertz v. Robert Welch, Incorporated, 418
U.S. 323, 94 S. Ct. 2997.
44 Restatement Torts (Second) 558 (1965).
45 Under Restatement Torts (Second) 559 (1965), a statement is defamatory if it tends to so
harm the reputation of another as to lower him in the estimation of the community or to deter third
persons from associating or dealing with him.
46 Restatement Torts (Second) 568 (1965).
47 Restatement Torts (Second) 571 (1965).
48 Restatement Torts (Second) 572 (1965).
49 Restatement Torts (Second) 573 (1965).
50 Restatement Torts (Second) 574. (1965).
51Weintraub Tobin, The Wolf Of Wall Street Defamation Suit The Risk Of An Inspired By
Character In Movies And TV, jdsupra.com, July 10, 2020.
https://www.jdsupra.com/legalnews/the-wolf-of-wall-street-defamation-suit-29398/
52 Id.
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named Nicky Koskoff. Koskoff engaged in or condoned numerous sleazy and illegal acts
including adulterous sex acts with prostitutes and criminal money laundering. Greene
sued the films producers and Paramount Pictures for their defamatory portrayal of
himself as Koskoff,
53 seeking $25 million in damages.54
Greene lost the lawsuit. If he was an ordinary person, he would likely have
prevailed. However, Greene is considered to be a public figure55 and as such, he must
prove one more element to succeed on a defamation claim that ordinary people do not
need to prove. He must show that the defendants in the case depicted his character in a
false manner with knowledge that the portrayal was false56 or with reckless disregard for
the truth57. The defendants convinced the court that the Koskoff character in the film was
a composite of three separate people and a disclaimer at the end of the film explained that
some of the characters were fictionalized.58
Truth and privilege are the defenses to a defamation claim. Truth is a defense to
defamation59 because if the allegedly defamatory statement is true, then by definition, it
is not a false statement. The defense of absolute privilege exists during judicial
proceedings for judicial officers, attorneys, jurors, parties and witnesses and also during
53 Greene v. Paramount Pictures Corp. 340 F. Supp. 3d 161 (E.D.N.Y. 2018).
54 Restatement of Torts (Second) 564, comment d (1965).
55 The United States Supreme Court ruled in New York Times v. Sullivan 376 U.S. 254 (1964),
that public officials cannot maintain a cause of action for defamation relating to the conduct,
fitness or roles ae a public official unless the official can prove the defendant knows the
communication is false or acts in reckless disregard for the truth. Later opinions extended this rule
to include public figures.
56 Restatement of Torts (Second) 580A (a) (1965).
57 Restatement of Torts (Second) 580A (b) (1965).
58 Robbins Kaplan, LLP, Paramount Prevails in Wolf of Wall Street Defamation Suit,
jdsupra.com, December 17, 2018. https://www.jdsupra.com/legalnews/paramount-prevails-inwolf-of-wall-52204/
59 Restatement of Torts (Second) 581A (1965).
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legislative proceedings to legislators and witnesses.60 Qualified privilege can also protect
the press, some governmental bodies, employers, and reviewers.61 While absolute
privilege protects even malicious statements, qualified privilege does not.
Invasion of Privacy
The victim can recover for invasion of privacy when the victims right to privacy
is invaded by (1) an unreasonable intrusion into the victims seclusion62; or (2) the
unauthorized appropriation of the victims name or likeness63; or (3) the unreasonable
publicity of the victims private life64; or (4) publicity that unreasonably puts the victim
in a false light65 in public.
Unreasonable Intrusion into Seclusion. When someone intentionally invades
the victims solitude or seclusion or his private affairs, the actor is liable if that intrusion
would be highly offensive to a reasonable person66. Examples include forcibly entering
the victims hotel room or wiretapping a victims telephone without permission67
.
Unauthorized Appropriation of Name, Image or Likeness. An actor is liable
for taking the name, image or likeness of the victim for his own use or benefit.68 Some
states limit liability to commercial use of the plaintiffs name, image or likeness while
others also allow recovery when the victims name, image or likeness is used for any
60 Restatement of Torts (Second) 585 (1965), et seq.
61 B. Sidler, Absolute Privileges, 43 CHI.-KENT L. REV. 55 (1966),
https://scholarship.kentlaw.iit.edu/cklawreview/vol43/iss1/10 .
62
Restatement of Torts (Second) 652(b) (1965).
63
Restatement of Torts (Second) 652(c) (1965).
64
Restatement of Torts (Second) 652(d) (1965).
