Remedies Hutchinson - 2012

Remedies Fall 2012 Hutchinson UF
I.
What is a Remedy?
A. Definition anything a court can do for a litigant who has been wronged or is about 2B wronged
1. the wrong can be something that has already occurred or something that is about to occur.
B. 2 Most Common Remedies
1. Damages = judgments that Ps are entitled to sums of money from Ds
2. Injunction = orders to Ds to refrain from wrongful conduct or to undo its consequences
C. How do we distinguish remedies from substantive law classes?
1. Substantive law = tells you what rights you have
2. Remedies add to the substantive law (tells you what rights you have), as they correct for deviations - so
remedies give meaning to substantive rights
D. How do we classify remedies?
1. Compensatory compensate P for value of thing P lost at time of loss - losses from Ds actions
a) Usually $$ - compensatory damages to make P as well off as if he was never wronged
b) These include substitutionary remedies where money substitutes for the thing that was lost.
2. Preventative designed to prevent harm or loss before it occurs
a) Coercive remedies includes injunctions (order for court to litigants to do or refrain from doing
specific things) e.g. specific performance, writs of mandamus, prohibition, habeas corpus
i. The direct order and potential for punishing disobedience distinguishes coercive from
declaratory remedies
b) Declaratory remedies state rights of parties under substantive law, but do not order parties to do
anything
i. Simply declares rights, judgment announces rights
ii. Preventative because - understanding that once declaratory judgment is set forth, litigants
will comply
iii. Most important declaratory judgment
iv. Other examples: bills to quiet title, and cancellation of instruments
3. Restitutionary designed to restore to P in amount D unjustly enriched
a) Restitutionary and compensatory damages can be =, but restitutionary can also be far greater than
damages
i. Can include unjust enrichment e.g. someone taking your property and profiting in a way
that exceeds the value of what was taken under remedies, you can recover all those gains
b) focus on Ds gains
i. disgorges unjust profits
ii. damages may be speculative/vague
c) damage can be caused by Ds mistake not always intentional
d) Sometimes differs practically reverse transactions in kind, restoring possession of specific
property when its practical to do so
e) Administered through variety of devices quasi-K, constructive trusts, equitable liens, accounting
for profits, rescission, and subrogation (courts see it as the same thing, granting restitution)
4. Punitive designed to punish where theres not only N, but some other type of bad behavior by
wrongdoers
a) in equity, we gave prophylactic injunctions which award more to Ps than they would be entitled to
under legal principles, because of some type of bad behavior
b) e.g. criminal prosecutions
c) There are also punitive damages
5. Ancillary designed to give life/aid of other remedies (costs/attorneys fees, etc._
a) e.g. went to court, got damages or injunction, but D doesnt comply, ancillary remedies come in to
enforce remedies:
i. contempt
ii. garnishment court orders people who owe $$ to D to pay P instead
iii. execution sheriff seizes Ds property, sells it, and uses proceeds to pay P
b) includes costs and attorneys fees
c) receivership court appoints 3rd party to manage assets pending litigation
E. Remedies are further divided into 2 more basic categories:
1. Substitutionary Remedies substitution for what P loss (if dont give P what actually lost)

a) P suffers harm, and receive cash payment usually damages as substitute for what lost
b) Includes compensatory damages, attorneys fees, restitution of $$ value of Ds gain (based on fact
finders valuation of loss) and punitive damages
c) Thus P who recovers damages, gets neither what he started with nor what he was promised,
instead gets defective goods and money to compensate for defects
2. Specific Remedies get the specific thing you owned, aspire to prevent harm, or undo it, rather than
letting it happen and compensating for it
a) Includes specific performance of Ks, injunctions, restitution of specific property, and restitution
of specific sum of $$
F. Remedies are further classified as Legal or Equitable: distinction is important because you only get a
jury trial with legal remedies. VIP 2 determine which is which
1. Legal
a) Damages are the quintessential legal remedy generally compensatory and punitive remedies are
legal
i. These allow the to sieze property
b) Some of specialized coercive remedies, such as mandamus and habeas corpus are legal
c) Most legal remedies are substitutionary with important exceptions
2. Equitable
a) Only available if no adequate relief in law must show damages available by law are inadequate
b) P will be irreparably harmed w/o equitable remedy
c) Injunctions and specific performance are the most important equitable remedies
i. These allow to coerce s behavior.
ii. ex/ - the irreparable injury rule that there is no adequate relief at law
(i) Preliminary injunctions unless courts intervene, injury will occur
(ii) No adequate relief in law thus specific relief in equity will be ordered to prevent harm
from occurring - assuming it can be foreseen
(iii) Unique what lost not adequate $ to compensate need specific performance
d) Equity being courts of last resort there are high standards for getting things like injunctions as
they are extraordinary remedies
e) Although once you get in there is more flexibility
II. Paying for Harm: Compensatory Damages
A. The Basic Principle: Restoring P to His Rightful Position Tailoring Principle
1. Tailoring - remedies must be tailored to loss this gets you to rightful position
a) Comes w/theory of corrective justice prevents windfall to D (if do less) to P if do more
2. Rightful Position position P would occupy in absence of Ds actual/imminent wrongdoing
United States v. Hatahley (10thCir.1958) (11) - Govt. agents rounded up Ps horses and burros and sold
them to a glue factory.
District Court In calculating damages, court place a fixed number on each animal without
differentiating condition, age, and sex of animals In addition, court found a total amount and divided
it amongst Ps for Pain and suffering. Crt took aggregate amt of damages divided in said thats
amount government responsible for
P argued based on his theory that animals were unique with special training, so market value was
incalculable.
SC
o Damages held that the lower courts calculations for the amount of damages and pain and
suffering failed to consider evidence of the availability of other animals were incorrect. Need
to compare w/similar animals at market, age, condition of each animal to find worth,
o Pain & Suffering - need to evaluate each person for pain & suffering/cant assume all
suffered equally rejects group/culture harmed same cuz look at loss same way.
o No showing Native Americans tried to mitigate loss
o No showing why gov responsible for 50%
3. RULE - A damage award should be individualized tailored to get P back to the rightful position: to
restore injured party as nearly as possible to the position they would have been in had the wrong not
occurred.

