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Chapter 10 - Torts Affecting Business
10-1
Chapter 10
Torts Affecting Business
Learning Objectives
The purpose of this chapter is to introduce students to noncontractual civil wrongs as they apply
to business. The chapter develops the main categories of torts: intentional torts, negligence torts,
and strict liability torts. Products liability is covered under strict tort liability. Through
assignment of rights and duties, the law affects the way wealth is distributed in society. Use the
tort chapter, and the recent changes in tort law, to illustrate this aspect of the law. Consider that
the role of tort law in a property-based legal system is both to compensate owners for trespasses
on what they own (including in that broad sense, ownership of themselves) and to define the
boundaries of what they own, especially as they own the uses of their resources. As resource uses
are defined by the courts (or legislatures) as legally wrong, wealth is redistributed.
References
Carroll, Stephen J., Assessing the Effects of Tort Reform. Rand Corp. (1987).
Hans, Valerie P., Business on Trial: The Civil Jury and Corporate Responsibility. Yale
(2000).
O'Connell, Jeffrey, Tort Law: No-Fault and Beyond. M. Bender (1976).
Schwartz, Victor E., et al, Prosser on Torts, 11th ed. Foundation Pr. (2005).
Schwartz, Victor E., et al, Torts: Cases and Materials, 10th ed. West (2001).
Stapleton, Jane, Product Liability. Butterworths (1994).
Williams, C. Arthur, Workers’ Compensation Systems Around the World. (1991).
Teaching Outline
I. Introduction
Emphasize:
That legally a tort is a civil wrong other than a breach of contract.
Chapter 10 - Torts Affecting Business
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That behavior that constitutes a tort is called tortious behavior.
Sidebar 10.3—“Tort or Crime? Or Both?”
II. Intentional Torts (LO 10-1)
Emphasize:
That intent is defined as the desire to bring about certain results.
Sidebar 10.1—“Types of Intentional Torts”
A. Assault and Battery
Emphasize:
The civil distinction between assault and battery.
That “illegal” means that touching is done without justification and without the consent
of the person touched.
Case 10.1: Harper v. Winston County 892 So.2d 346 (Ala. Sup. Ct. 2004)
Cases for Discussion:
1. A fraternity hazing instance involving the paddling of a pledge led to a tort action for
battery.
2. An award of $275,000 in compensatory damages for false imprisonment and battery
against the District of Columbia and two city police officers was not excessive when the
plaintiff was a 38-year-old black man who held two Masters’ degrees, who had served
as a Peace Corps volunteer, and who had never been arrested. The plaintiff was
suddenly accosted by plain-clothes officers, subjected to degrading remarks, and kicked
into a marked police car that was driven to a robbed bank. When the officers learned
that the plaintiff was not the robber, he was nevertheless booked for assault. The
plaintiff was confined to bed for a week recovering from the injuries suffered. District
of Columbia v. Gandy, 450 A.2d 896 (1982).
B. Intentional Infliction of Mental Distress
Emphasize:
That intentional infliction of mental distress is a battery to the emotions.
That usually, one who sues on the basis of an intentional infliction of mental distress
must prove that the defendant’s outrageous behavior caused not only mental distress but
also physical symptoms, such as headaches or sleeplessness.
How this tort can occur in the workplace.
Chapter 10 - Torts Affecting Business
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Cases for Discussion:
1. Walters v. Mintec/International, 53 LW 2488 (CA3, 1986).
2. Ellington v. Coca Cola Bottling Co. of Tulsa, 809 P.2d 69 (Okla. App. 1986).
The plaintiff became physically ill after drinking from a soft drink bottle containing
3. St. Elizabeth Hospital v. Garrard, 730 S.W.2d 649 (Tex. 1987).
Parents sued a hospital and a doctor for mental anguish due to the improper disposal of
4. Hustler Magazine v. Falwell, 108 S.Ct. 846 (1988).
Hustler magazine parodied minister Jerry Falwell by showing him having sex with his
mother in an outhouse.