65
Restatement of Torts (Second) 653(e) (1965).
66
Restatement of Torts (Second) 652 B. (1965).
67
Restatement of Torts (Second) 652 B, comment b (1965).
68 Restatement of Torts (Second) 652 C (1965).
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purpose. One famous example of this tort occurred when Michael Jordan sued a Chicagoarea grocery store for using his name without his permission in an advertisement that
appeared in Sports Illustrated.69 A civil jury awarded Michael Jordan $8.9 million in
damages for that violation.
Unreasonable Publicity of Private Life. When an actor communicates
information that reaches or is sure to reach the public70 about the private life of the
victim, the actor is liable when the matter would be highly offensive to a reasonable
person71 and is not of legitimate concern to the public.72
For example, when the manager
of a liquor store posts the checks from customers that were returned from the bank
because they have bounced would have liability for invasion of privacy.
False Light. Someone who publicizes a matter that places the victim in a false
light in the public eye is liable when a reasonable person would be highly offended and
the actor knew that the publicized matter was false or acted in reckless disregard of its
falsity.73
For example, Mrs. Liebeck, the plaintiff in the McDonalds hot coffee case,
was portrayed by some political activists and media outlets as a greedy and negligent
driver who suffered only minor burns from the hot coffee that she spilled in her lap74
while she was driving. In reality, she suffered third degree burns that required skin
grafts,was a passenger in the vehicle, and the vehicle was not moving at the time she was
burned.
69 Michael Jordan awarded $8.9 million for stores use of image, Associated Press, Aug 21, 2015,
https://www.usatoday.com/story/sports/nba/2015/08/21/michael-jordan-dominicks-lawsuit-imagewithout-permission/32160971/
70 Restatement of Torts (Second) 652 C, comment a (1965).
71 Restatement of Torts (Second) 652 D (a) (1965).
72 Restatement of Torts (Second) 652 D (b) (1965).
73 Restatement of Torts (Second) 652 (e) (1965).
74 Hot Coffee, (If Not Now Productions, The Group Entertainment, 2011), imdb.com,
https://www.imdb.com/title/tt1445203/?ref_=nv_sr_srsg_0 (last viewed Feb. 28, 2021).
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IV. CYBER TORTS
Cyber Attacks Abound
The full impact of the SolarWinds hack is not fully known as 2021 begins.
However, U.S. government agencies and corporate boards are still trying to understand
this massive data breach, described as one of the worst in U.S. history.75 According to
The Wall Street Journal, Dozens of SolarWinds customers, including major technology
companies such as Microsoft Corp. and Cisco Systems Inc., were affected by the
incident, as well as the Treasury, Justice, Energy, Commerce, State, Homeland Security,
Labor and Energy Departments of the United States government.76 The directors of a
company have fiduciary duties to safeguard the data and information of the company.
Professors Larcker, Reiss and Tayan note that, The board of directors is expected to
ensure that management has identified and developed processes to mitigate risks facing
the organization, including risks arising from data theft and the loss of information.
Unfortunately, recent experience suggests that companies are not doing a sufficient job of
securing this data.77
75 Robert McMillan, Hackers Lurked in SolarWinds Email System for at Least 9 Months, CEO
Says, WALL ST. J., (Feb. 2, 2021), https://www.wsj.com/articles/hackers-lurked-in-solarwindsemail-system-for-at-least-9-months-ceo-says-11612317963.
76 Id.
77 David F. Larcker, Peter C. Reiss & Brian Tayan, Critical Update Needed: Cybersecurity
Expertise in the Boardroom, Rock Center for Corporate Governance at Stanford University Closer
Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-69, Stanford
University Graduate School of Business Research Paper No. 17-70 (2017),
https://ssrn.com/abstract=3074594. See also Lawrence J. Trautman, Seletha Butler, Frederick
Chang, Michele Hooper, Ron McCray & Ruth Simmons, Corporate Directors: Who They Are,
What They Do, Cyber and Other Contemporary Challenges, http://ssrn.com/abstract=3792382;
Neal Newman & Lawrence J. Trautman, Securities Law: Overview and Contemporary Issues, 16
OHIO ST. BUS. L.J. (forthcoming), http://ssrn.com/abstract=3790804.