a)
Right to sue for damages is limited to the time in which a prudent person would replace this
destroyed horses and burros thus you have to mitigate damages when possible
4. Applied Here - Ps were entitled:
a) to the market value, or replacement cost of horses and burros at the time of the taking
i. Must consider availability of like animals in the immediate vicinity and their value
ii. Must factor in a premium for training costs
iii. Ps must show proximate cause show some facts as to why Ds were responsible for harm
b) plus use value of animals during the period of time between the taking and the time they could
have replace the animals
c) to pain and suffering
i. award for pain and suffering must result from wrongful taking of Ps animals by US agents
ii. and it must be treated on an individual manner, as it is unique to each person
B. LAW & ECONOMICS different approach to this: Profit Maximizing
1. If D can profit from doing wrong -- if still have profit left over after remedy given to P
a) PROBLEMS w/THIS
i. Encourages wrongdoing, makes Ks more unpredictable - since may get more if breach may
underestimate damages will be when breach
ii. Externalities Ds not always motivated by $
iii. More dimensions to law fails to consider Ps losses may not be monetary
III. INJUNCTIONS
A. Defined - A court order that directs a party to engage in a particular course of conduct or to refrain from
engaging in a particular course of conduct
1. Fed Rule for Injunctions Rule 65(a) must be complete documents:
a) State reason/issue in clear detail why issued
b) State its terms specifically, and
c) Described in reasonable detail within document itself cant refer you to other documents to get
rest of info
d) Must be reasonably clear who parties bound by injunction so they have sufficient notice
2. Tailoring Principle tailor the remedy to the injury
a) Applied to both quantitative damages, and injunctions as well
3. Types:
a) Preliminary
b) TRO
c) Specific injunction
4. Non-compliance can lead to sanctions/contempt
5. P has to show that there is a harm that has occurred or is going to occur
6. Functions of injunctions (academic terms, dont need to classify in ct)
a) Prevent harm
b) Repair harm that has already occurred
c) Restructure public institutions to bring them in compliance with statutory and institutional norms
7. Injunctions are treated as unusual or extraordinary relief
a) Cant just order parties to obey law need to be more specific 2 facts of case since injunctions are
a higher level of relief than law since injunction are last resort relief , injunctions are special
because they carry ancillary remedy of contempt, so there is support 2 primary remedy
b) Could damage the reputation of D (see Humble Oil)
c) Issuing too many injunctions would dilute their force.
B. Preventing Harm The Measure of Injunctive Relief ()
1. Preventative Injunctions
a) First step: we have to show ripeness P must show threat/injury ripe
i. Almurbati v. Bush (D.D.C. 2005) (263)
(i) Facts: Plaintiffs, six Bahraini nationals classified as "enemy combatants," filed a petition
for habeas corpus. Relying on news reports and statements of the petitioners, they
allege that they will face irreparable harm (from torture to possible death) if transferred
to certain foreign nations. The Department of Defense -- Senior Exec officials testify/