C. Invasion of Privacy
Emphasize:
That the tort of invasion of privacy is one that is still in the early stages of legal
development.
That as the statutes and court cases recognize it, the tort at present comprises three
principal invasions of personal interest. An invasion of any one of these areas of interest
Chapter 10 - Torts Affecting Business
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is sufficient to trigger liability.
That before using anyone’s picture or name, an advertiser must obtain a proper release
from that person to avoid possible liability.
Ehling V. Monmouth-Ocean Hospital Service Corp. 872 F.Supp. 2d369 (D.N.J 2012)
Cases for Discussion:
1. After the plaintiff modeled lingerie at Hipsters, a social club for large women and men
who admire them, her picture appeared in Plumpers, an adult magazine featuring large
women. The picture was accompanied by an article that described the Hipsters’
gathering as 5,000 pounds of “Sex-Starved Fatties.” In 2000 a jury in Marietta, Georgia,
awarded the plaintiff $800,000 for invasion of privacy and defamation. Is there a free
press and speech issue here? Did the plaintiff become a “public figure” by modeling?
2. Mendosa v. Time Inc., No. 87-0371 L (2/23/88).
A man claiming to be the subject of a famous Life magazine photo showing a sailor
kissing a nurse on V-J day sued when the publisher offered to sell copies of the photo.
3. Eddy v. Brown, 54 LW 2477 (1986).
An employee sued his employer for disclosing to several of his co-workers that he was
undergoing psychiatric treatment.
Held: Such disclosure was not of sufficiently public nature to constitute invasion of
statute. Bratt v. IBM (CA1, 1986).
D. False Imprisonment and Malicious Prosecution
Emphasize:
The relationship between false imprisonment and the problems of merchants with
shoplifters.
That malicious prosecution, also known as false arrest, arises from causing someone to
be arrested criminally without proper grounds.
Chapter 10 - Torts Affecting Business
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E. Trespass
Emphasize:
That the famous British constitutional historian Frederick Maitland wrote, “Trespass is
the fertile mother of actions.” By this he meant that many of our modern day causes of
action in tort—like battery—come from trespass.
How trespass can be a crime as well as a tort.
Case for Discussion:
1. Lloyd Corp. Ltd. v. Leheiffen, 57 LW 2685 (1989).
When a few people entered a shopping center to gather signatures for a petition to
initiate public lawmaking, the owner sued to enjoin them from continuing to enter.
denied, however the trial court may issue an injunction imposing reasonable restrictions.
Dissent: The majority has overruled over 100 years of good trespass injunction law.
F. Conversion
Emphasize:
The definition of conversion.
That conversion deprives owners of their lawful right to exclude others from such
resources.
Cases for Discussion:
1. Ryno v. Tyra, 752 S.W.2d 148 (1988).
The plaintiff, an automobile buyer, agreed to buy the defendant car dealer’s BMW
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
each time returning it to the plaintiff. Finally, however, he kept the car. When the
plaintiff sued, the defendant argued that the wager was a jest.
Held: The Texas Court of Appeals held that the defendant is guilty of conversion. The
defendant made a gift of the car to the plaintiff.
2. Steenbergen v. First Federal S&L of Chicasha, 56 LW 2378 (1987).
An S&L allowed the plaintiff’s estranged daughter to pick up and cash a check held for
the plaintiff.
Held: The S&L is liable for conversion.
Berrie & Co. for defamation for telling other employees that she had been fired because
she had padded sales orders.
Cases for Discussion:
1. Philadelphia Newspapers, Inc. v. Hepps, 106 S.Ct. 1558 (1987).
10-7
© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
prove the truth of defamatory statements to escape judgment.
Held: Although the plaintiff is a private figure, he cannot constitutionally recover
damages without providing that the defamatory statements are false.