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Challenge of Technology
Existing for just a little more than a decade, Bitcoin and other virtual currencies
have had a major impact and have proven to be a unique payment systems challenge for
law enforcement, financial regulatory authorities worldwide, and the investment
community.78 Professor Trautman observes, Rapid introduction and diffusion of
technological changes throughout society, such as the blockchain that serves as Bitcoins
crypto-foundation, continue to exceed the ability of law and regulation to keep pace.79
Rapid growth of the Internet in particular and technology in general has created
challenges for government regulatory agencies such as the CFTC and SEC,80 other
regulators,81 Congress,82 corporate directors,83 and all of us in society.84 The legal system
78 Lawrence J. Trautman, Bitcoin, Virtual Currencies and the Struggle of Law and Regulation to
Keep Pace, 102 MARQ. L. REV. 447 (2018), https://ssrn.com/abstract=3182867. See also
Lawrence J. Trautman & Mason J. Molesky, A Primer for Blockchain, 88 UMKC L. REV. 239
(2019), arXiv:1904.03254, https://ssrn.com/abstract=3324660; Lawrence J. Trautman,
Mohammed T. Hussein, Louis Ngamassi & Mason Molesky, Governance of The Internet of
Things (IoT) 60(3) JURIMETRICS 315 (2020), http://ssrn.com/abstract=3443973; Lawrence J.
Trautman, (with Mohammed T. Hussein, Emmanuel U. Opara, Mason J. Molesky & Shahedur
Rahman, Posted: No Phishing 8 EMORY CORP. GOV. & ACCT. REV. 39 (2021),
http://ssrn.com/abstract=3549992.
79 Lawrence J. Trautman, Virtual Currencies: Bitcoin & What Now After Liberty Reserve, Silk
Road, and Mt. Gox?, 20 RICH. J. L. & TECH. 13 (2014), http://www.ssrn.com/abstract=2393537;
Joshua A.T. Fairfield & Lawrence J. Trautman, Virtual Art and Non-fungible Tokens,
http://ssrn.com/abstract=3814087.
80 Lawrence J. Trautman & George P. Michaely, The SEC & The Internet: Regulating the Web of
Deceit, 68 CONSUMER FIN. L. Q. REP. 262 (2014), http://www.ssrn.com/abstract=1951148.
81 David D. Schein & Lawrence J. Trautman, The Dark Web and Employer Liability, 18 COLO.
TECH. L.J. 49 (2020), http://ssrn.com/abstract=3251479. Lawrence J. Trautman & Alvin Harrell,
Bitcoin Versus Regulated Payment Systems: What Gives?, 38 CARDOZO L. REV. 1041 (2017),
http://ssrn.com/abstract=2730983; Lawrence J. Trautman, Is Disruptive Blockchain Technology
the Future of Financial Services?, 69 CONSUMER FIN. L. Q. REP. 232 (2016),
http://ssrn.com/abstract=2786186.
82 Lawrence J. Trautman, Congressional Cybersecurity Oversight: Whos Who & How It Works, 5
J. L. & CYBER WARFARE 147 (2016), http://ssrn.com/abstract=2638448; Lawrence J. Trautman,
Cybersecurity: What About U.S. Policy?, 2015 U. ILL. J. L. TECH. & POLY 341 (2015),
http://ssrn.com/abstract=2548561.
83 Lawrence J. Trautman, Governance of the Facebook Privacy Crisis, 20 PITT. J. TECH. L. &
POLY 41 (2020), http://ssrn.com/abstract=3363002; Lawrence J. Trautman & Peter C. Ormerod,
WannaCry, Ransomware, and the Emerging Threat to Corporations, 86 TENN. L. REV. 503
(2019), http://ssrn.com/abstract=3238293; Lawrence J. Trautman, How Google Perceives
Customer Privacy, Cyber, E-Commerce, Political and Regulatory Compliance Risks, 10 WM. &
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Thomas J. Freeman, Vanessa L. Johnson & Lora J. Koretz
is still determining how to treat cryptocurrency or virtual currency, which can be viewed
as a combination of currency and information. It is safe to assume the same duties,
fiduciary or otherwise, to safeguard this new type of currency will apply as do with other
classes of corporate data and/or assets. When those duties are breached, the same analysis
will apply as with similar torts.
The Hazards of Personal Information
Law professor Danielle Keats Citron, when contemplating how we think about
injuries resulting from information and data storage accidents warns, Their diverse new
risks include the uncontrolled release of sensitive personal information from insecure
computer databases into the hands of hackers, dishonest employees, and other criminals.