counters prisoners arent transferred if there are any concerns about mistreatment of
prisoner in his home country (or prospective destination country) cannot be resolved.
(ii) Issue: Whether injunctive relief forbidding the government to transfer any plaintiff out of
Guantanamo without 30 days' notice to the court and counsel is appropriate
(iii) Rule: To obtain injunctive relief, the petitioners must show w/reasonable certainty that
alleged controversy likely to occur not just threatened injury is "remote and
speculative." irreparable injury reasonably likely to occur
(iv) Holding: No. Because gove directly refused prisoners' allegations of their potential
torture, mistreatment and indefinite detention to which the US will in some way be
complicit, this Court cannot conclude that the petitioners would suffer irreparable harm
if they are transferred from the Guantanamo facility.
1. NOTES: Prisoners sought prophylactic relief party gets more/above rightful
position 2 ensure P doesnt fall below rightful position
a. 30 days notice so give time to react/prevent possible harm of torture
2. Problems with Issuing Injunctions Right off the bat:
a. Injunctions are unusual or drastic remedies
b. FRCiv Pro note #8, pg. 274
c. Courts have discretion (only unreasonable or decisions contrary to law will be
overturned abuse of discretion standard)
b) Second Step: determine scope of relief injunction relief tailored to harm
i. Marshall v. Goodyear Tire & Rubber Co. (5th Cir.1977) (269) - Secretary of Labor sued
appellant Goodyear alleging violation of Age Discrimination in Employment Act of 1967, for
discharge of 1 employee -William Reed. District court issued a nationwide injunction against
further violations.
ii. ISSUE: Goodyear argued that scope of injunction was too broad. 5th Cir. Agrees.
iii. RULE - Injunctions should be narrowly tailored to remedy the specific problem/issue/harm
iv. 5th Cir
(i) In terms of ripeness, no evidence that age discrimination is occurring on a nationwide
scale no findings of a discriminatory company policy or practice
(ii) Lower court only dealt with isolated wrongdoing. Equal Pay Act, Fair Labor Standards
Act, and Age Discrimination in Employment Act cases establish that a nationwide or
companywide injunction is appropriate only when the facts indicate a company policy of
practice in violation of the statute. In Hodgson, a broad injunction against the employer's
future discrimination hiring was on age was appropriate, inasmuch as the proof showed a
company policy of hiring discrimination extending beyond the category of tellers'
positions.
(i) Holding: The district court may no finding of discriminatory company policy or practices
and relied only on the isolated fact of Reed's discriminatory discharge in enjoining
appellant nationwide. Relief should be limited to the particular store.
ii. Notes
(i) #3 pg 272 -Std argument against Crt granting company-wide relief just cuz D
committed act in violation of statute doesnt justify broad injunction 2 obey statute -which subjects D to contempt for a new violation of act unrelated to act originally
charged
(ii) #4 pg 272- bigger company, more violations can get away with since # high, but overall
%age low, Extended-A-Care Employee Assn. v. NLRB
(iii) #5 pg 273 E.J. Gallo Winery v. Gallo Cattle Co. Gallo winery sued Joseph Gallo for
trademark infringement for selling cheese under his own name Gallo. Initial injunction
forbid J. Gallo from selling cheese or other product under his own name. Court of appeals
narrowed to only forbidding Gallo to use his own name in selling cheese since cheese &
wine commonly paired together therefore potential to confuse customers
(iv) Class injunctions courts can certify a class of Ps therefore injunction in individual case
of P representing class will protect all members in class
c)
Equitable Mootness D has burden if claims moot first courts review merits of case then
look at harm if court cannot do anything to prevent /remedy harm from re-occurring harm moot
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i. has the burden of proving propensity and then has the burden of showing mootness.
ii. D must show subsequent events make it absolutely clear that the allegedly wrongful
behavior could not reasonably be expected to reoccur.Pg.279 note 3
iii. United States v. W.T. Grant Co. (1953) (276) government brought suit against Hancock who
was director for 6 companies (3 were direct competitors), arguing that there was an
interlocking corporate directorate. Gov asks court to order interlocks terminated and enjoin
future violations by Hancock and corporate Ds. District judge concluded that since Hancock
had resigned from all 3 boards, there was no threat that violations would reoccur. Appeals
court reverses for abuse of discretion misapplying law. SC reverses.
(i) Voluntary Cessation 1. RULES
a. voluntary cessation of allegedly illegal conduct doesnt deprive courts the
power to hear and determine a case doesnt make case moot, may be factor
for court to consider but not only factor:
i. Why?
ii. Behavior may re-occur,
iii. finality of judgment issue not decided, no judgment on whether
conduct was illegal or not
b. courts power to grant injunctive relief survives discontinuance of illegal
conduct- but P must in begging of case that there exists some cognizable
danger that relief is needed more than just mere possibility based on
TOC
(ii) Abuse of Discretion:
1. governments arguments for abuse of discretion:
a. failure to resign for 5 years until eve of litigation,
b. refusal to concede his actions were illegal,
c. and failure to promise not to commit similar violations in the future do not meet
its burden
2. CRT didnt meet its burden -- unclear if interlocks were illegal- gov kept
postponing case so took 5 years to get to court cant overturn district court
finding to say unreasonable therefore upheld
(iii) Notes
1. D usually wins w/voluntary cessation but here D didnt until eve of litigation
therefore court wasnt as apt to apply
2. P usually wins w/ripeness
3. Mootness:
a. Constitutional -- sufficient to end the case or controversy and deprive court of
jurisdiction
b. Equitable -- Likelihood of repetition so low that relief should be withheld as a
matter of discretion
i. To decide this, courts will look at:
ii. Expression of intent to comply
iii. Effectiveness of discontinuance
iv. Character of violations
c. And then the 9th Circuit has its own test a much more complicated test its
on pg. 250.
4. Holding in Grant, only goes to preventative relief
5. Damages claims = never moot, never impossible to compensate for past loss
d) Case below attempt at Prophylactic Relief prohibit behavior/act altogether to prevent
harm, also can be ripeness case since no harm yet since halfway house not even in
neighborhood
i. Nicholson v. Connecticut Half-Way House, Inc. (Conn.1966) (280)
(i) D wanted to set up a half-way house in neighborhood. Ps, property owners in the
neighborhood, brought suit under nuisance law to enjoin its operation arguing that they
were fearful of a rise in criminal activity and decreases in property value. CT SC denies
injunction.
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(ii) RULE Plaintiffs claiming nuisance must show with reasonable certainty that harm is
likely to happen to justify an injunction not ripe merely speculative fear
(iii) Applied here CRT
1. Ps fears were unfounded and unreasonable not enough proof to show with
reasonable certainty that harm would occur to justify an injunction
i. not enough to substantiate property depreciation theory mere depreciation
of land values not enough to support nuisance
b. just speculative would commit crime, since had in past no evidence of pattern
or specific acts 2 support assertion
2. Ps relied on 2 cases showing nuisance 4 unreasonable use of property that is
merely anticipatory can be enjoined -- but court distinguished both
a. Brainard v. Town of West Hartford (281) proposed use of a town dump in a
residential area was a known quantity whose hazards and evils as a nuisance
were discernible prior to its undertaking (smoke, litter, odors, rats, vermin, fire
dangers- not speculative)
b. Jack v. Torrant (281-82) funeral home would depress neighborhood residents
constantly reminding them of death (still somewhat speculative court
doesnt get into)
3. NOTES: NARROW RULING REQUEST - Couldve asked court to keep area free
from crime by requiring halfway house to measurements 2 prevent crime, ensuring
safety of neighbors by adopting specific precautions.
4. Grant v. Lone Oak Sportsmens Club, Inc. (283)
a. Court granted riffle range was nuisance to neighbors even though active and no
injuries for 50 years. Crt said neighbors injured in other ways, couldnt let
children go outside, afraid 2 use parts of their yards
ii. PepsiCo, Inc. v. Redmond (7th Cir. 1995) [284]
(i) Facts: Redmond, a General Manager of PepsiCo's business unit covering all of CA,
signed confidentiality agreement not to disclose info learned at Pepsico. Redmond then
accepted an offer from Quaker to become VP of Field Operations for Gatorade but 2 days
later just tells Pepsico just thinking about offer then 2 days later quits Pepsico. 6 days
after Redmond VP at Quaker PepsiCo seeks to enjoin Redmond from assuming his duties
at Quaker and to prevent him from disclosing trade secrets or confidential information to
his new employer.
(ii) Issue: Whether an injunction was proper in this situation
(iii) Rule: The Illinois Trade Secrets Act, which governs the trade secret issues in this case,
provides that a court may enjoin the "actual or threatened misappropriation" of a trade
secret. A plaintiff may prove a claim of trade secret misappropriation by demonstrating
that defendant's new employment will inevitably lead him to rely on the plaintiff's trade
secrets.
(iv) Holding: Pepsico gets injunction
1. Redmond cant turn off brain --- Redmond cannot help by rely on PepsiCo trade
secrets as he helps plot Gatorade and Snapple's new course, and that these secrets
will enable Quaker to achieve a substantial marketing advantage by knowing exactly
how PepsiCo will price, distribute, and market its sports drinks and new age drinks
and being able to respond strategically. This type of trade secret problem may arise
less often, but it nevertheless falls within the realm of trade secret protection under
the present circumstances. When we couple the demonstrated inevitability that
Redmond would rely on PepsiCo trade secrets in his new job at Quaker with the
district court's reluctance to believe that Redmond would refrain from
disclosing these secrets in his new position, we conclude that the district court
correctly decided that PepsiCo demonstrated a likelihood of success on its
statutory claim of trade secret misappropriation.
2. Behavior of Redmond not good faith not trustworthy lied to Pepsico about going
to work for Quaker
3. Pepsicos rightful position = not to divulge trade secrets= enforce K