2. Bose Corp. v. Consumers Union, 104 S.Ct. 1949 (1984).
The plaintiff sued Consumers Union for publishing an article stating that sound from
3. McDonald v. Smith, 53 LW 4789 (1985).
The respondent was being considered for a U.S. attorney’s position. Petitioner wrote
letters to President Reagan, with copies to other government officials, accusing
4. Brown & Williamson Tobacco Co. v. Jacobson, 56 LW 2147 (1987).
The commentator for a Chicago TV station asserted that Viceroy cigarette advertising
5. Dun and Bradstreet v. Greenmoss Builders, 105 S.Ct. 2939 (1985).
Credit reporting firm Dun & Bradstreet issued a false credit report to plaintiff’s
Chapter 10 - Torts Affecting Business
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creditors. Thereafter D&B issued a corrective report, but plaintiff was dissatisfied and
sued anyway. When the jury awarded compensatory and punitive damages, the case was
appealed on the constitutional issue of whether the First Amendment requires a showing
of “actual malice” before damages can be awarded against a nonmedia defendant.
H. Fraud
Emphasize:
That a fraud is an intentional misrepresentation of a material fact that is justifiably relied
upon by someone to his or her injury.
That fraud applies in many different situations.
That an individual can also prove fraud by giving evidence that another individual has
harmed him or her by failing to disclose a material (important) hidden fact. Discuss
when one is under a duty to disclose or not to conceal.
That following the financial collapse that began in 2007, hundreds of plaintiffs filed
fraud lawsuits against banks, other financial institutions, and various of their executives
based on concealment.
That fraud is a broad term that is used in many different areas of law.
See Sidebar 10.3—“Tort or Crime? Both?”
Case for Discussion:
1. A jury awarded Food Lion $5 million for fraud and trespass when ABC reporters
misrepresented themselves in order to get jobs and do a story on Food Lion’s alleged
sale of out-of-date meat.
Chapter 10 - Torts Affecting Business
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Emphasize:
That trade falsehood, sometimes called trade disagreement, is a common business
tort.
Intentional Interference with Contractual Relations
Emphasize:
How intentional interference with contractual relations might occur.
Additional Matter for Discussion:
Procter & Gamble filed injurious falsehood lawsuits against a number of individuals
that alleged that the defendants were spreading statements that P&G was associated
with satanism. P&G also announced that it would remove its moon-and-stars logo
from its products to help stop the satanism rumors.
Cases for Discussion:
1. On her TV show, Oprah Winfrey made statements questioning the eating of beef in
2. To emphasize the extent and seriousness with which business firms seek out
information about other firms, share with the class “Call It Mission Impossible Inc.—
Corporate-Spying Firms Thrive,” WSJ, 8/3/00, p. B1. Note that the Economic
Espionage Act of 1996 makes theft of trade secrets a federal felony. Is raiding
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Case 10.3: Iannelli v. Burger King Corp. 200 N. H. Lexis 42 (N. H. Sup. Ct. 2000)
Additional Matter for Discussion:
As this is being written, Dr. Conrad Murray has just been convicted of involuntary
manslaughter in the death of Michael Jackson. Point out how Dr. Murray’s medical
malpractice led to a criminal conviction. Note that Dr. Murray is likely to appeal this
conviction.
Cases for Discussion:
1. Garofalo v. Lambda Chi Alpha, 616 N.W.2d 647 (2000).
A student died while taking the fraternity pledge at a fraternity house following
2. Hamman v. Maricopa County (1/19/89).
A stepfather brought his stepson in for psychiatric evaluation. The treating psychiatrist
said the stepson was harmless and refused to admit him. The psychiatrist did not refer to
3. Leesley v. West, 16 PSLR 301 (1988).
A woman claimed that a drug caused her to have severe internal bleeding. She sued the
4. Many colleges are being sued by students who injure themselves. The plaintiffs rely on
the special relationship between college and student and argue that the colleges should