The escape of such personal data brings the threat of identity theft, criminal
impersonation, stalking, and corporate espionage.85 It seems clear from scheduled
MARY BUS. L. REV. 1 (2018), https://ssrn.com/abstract=3067298; Lawrence J. Trautman & Peter
C. Ormerod, Industrial Cyber Vulnerabilities: Lessons from Stuxnet and the Internet of Things, 72
U. MIAMI L. REV. 761 (2018), http://ssrn.com/abstract=2982629; Lawrence J. Trautman,
Managing Cyberthreat, 33(2) SANTA CLARA HIGH TECH. L.J. 230 (2016),
http://ssrn.com/abstract=2534119; Lawrence J. Trautman, E-Commerce and Electronic Payment
System Risks: Lessons from PayPal, 17 U.C. DAVIS BUS. L.J. 261 (2016),
http://www.ssrn.com/abstract=2314119; Lawrence J. Trautman & Kara Altenbaumer-Price, The
Boards Responsibility for Information Technology Governance, 29 J. MARSHALL J. COMP. &
INFO. L. 313 (2011), http://www.ssrn.com/abstract=1947283; Lawrence J. Trautman, Jason Triche
& James C. Wetherbe, Corporate Information Technology Governance Under Fire, 8 J. STRAT. &
INTL STUD. 105 (2013), http://ssrn.com/abstract=2314119.
84 Robert W. Emerson & Lawrence J. Trautman, Lessons About Franchise Risk From YUM!
Brands and Schlotskys, 24 LEWIS & CLARK L. REV. 997 (2020) http://ssrn.com/abstract=3442905;
Lawrence J. Trautman, Is Cyberattack The Next Pearl Harbor?, 18 N.C. J. L. & TECHN. 232
(2016), http://ssrn.com/abstract=2711059; Lawrence J. Trautman & Janet Ford, Nonprofit
Governance: The Basics, 52 AKRON L. REV. 971 (2018), https://ssrn.com/abstract=3133818;
Lawrence J. Trautman, How Law Operates in a Wired Global Society: Cyber and E-Commerce
Risk, PROCEEDS OF THE KOREA LEGISLATION RESEARCH INSTITUTE (KLRI), 2017 LEGAL SCHOLAR
ROUNDTABLE, Seoul, Korea, 21-22 Sept., 2017, https://ssrn.com/abstract=3033776.
85 Daniel Keats Citron, Reservoirs of Danger: The Evolution of Public and Private Law at the
Dawn of the Information Age, 80 S. CAL. L. REV. 241, 296 (2007),
https://ssrn.com/abstract=928401
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Thomas J. Freeman, Vanessa L. Johnson & Lora J. Koretz
hearings before Congress and the reading of almost any daily newspaper that we can
expect to see new laws crafted in an attempt to provide answers to these problems.
V. ENVIRONMENTAL TORTS
Environmental torts must be viewed through a different lens than traditional torts
such as trespass and nuisance.
86 Those who have suffered physical injury or disease must
be allowed legal recourse for their damages. They must be permitted to sue, either
individually or as a class, to receive compensation for those damages and to punish
offenders and deter others who might offend in the future.
VI. MEDICAL TORTS
When people think of liability in healthcare, they usually think of medical
malpractice, which is an unintentional tort or form of negligence.87
However, medical
malpractice can also be based on breach of contract or the commission of intentional
torts.88
Accordingly, in Texas, a health care liability claim, is defined as –
A cause of action against a health care provider or physician for treatment,
lack of treatment, or other claimed departure from accepted standards of
medical care, or health care, or safety or professional or administrative
services directly related to health care, which proximately results in injury
to or death of a claimant, whether the claimant’s claim or cause of action
sounds in tort or contract.89
As this definition and discussion signals, medical torts and breach of contract
claims are interrelated in healthcare, primarily because special legal duties generally only
arise after a physician-patient relationship has been established.90
The physician-patient
relationship is based on contract principles because the physician agrees to diagnose and
86 Troyen A. Brennan, Environmental Torts, 46 Vanderbilt Law Review 1 (1993),
https://scholarship.law.vanderbilt.edu/vlr/vol46/iss1/1
87 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 114.
88 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 114.
89 Texas Civil Practice and Remedies Code 74.001(13).
90 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 114.
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treat the patient in accordance with the standards of acceptable medical practice91 in
exchange for the patients agreement to pay for the provided treatment/services.