4.
Pepsico got more than that since Redmond cant work for direct competitor for
certain period of time
(v) NOTES: pg. 289 abortion protests prophylactic injunction to have abortion protestors
stay certain distance away from clinic.
1. Gangs CA put preliminary injunction for nuisance for gang members in 4 block
radius but since no gang member showed up in court couldnt enforce, since no
notice
C. Reparative Injunctions (Repairing Harm) courts can issue injunctions ordering D to do something in
order to correct harm that has already taken place, 2 prevent u from living w/harm already occurred
a) Bell v. Southwell (5th Cir. 1967) (260) GA election for Justice of the Peace. Bell was a black
candidate. Southwell, white candidate, won due to various acts of racial intimidation and
discrimination. Bell asks court to set aside election and order a new one, and enjoin Southwell
from taking office. Lower court while finding a clear constitutional violation holds that it cannot
issue an injunction to rectify a past wrong especially when there is no evidence to suggest that
outcome will be different, as they have to be forward looking. Ct. of Appeals reversed and
remanded for an appropriate order setting aside the election results and calling for a new election.
i. RULE - A court can issue an injunction to rectify a past action, even if its not certain that the
outcome will change that if affirmative relief is essential, court has the power and should
employ it this was exceptional remedy
ii. Injunctions can be both forward and backward looking
b) Forster v. Boss (8th Cir. 1996) (295) The Bosses, in selling their property to the Forsters,
defrauded them. The Bosses said that the Forsters could obtain a permit for a boat dock knowing
that they themselves owned a permit, which would prevent the Forsters from obtaining one. Also,
the Bosses said they would remove their swim dock, which they did not do. The district court
awarded $10,000 in punitive damages, $12,500 in compensatory damages for the boat dock,
$2,500 in compensatory damages for the swim dock, and injunctions ordering the Bosses to
remove the swim dock and for the boat dock permit.
i. RULE - A P can be awarded damages and an injunction so long as there is not a double
recovery cannot have both compensatory damages + injunctive relief
ii. Applied Here:
(i) Court allows P to choose remedy probably didnt like D for fraud
(ii) P can either get removal of boat dock + permit or compensatory damages
(iii) Ps get to keep punitive damages as damages for delay are not a double recovery
iii. NOTES: Distinction between preventative and reparative (since all injunctions are
preventative in a sense) is between preventing the wrongful act (racial intimidation on
election day, failing to deliver dock permit at closing), and preventing some or all of the
harmful consequences of that act (four years under an illegally elected justice of the peace,
living without a dock)
(i) thus reparative doesnt literally undo past violations, rather it prevents some of the harm
from that past violation
(ii) \reparative injunction is thus appropriate when P will suffer additional harm in the future,
and when it is possible to prevent that additional harm from happening
2. How much Harm Should Injunctions Prevent? How much harm should the injunction undo?
a) Winston Research Corp. v. Minnesota Mining & Manufacturing Co. (9th Cir. 1965) (300)
Rightful Position restores 2 position wouldve had but 4 harm
i. Mincom developed an improved precision tape recorded and reproducer. Somewhat later,
Winston developed a similar machine by using confidential information supplied by former
employees of Mincom. Mincom sues Winston arguing Winston machine made by former
Mincom employees from trade secrets known by employees. Dist. Ct. finds that technology
was a trade secret, and granted injunction for 2 years(time protected after public disclosure),
but no damages, both sides appealed Mincom wanted a permanent injunction.
ii. RULES
(i) Courts will not issue damages where P has not been damaged and D has not been unjustly
enriched

(ii) Appropriate Injunction period is for a reasonable period of time in order to eliminate
commercial disadvantage that otherwise wouldve derived from misappropriation
1. Reasonable time competitors would require after public disclosure to develop a
competitive machine
iii. Applied Here
(i) permanent injunction wouldve been inappropriate, as it would run counter to the public
interest in allowing technical employees to really use their knowledge and skill in
fostering research and development
1. 2 year injunction deprives Winston of any benefit it gained from unfair advantage
took Winston 14 months, so add a few months more since taking into account parties
may take longer since not familiar as those w/trade secrets already
(ii) no money damages as Ds didnt sell anything, so no injury, evidence of possible future
profits were speculative
1. assuming damages were applicable, wouldve been restitution losses from sales
and profits for Ds
2. damages wouldve been duplicative here, as injunction sets things right
iv. Notes
(i) Slipperiness of distinction between preventative and reparative injunctions:
1. If wrong is stealing trade secrets injunction is reparative
2. If wrong is selling products manufactured from trade secrets then preventative
b) Bailey v. Proctor (1st Cir.1947) (304) Prophylactic Remedy
(i) Voting control of mutual fund was held by owners of $150,000 in stock (control group),
while holder of $6M in debentures provided most of capital (group no control over
decisions made for fund). Under scheme, debentures get a fixed rate of return, while
stockholders get additional profits. Moreover, stockholders only lose what they put in,
while debentures have less protections. Fund became insolvent, and voting stockholders
were caught in fraud and self-dealing. Dist. Ct. appointed receiver to take possession and
control of property and manage it under judicial supervision pending litigation. Court
ordered liquidation, but during proceedings Baileys bought out original control group,
made fund solvent again, and appealed arguing that since trust was solvent, and since
those responsible for fraud were no longer involved, the reasons for receivership were
eliminated, and the court no longer had power to order liquidation.
ii. RULES
(i) Court of equity has inherent power (jurisdiction) to appoint a receiver to liquidate a
corporation or investment trust where fraud, mismanagement or abuse of trust is present
whether or not insolvency is likewise present
1. Solvency doesnt terminate jurisdiction
2. Court must determine until it becomes satisfied that equity has been done to those
whose interests the court had been asked to protect
(ii) Liquidation, being a drastic remedy, will only be decreed in an extraordinary case or
where special and peculiar circumstances exist
iii. Applied Here
(i) trust was insolvent and there was a gross abuse of trust justifying jurisdiction
(ii) even after solvency, strong likelihood of similar events occurring again (solvency was
only due to risky, speculative investments)
1. moreover, existence of Trusts structure poorly allocating distribution of risk, makes
abuse likely to occur again, and combined with other factors supports liquidation
{even though no statute allows court to liquidate trust}
iv. Notes:
2 Competing Traditions 2 Awarding Remedies
1. Receivership is an equitable remedy
a. Equity doing Equity = Bailey represents tradition that one violation in equity
court chancellor has roving commission to do good
i. Criticisms: Equity courts have too much flexibility w/discretion they use

