Preventing Harm cont...
Is specific performance a permissible remedy for breach of contracts for service?
No, not really. High transaction costs. Specific performance not ideal, because it is not efficient and borders on "involuntary servitude." UNLESS discrimination is the basis of claim. "you must re-hire."
If you don’t seek a preliminary injunction, but are awarded a permanent injunction, have you thereby forfeited any remedy in the gap?
NO.
Whose "pocketbook" are we focused on in evaluating restitution and why?
Defendant's pocketbook.
Substantive law:
In restitution, we are looking at DEFENDANT's pocket book. How was defendant unjustly enriched?
What is disgorging profits (or disgorgement)?
an equitable remedy that requires a defendant to surrender the profits they wrongfully obtained through unlawful or improper conduct.
What is restitution?
Giving one party the right to recover money or property from mistaken wrongdoing.
What is the rule governing prior restraint?
In general, strictly prohibited to get an injunction to bar future "free speech." In Willing case, though, speech had already occurred so it wasn't necessarily a perfect prior restraint case, but still technically prior restraint.
What is a liquidated damages clause?
a provision in a contract that specifies in advance the amount of money one party must pay the other if they breach the contract—usually for delays or failures to perform.
Is a gift unjust enrichment?
No. Although it is enrichment, it's not unjust because it is intentional.
When does disgorgement usually apply?
Disgorgement often arises in breach of fiduciary duty, intellectual property, fraud, or unfair competition cases. NOT breach of contract cases!!
What is a constructive trust?
an equitable device used to compel one who unfairly holds a property interest to convey that interest to another to whom it justly belongs.
What is a permanent injunction?
Remedy in equity after a determination of the merits (after the final judgment). Intended to prevent future harm.
What must Plaintiff show to obtain a permanent injunction?
Under the Common Law Torts Test, Plaintiff must show:
1. Ripeness/Propensity: We don't want adjudication of hypothetical harm. (Halfway House case, Pepsi case) (is it appropriate for court to issue this broad relief? No, not ripe). (are we stepping in prematurely?).
2. Suffered irreparable harm. (legal damages are not sufficient) (Pardee construction case) (is the money good enough?)
3. Other stuff. (not necessarily a strict factor, but basically is policy considerations)
Is restitution a substantive law cause of action or a remedy?
Both! You can sue for restitution the way you sue for breach of contract. BUT it is ALSO the remedy!!! There are a bunch of remedies that come under the umbrella of restitution.
How do courts measure damages for disgorgement?
The court orders the defendant to pay over net profits causally connected to the wrongful act, not gross revenues.
Is underlying unjust enrichment required for a constructive trust claim?
Yes. Absolutely essential.
What is a preliminary injunction?
Remedy in equity, but kind of a gap order, to stop harm that is occurring now in order to maintain the [Plaintiff's] status quo during the pendency of the case. It will need to turn into a permanent injunction upon the conclusion of the case.
What must Plaintiff show in order to obtain a preliminary injunction?
Plaintiff must show: (Winter v. Natural Resources Defense Council)
1. Likely to succeed on the merits : Just must be likely, not a "possibility" but also not necessary to be "near certain."
2. Likely to suffer irreparable harm in the absence of preliminary relief
3. Balance of equities/hardships tip in favor of injunction
4. Injunction is in the public interest
What is unjust enrichment and how do you prove it?
One party unfairly benefits at another party’s expense.
To prove unjust enrichment:
Enrichment: The defendant received a benefit (money, property, services, etc.).
At the plaintiff’s expense: The benefit came from the person bringing the claim.
Unjust or unfair to keep: It would be inequitable for the defendant to retain the benefit without paying for it.
How do courts measure the disgorgement of profits from opportunistic breach?
Non-breacher is entitled to the value breacher gained from breach.
Ex: May v. Muroff. Seller, in the interim between the K and closing for property sale, sold fill from the land to a third party for $240k. Purchaser is entitled to the value of the materials removed, which is the full $240k.
What are the two presumptions regarding commingled trust funds?
1. Lowest Intermediate Balance Rule: Whatever remains of the defendant's money is the "lowest intermediate balance" and said to be Plaintiff's at that point. Becomes a "constructive trust."
Burden on Plaintiff- if funds held in a constructive trust have been commingled, the beneficiary of the constructive trust must trace the funds using the lowest intermediate balance rule.
2. Investments Benefit Plaintiff: When wrongdoer is investing from general cash fund, it is presumed that the wrongdoer is investing FIRST with Plaintiff's money (at least until Plaintiff's money has been fully accounted).
What is the Ebay standard that Plaintiff must prove to obtain an injunction? (even in patent infringement cases!)
(1) Plaintiff has suffered irreparable injury. Not just profit loss, but taking of property (remember: equating to property is vital because property is always unique and subject to equitable remedy as such.)
(2) Remedies available at law are inadequate.
(3) Considering the balance of hardships, a remedy at equity is warranted. (balancing the hardship is something we look at with preliminary injunction)
(4) Public interest is not disserved by permanent injunction.
What is the "Takedown" theory of damage assessment?
damages are measured by the cost of undoing or removing the defective work plus the cost of properly rebuilding it.
With unjust enrichment we are no longer looking at fair market value, but simple judgment: just return the money.
What is the rule derived fro the Mobile Oil Exploration case regarding breach by the Government?
If the Government said it would break, or did break, an important contractual promise, thereby substantially impairing the value of the contract, the government must give the money back. (unless the parties waived right to restitution).
What are the two "tracing" standards and how do you know which one to apply?
Liberal Tracing: "Somewhere in D's assets my money is there.”
Strict Tracing: Combing through each account to see where things were paid.
So, which standard?
**Where the dispute is truly just between P and D, then courts also more okay with liberal tracing. But when creditors are involved and other third parties, more strict on the tracing.