However, because the general rule is that a physician is under no obligation to engage in
practice or to accept professional employment,92 establishment of the relationship
usually results from either an express or implied contract.93
Consequently, after the
relationship is established, professional liability arises if this contract is breached.94
The special duty and/or contract is breached if the physician deviates from the
standards of acceptable medical practice. This standard of care is defined as the degree
of skill and diligence ordinarily exercised by the average members of the medical
profession in the same or similar localities with due consideration to the state of the
profession at the time.95
Therefore, physicians are only required to provide reasonable
and ordinary treatment.96 Their actions are judged against the knowledge and skill of
average physicians in the same line of practice.97
Once the standard of care is
established, a plaintiff in a medical malpractice action must present evidence of the facts
of the case and testimony from expert witnesses regarding whether the standard of care
was met.98
Expert witnesses must meet specific qualifications. For example, in Texas,
an expert witness must be practicing medicine at the time of their testimony or at the time
the claim arose, be qualified on the basis of experience or training (e.g., board certified),
and have knowledge of the accepted standards of medical care for the diagnosis, care, or
91 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 120.
92 AM. JUR. 2d, Physicians, Surgeons, and Other Healers, 96 (2012)
93 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 120.
94 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 120.
95 61 AM. JUR. 2d, Physicians, Surgeons, and Other Healers, 184 (2012)
96 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 142.
97 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 142.
98 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 149.
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treatment of the illness, injury or condition involved in the claim.99
Additionally,
written rules or procedures of the hospital, regulations of the governmental agencies,
standards of private accrediting agencies, and similar published material may be
admissible to show the requisite standard of care.100
Next, as the definition of health care liability claim states, the plaintiff must also
prove that the departure from accepted standards of medical care was the proximate cause
(which proximately results) of the injury to or death of a claimant.101
In other words,
the plaintiff must demonstrate that there is a strong likelihood (a preponderance of the
evidence) that the injury or death would not have occurred but for the health care
providers departure from accepted standards of medical care, or the result of his or her
actions were foreseeable.102
The negligence of deviating from the standard of care need
not be the sole cause of, but must be a significant factor in the injury or death.103
Finally, the plaintiff must prove which injuries resulted from the negligent
conduct and what those injuries are worth.104
The most commonly awarded damages
are compensatory damages, which compensate the plaintiff for actual losses (e.g. cost of
medical treatments, lost earnings, etc.), and noneconomic losses (e.g. pain and suffering).
For example, the Texas Medical Liability Act allows damages for actual expenses of
necessary medical, hospital, and custodial care received before judgment or required in
99 Texas Civil Practice and Remedies Code 74.401.
100 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 151.
101 Texas Civil Practice and Remedies Code 74.001(13).
102 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 157.
103 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 157.
104 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 157.
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the future for treatment of the injury,105 but caps damages for wrongful death and
noneconomic damages.106
Defenses available for medical malpractice claims include statutes of limitation
and comparative negligence. For example, in Texas, the statutes of limitation for medical
malpractice are 2 years from the date of the injuries and 2 years from the date of death for
wrongful death.107
The discussion above described the elements of medical malpractice negligence
claims; however, as mentioned previously, medical malpractice can also be based on
breach of contract or the commission of intentional torts.108
Consequently, other related
medical torts include claims of abandonment when physicians prematurely withdraw
their services and the patient suffers avoidable injuries or death.109 Additionally, in
Texas, a patient must be advised about the risk of complications for any medical
procedure, and the patient must be provided with the name of the person performing the
procedure, . . . [and] receive specific information about the possible risks, [but] if a
procedure is performed without securing informed consent from the patient, the result can
be medical battery.110
Another example, is when a doctor was found liable for medical
battery after he operated on a patient who had consented only to an examination under
anesthesia but not to an operation.111
The tort of false imprisonment __________ .
105 Texas Civil Practice and Remedies Code 74.303(c).
106 Texas Civil Practice and Remedies Code 74.301, 74.303(a).
107 Bala v. Maxwell, 909 S.W.2d 889 (Tex. 1995).
108 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 114.
109 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 122.
110 https://www.texaslawfirm.com/military-medical-malpractice/medical-battery/
111 The Law of Healthcare Administration, J. Stuart Showalter, 8th Edition, page 128, citing
Schloendorff v. Society of New York Hospital, 211 N.Y. 125 (1914).
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VII. GLOBAL PANDEMIC AND TORT RISK
Sub Topic
VIII. RISK MITIGATION
Role of Insurance
Insurance is available and employed to mitigate many areas of corporate risk.112
IX. CONCLUSION
112 Lawrence J. Trautman & Kara Altenbaumer-Price, D&O Insurance: A Primer, 1 AM. U. BUS. L. REV.
337 (2012), http://www.ssrn.com/abstract=1998080.
Electronic copy available at: https://ssrn.com/abstract=3795841
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
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Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
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