ii. SC Rebuffs: Courts need to back up their equitable remedies w/sound legal
principles and reason so this limits discretion
b. Rightful Position Winston restores P as near position wouldve occupied but
for violation remedy narrowly tailored 2 fit harm
(ii) Prophylactic Remedy: Can also classify this remedy as a prophylactic remedy
enacted to prevent the recurrence of fraud and insolvency
1. Settings where prophylactic injunctions often come up:
a. Recurrence of harm likely
b. Bad faith Ds dont trust them, so just fix the mess
(iii) Community Renewal Foundation, Inc. v. Chicago Title Trust Co. p9. 309
1. Ex/statute applied to case and court ordered remedies above what granted by statute
In middle of 2 cases above
2. Statute housing codes were violated court orders repairs that were above
minimum required by housing code. Appellant challenges but loses. RULE: judge
given discretion to determine the repairs necessary to comply w/legislation no
evidence that judge abused discretion by requiring repairs returned building to
economic life & acceptable usefulness
D. Restructuring Public Institutions
1. Structural Injunction collection of more specific preventative/reparative injunctions addressing
complex factual situations, courts highly involved in day-2-day operations in public institutions
(i) designed to restructure public institutions or private organizations in order to bring them
into compliance with the constitution or statutory norms
(ii) Actually a series of injunctions, a complex judicial order, comprised of a series of orders
(iii) Why Complex? organizations affected are complex, orders have to be detailed to repair
harms and prevent further harm
(iv) The Scope of the Injunction When Issued controlling principle in desegregation cases
was that the scope of the remedy was determined by the nature and extent of the
constitutional violation
1. E.g. It must be shown that racially discriminatory acts of the state or local school
districts, or of a single school district have been a substantial cause of interdistrict
segregation before boundaries of separate and autonomous school districts may be
set aside for cross-district remedies
2. Modern structural injunctions trace back to school desegregation cases
a. Brown II, said that Dist. Cts. had to fashion remedies to desegregate, and lower
court had to follow equitable principles
i. De jure: legally mandated, intentional(by law-unconstitutional segregation)
ii. De facto segregation (by fact- patterns of segregation)
b. what followed was Dist. Cts. supervising school districts and detailing what they
had to do to desegregate
c. ex/ of courts monitoring public agencies: public schools, prisons, hospitals
3. 2 Approaches: Broad vs. Narrow
a. Liberal approach equity seen as a broad thing (equity doing equity, fair
Swann)
b. Narrow/Conservative approach equity must be tailored to harms guarding
against equity going too far Milliken I, Jenkins (the most conservative)
TODAY litigants should seek narrower scale reform rather than broader reform. Crts only seem to get involved w/
day-to-day operations 2 vindicate rights mostly constitutional therefore criticisms of separation of powers are
unwarranted since need to take a long time to correct wrong
EDUCATION
a)
Broad View Swann v. Charlotte-Mecklenburg Bd. of Education (1971) schools districts

maintained black and white district schools got rid of de jure segregation (by law), and instead
relied on neutral practices in order to keep the system segregated locating schools in segregated

neighborhoods, bussing students long distances(segregation de facto - segregation patterns),. SC
upheld dist. cts. remedies.
i. RULE - The nature of the violation determines the scope of the equity and courts have
broad powers to fashion remedies that will assure a unitary school system
ii. Applied Here
(i) Neutrally drawn attendance zones were not necessarily a sufficient remedy. Lower
courts finding that that segregation was the intentional result of the school system was
reasonable given the disproportionate race percentages
1. Gerrymandering school districts, implementation of a bussing plan, and the setting of
a benchmark to determine if schools were integrated enough was appropriate as
neutrally drawn attendance zones were not a sufficient remedy as court must
achieve the greatest possible degree of actual desegregation
2. Courts looked at racial composition itself to determine if remedy is needed
(segregation de facto)
iii. Notes:
(i) important for identifying the more flexible standard for fashioning remedies
b) Narrow View Milliken v. Bradley I (1974) (312) District Ct. that desegregation was
impossible, based on demographics of population and white flight to suburbs and ordered the
parties to submit proposals for a metropolitan desegregation plan by consolidating the suburbs
with the inner-city, and creating wedges much like in Swann. Appeals court affirmed. SC
reversed.
i. RULE Yes, the scope of the remedy is determined by the nature and extent of the
constitutional violation (de jure), but the remedy must then be narrowly tailored to the harm
ii. Applied Here:
(i) Ps rightful position was desegregation within Detroit, thus the courts had no power to
involved the suburban districts unless the violation in Detroit had caused segregation in
the suburbs no evidence of that provided
1. The remedy must then be limited to the inner-city school system where the disparate
treatment occurred
iii. Notes:
(i) 2 ways to approach the rightful position in segregation cases
1. In the absence of the constitutional violation, what would the racial composition of
the schools look like? Look at benchmarks and demographics
2. Or, courts try to remedy more intangible things, that may have resulted from
segregation improvements in schools?
c) Broad/Narrow Meet in the Middle Here- Milliken II (312-13) equity doing equity
i. District Court made Detroit only bussing plan + ordered remedial training in reading,
communication skills, testing programs, etc.. SC Affirmed.
(i) The specific remedy was tailored to the harm therefore courts injunction upheld
1. Quality of education needs to be addressed if education inferior fix it -- so harm of
segregation could be addressed n victims of segregation made whole
d) Narrowly Tailored & Rigid -- Dayton Board of Edu v. Brinkman (313) incrementalsegregative effect
i. Dist Crt found - limited efforts school district to stop segregation in its schools. The Appeals
Court ordered citywide bussing to remedy lack of racial distribution. SC reversed.
ii. SC remedy > scope of violation = must show past practices contribute to harm 2 justify
remedies youre seeking show how racial segregation now is different than would be if
complied/no constitutional violation
e) Most Narrowly Tailored & Rigid Missouri v. Jenkins (1995) (314)
i. Dist Court found State & KCMSD had substantive intradistrict violation, operating a
segregated school system, was found in the KCMSD (Kansas City Metropolitan Area). Dist.
Ct. ordered major remedies costing over $220M which ordered programs expanding
educational opportunities, ordered quality education programs, effective schools program.
Created a magnet school plan, and a long range capital improvement plan, salary assistance
program. Dist. Ct. focused on desegregative attractiveness couple with suburban
comparability arguing that it would remedy reduction in student achievement and attract
10

nonminority students not presently enrolled in the KCMSD. Ct. of Appeals affirmed. SC
reverses.
ii. RULE Desegregation remedy is necessarily designed, as all remedies are, to restore the
victims of discriminatory conduct to the position they would have occupied in the absence of
such conduct. - It is okay to remedy segregation by improving schools if you can trace the
inequality back to segregation but it is not okay to compare inner-city schools to suburban
schools look if in achievement by minority students attributed 2 prior (de jure segregation)
law segregation has been remedied to extent practible
iii. Applied Here:
(i) District Court trying to create interdistrict remedy like Miliken I, the remedy here is
not tailored, the pursuit of desegregative attractiveness is beyond the scope of the
courts broad remedial authority
1. clear that court isnt just curing segregation, theyre making a really nice school, thus
becoming an inter-district remedy, as its trying to compete with suburbs who are not
part of the discrimination court devised a remedy to accomplish indirectly what it
admittedly lacks the remedial authority to mandate directly the interdistrict transfer
of students
2. remedying white-flight would only be in the courts authority if it was directly
caused by the constitutional violation
(ii) very expensive & long oversight to comply with mandates -- local autonomy is an
important goal thus dist. court must strive to restore authority to local and state officials
thus state and district are entitled to a rather precise statement of their obligations
measure of progress needs to be set
(iii) CONCURRENCE THOMAS structural injunctions violate separation of powers
legislative or executive to order state how to run its school programs
(iv) DISSENT not like Miliken since only improving within own district not others
1. NOTES: how much is too involved in reaching remedy, when is it outside
institutional capacity of Crt/outside their jurisdiction
2. Is Thomas correct if constitution is violated then court needs to be able to remedy
(Marbury v. Madison where there is a right there is a remedy)
PRISONS Courts concerned w/8th (cruel & unusual) & 14th (due process) violations
f) Hutto v. Finney (1978) (325) Prophylactic Remedy
i. Terrible conditions in Arkansas prisons. Dist. Ct. found conditions unconstitutional but
allowed prisons to self-correct to. A Second hearing was held, and while the court found
some improvements, it was still unconstitutional, again it allowed officials to devise their own
plan for improving conditions, but issued guidelines and ordered them to move as fast as
funds were available guidelines improve conditions in isolation, inmate safety,
eliminate barracks sleeping, end trustee system (inmates used as guards).
ii. More hearings were held later, and dist. court found that supervision was no longer necessary.
Ct. of Appeals reversed, and
iii. Dist ct. held a 4th hearing, in which it found constitutional violations had not been cured,
entered order: limiting number of men in one cell, each person must have bunk, no longer
gruel diet, 30 max isolation. and found that Ds acted in bad faith. Ct. of appeals affirmed, SC
affirmed
iv. RULE - Courts are allowed to examine the situation as a whole when deciding if something is
unconstitutional and ordering a change court within their authority to order remedy that was
broader then earlier orders to ensure against inadequate compliance (prophylactic remedy)
v. Applied Here:
(i) while there is a strong deference toward penological interests, prisons here acted in bad
faith years of non-compliance thus setting tough standards was appropriate
(ii) lack of compliance justified a prophylactic remedy adjudicated wrongdoer, bad faith on
Ds, non-compliance for many years
(iii) unrest, days in isolation are interdependent on prison conditions = remedy tailored
to harm
vi. Notes:
11

(i) Why did Court allow Ds to fix things in the first place?
1. Efficiency allow people implementing the policy to have a say
2. Easier to comply know the limitations involved
3. Separation of powers argument federalism governmental Ds get more
opportunities to created their own remedies than anyone else
4. Takes a long time to tailor remedies
(ii) SC says in Hutto we dont trust you prisons 2 remedy conditions so we will
impose own remedies to severity of conditions
vii. CA CASES (334) class action against CA over adequacy of mental health care for
mentally ill prisoners (1990s), (2001s) class actions for adequacy of medical care for all
prisoners in CA
(i) After years of noncompliance w/injunctions ordering CA to improve prison conditions
District Court released $13K inmates since prison couldnt provide medical care for
prisoners
g) Lewis v. Casey (1996) (313) class action by AZ prisoners arguing that inadequate libraries
prevented them from getting to court. Dist Ct. findings detailed only two incidents, both involving
inadequate assistance to illiterate prisoners, yet it entered into an injunction regulating the details
of law libraries in entire US prison system. SC reversed injunction
i. RULE Remedy must be limited to the inadequacy that produced the injury in fact that P has
established (nature of remedy is to be determined by the nature and scope of the constitutional
violation)
ii. Applied Here:
(i) 2 instances were an inadequate basis for a conclusion of a system-wide violation and
imposition of system-wide relief remedy 2 broad
1. Findings revealed one case where a prison failed to provide special services to
prisoner who would have needed due to his illiteracy, to avoid dismissal of case
which is quite different from this suit
2. Other instance involved a prisoner who while incarcerated had once been unable to
file a legal action
(ii) granting a remedy beyond what was necessary to provide relief to the 2 prisoners was
improper
(iii) moreover, dist. ct. didnt defer to penological interests and failed to give them chance
to propose their own remedy
1. CRT disagreed whether broad holding unnecessary sep powers 2 broad other
view could be broad if more evidence to support
h) United States v. Virginia (1996) (336)
i. lower court and SC found VMIs men-only program unconstitutional, gave school the option
to create a remedy either become a private school, fully integrate, or create an alternative
program for women. State chose to create VWIL. SC finds that VWIL fails as a remedy
ii. RULE remedy not tailored to harm VA still excludes women from
opportunities/advantages offered by mens instiution
iii. Applied Here
(i) remedy didnt match the violation schools were distinctly different
1. different curriculum, different training methods (adversative vs. cooperative),
endowment, faculty plus intangibles
iv. Rehnquist Concurrence excluding women/gender specific education okay, but that no
comparable institution existed here so not okay (not = prestige, $ spent, quality of faculty to
make work)
1. [distinction btwn complete equity & comparable]
Prof What if Va created milt institution for women?
Need to make identical resources, attach prestigious school as alumni network, curriculum
Prestige still may be difficult to achieve we dont know if court looking for exactly same or comparable
since doesnt address
D. Modifying Injunctions FED RULE 60(b)(5)
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1.
RULE 60(b)(5) = permanent injunction is a final judgment. Unless vacated or modified on appeal, it is
res judicata (decided therefore barred) from subsequent proceedings.
i. Drafted before institutional reform litigation/structural injunction
ii. CRTS HATE Why? judges view as person brining suit to re-hear litigation/retry claim
iii. Only applies to remedies that operate prospectively (expected to happen) ensuring those
remedies are equitable
iv. CANNOT USE TO COMBAT INJUNCTION ITSELF only to combat effect of injunction
result of injunction
b) United States v. Swift & Co. (1932) [342]: The inquiry in modifying an injunction is whether the
changes are so important that dangers, once substantial, have become attenuated to be shadow.
Nothing less than a clear showing of grievous wrong evoked by new and unforeseen conditions
should lead us to change what was decreed after years of litigation with the consent of all
concerned.
c) United States v. United Shoe Machinery Corp. (1968): [342] Swift is inapplicable when a decree
fails to achieve its central purpose and a party seeks modifications designed to achieve that
purpose.
d) Rufo v. Inmates of the Suffolk Country Jail (1992) [344]: inmates sued claiming pretrial detainees
were held in unconstitutional conditions. Court issued injunction enjoining Government Ds from
(1)housing at the jail an inmate awaiting a trial with another inmate, and after a later date (2) from
housing any inmates awaiting trial at all.
i. RULE: A party seeking modification of a consent decree must establish that a significant
change in facts or law warrants revision of the decree and that the proposed modifications is
suitably tailored to the changed circumstance.
(i) Courts CANNT RELITIGATE FLOOR OF INJUNCTION IF new law requires less
leaving injunction requirements > law requires cannot relitigate
(ii) A consent decree can be modified if events that were unforeseen at the time it was made
occur that make it inequitable to bind the parties a flexible approach that takes into
account certain changes:
1. Changes that make compliance unworkable
2. Factual conditions make compliance onerous
3. Proves to be detrimental to public interest
4. Becomes illegal to comply, or likewise, laws change to make legal what decree was
designed to prevent
(iii) modification should not be granted where a party relies on events that actually were
anticipated a the time it entered into a decree
(iv) once moving party meets burden of establishing change in fact or law, Dist. Court should
determine whether proposed modification is suitably tailored to the changed
circumstances thus 3 matters should be clear:
1. modification must not create or perpetuate a constitutional violation
2. modification should not strive to rewrite a consent decree so that it conforms to the
constitutional floor
3. public interest and separation of powers requires court to defer to local govt
administrators
ii. Applied Here:
(i) change in fact: surge in inmate population
(ii) change in law: SC held that double cells were constitutional
(iii) The outcome depends on if the jail anticipated the growth, and whether Ds though single
celling of pretrial detainees was mandated by the constitution
e) Agostini v. Felton (1997): [344] An injunction is modifiable for significant change in law when the
precedents on which it is based have been seriously undermined or eroded; only the SC can decide
that one of its own decision has been so undermined.
f) Frew v. Hawkins (2004) [344]: State officials cannot re-litigate the minimum requirements of
federal law on plaintiffs' motion to enforce a consent decree.
2.
CONSENT DECREES: A consent decree is an injunction entered by agreement of the parties, subject
to the approval of the court.
13
a)
i. Structural injunction = once court agrees to enter into record

ii. -Once entered, final judgment and a permanent injunction just as much as if it had been fully
litigated.
iii. -The meaning of a consent decree must be discerned within its four corners, and not by
reference to what plaintiff might satisfy the purposes of either party or what the court might
have ordered if plaintiffs had proved their case.
iv. -The court's authority to enter a consent decree comes only from the statute or other
substantive law which the decree is intended to enforce, not from the parties' consent.
v. -Federal consent decrees (1) must be directed to protecting federal interests; (2) must spring
from, and serve to resolve a dispute within the court's subject-matter jurisdiction; (3) must
come within the general scope of the case made by the pleadings; and (4) must further the
objectives of the law upon which the complaint was based.
Horne v. Flores (U.S. 2009) [346]
i. Injunction against AR because didnt provide adequate funding 2comply w/federal law that
required states to offer ESL support to students, over decade passes and AR still hasnt
complied w/injunction. New law passes no child left behind law passes which gives
funding to state for ESL program so AR claims injunction no longer needed. Dist. Crt says up
to AR to prove no longer needed
ii. Issue: Whether the objective of the 2000 declaratory judgment order has been achieved
iii. Holding: SC ignores Dist Crt requirement that D burden to prove. Remanding to Dist Crt for
a proper examination of at least four important factual and legal changes that may warrant the
granting of relief from the judgment: the state's adoption of a new ELL instructional
methodology, Congress' enactment of the No Child Left Behind Act, structural and
management reforms in Nogales, and increased overall education funding. These changes are
critical to a proper Rule 60(b)(5) analysis, as they may establish that Nogales is no longer
in violation of the EEOA and, to the contrary, is taking "appropriate action" to remove
language barriers in its schools. If this is the case, continued enforcement of the District
Court's original order is inequitable within the meaning of Rule 60(b)(5)
(i) Prof/Notes:
1. modifications determinations difficult to overturn since discretion standard so
arbitrary n capricious.
2. SC Horne ruling gives more flexibility in determining whether injunction is no
longer necessary
a. This case shows conservatives saying we hate structural injunctions therefore
ruled this way to them
3. The Rights of 3rd Parties parties not involved in litigation injunction can still be imposed on them
for minor & ancillary tasks but not usually substantive relief
i. Rule = innocent third parties can be affected substantially, but not to the point of being
restructured, by orders to defendants who violated the law.
(i) Innocent third parties may also be subjected to minor and ancillary tasks to orders
themselves. (so still can be subject to injunction)
ii. Claim and Issue Preclusion
(i) Martin v. Wilks (1989) [372]: No one is bound by a decree unless he was a party, and no
one is obliged to intervene in a lawsuit to which he has not been made a party.
a)
Hills v. Gautreaux (359) Court of Appeals found that HUD had violated 5th Amendment when
it knowingly funded the CHAs (Chicago Housing Authorities) racially discriminatory family
public housing authority. After efforts to implement a remedy within Chicago, Ct. of Appeals
ordered HUD to develop a metropolitan housing plan -- develop public housing in desegregated
neighborhoods, not just in low-income minority neighborhoods. HUD argued that remedy should
only apply to Chicago. SC rejects this argument
i. ISSUE: Can metropolitan housing plan be required to go outside city limits?
ii. RULE Remedial powers to restructure the operation of local and state governmental entities
may be exercised only on the basis of a constitutional violation and once that violation has
14

been found, court is required to tailor the scope of the remedy to fit the nature and extent
of the constitutional violation. - Thus, the remedy to segregation may extend to any area
where the state agency which was causing the segregation had authority using all
reasonable methods available to formulate an effective remedy
iii. Applied Here:
(i) unlike the suburban districts in Milliken, HUD has been found in violation of the
Constitution, and since CHA and HUD have authority to operate outside Chicago city
limits, its distinguishable from the Ds in Milliken
(ii) separation of powers issues HUD can go through private entities w/o going through
state so no intrusion on state to have program comply w/constitution and therefore create
interdistrict remedy
(iii) State could comply w/injunction w/o being forced to their state power can enforce
land use restrictions/remedies, etc., to provide minorities w/alternatives to racially
segregated Chicago pulic housing system created by HUD and CHA
b) General Building Contractors Association v. Pennsylvania (U.S. 1982) 366
(i) Facts: Local 542 (union) & other trade associations and employers, practiced a pattern of
intentional discrimination in administering the hiring hall system, and union practices in
the overall operation of a hiring hall for operating engineers created substantial racial
disparities. Dist Crt found that there was no evidence that trade associations were aware
of unions discrimination, or that employers intended to engage in discrimination as a
class. However, Dist Crt ordered trade assoc. & employers had violated statute and
therefore must comply w/injunction. SC reverses.
ii. Issue: Whether a party not subject to L for violating the law may nonetheless be assessed a
proportionate share of the costs of implementing a decree to assure non-discriminatory
practices on the part of another party which was properly enjoined
i. Holding: Dist Holding too harsh 4 nonparties not held L, can only impose on them minor
or ancillary tasks 2 comply w/injunction
(i) Absent a supportable finding of L, we see no basis for requiring the employers or the
association to aid either in paying for the cost of the remedial program as a whole or in
establishing and administering the training program.
(ii) Nor is the imposition of minority hiring quotas directly upon petitioners the sort of
remedy that may be imposed without regard to a finding of L
1. PROF EXAMPLES:
a. Court can order someone (nonparty 2 litigation) to produce documents, property
at issue in litigation
i. Can only order persons not in violation of law to small tasks to facilitate
litigation
IV. CHOOSING REMEDIES Categorize Remedies into 2 Groups
A. Substitutionary vs. Remedies
1. NUTS AND BOLTS
a) Categorizing Remedies into 2 Groups
i. Substitutionary Remedies = normally $$, compensatory damages, paid to compensate what
lost
ii. Specific Relief = more equitable relief, primarily injunctions
1. Seeks to avoid transaction altogether by preventing injury B4 happens
2. Want to get property back
b) damages vs. restitution courts have created a host of doctrines determining what Ps get, thus
its not really Ps choice, but usually when its damages vs. restitution, its Ps choice (right of
election)
c) damages vs. injunction Ps must satisfy irreparable injury rule
i. Irreparable Injury Rule: Courts will issue an injunction if P proves:
1. Will sustain irreparable injury absent court injunction
2. Legal remedies inadequate if damages are insufficient to cover Ps loss
a. adequacy
15
2.
i. damages are adequate when -- are calculable, when there

ii. damages inadequate when -- intangible rights, unique property
ii. General Principles of Irreparable Injury Rule
(i) -Equity will not act if there is an adequate remedy at law.
(ii) -Equity will act only to prevent injury that is irreparable [at law].
(iii) -A useful distinction is to use the:
1. "adequate remedy" formulation = choice of remedies at final judgment, and the
2. "irreparable injury" = the requirements for interim relief pending final judgment.
d) Replevin
i. = legal remedy, not subject to the irreparable injury rule.
ii. enforced by state official seizing the property and delivering it to the plaintiff.
iii. only to recover goods; it does not lie to prevent a threatened destruction or dispossession
e) TODAY relatively easy to satisfy the irreparable injury rule now although some challenges to 7th
amendment right to jury as this is equitable relief therefore no jury requirement no court has
repudiated irreparable injury rule
IRREPLACABLE LOSSES
a) Pardee v. Camden Lumber Co. (W.Va.1911) () - P got an injunction to prevent D from cutting
down his trees. Appeals court overturned finding P had to show that D was insolvent & unable 2
pay damages 2 get an injunction. W.Va. SC overruled
i. RULE - an injunction is necessary when it is the only thing that will keep P in the rightful
position court wont grant equitable remedy if a legal remedy would be adequate
ii. Applied Here: Damages are inadequate
(i) Saying that injunction only applies if D is insolvent is no good, this is property, you have
the right to control your property, and if you can demonstrate uniqueness of the real
property such that money damages would be inadequate, then an injunction is ok
1. Timber has become a scarce resource, moreover, once timber is turned into lumber,
cant be converted back to normal state so unique
2. Right to have control over property so shouldnt let someone trespass to violate
your rights
iii. VIP Notes:
(i) Why do we have an irreparable injury rule?
1. Injunctions impose a greater burden on court as they have to be enforced over
time, as opposed to damages, which are a one-time solution
i. although damages arent always quick, sometimes difficult to calculate,
sometimes difficult to collect
ii. sometimes injunctions only require party to refrain from doing something
so not burdensome on court to oversee
2. injunctions impose a greater intrusion over Ds property requires a particular
type of conduct, whereas damages allow D to proceed as long as D is willing to bear
costs
i. damages could be extremely burdensome depending on assets
ii. why are we concerned with D? the wrongdoer
3. Jury Trial irreparable injury rule is equitable relief which deprives D of jury trial
by asking for injunction
a. How often does D want jury trial and P want bench trial?
4. sometimes timing is an issue, when preventing something, risk that remedy
requiring D to act takes longer than getting damages after act occurs, D may claim
timing for preventative relief deprives right of full trial b4 required to act/give up
something
(ii) Law & Economics $$ awards incentive for D to commit wrong
1. Criticism could be non-monetary motive that D motivated by, other social goals
not related to $$ wont be compensated, some people use their property
inefficiently dont have right to take, efficient thief valued
2. Law & Econ some rebut efficient thief only support voluntary transactions
since directly challenges other important rights which are necessary to have
efficiency right to have sole dominion over property/right to exclude
16

(iii) Laycock argues that irreparable injury rule is dead:
1. definition of adequacy for legal remedies: legal remedy is adequate only if is as
complete. Practical and efficient as the equitable remedy thus, always gives way to
equitable relief as legal remedies almost never meet adequacy standard
2. Although it has life at the preliminary stage prelim injunction
a. but courts are afraid to enact preliminary injunctions as facts arent fully
known, plus you dont know who is right or wrong
b. law and economics theory- that we should be encouraging profitable violations
of the law, economic efficiency
b) Brook v. James A. Cullimore & Co. (Okla. 1967) (384) Does the have a choice of remedy?
i. whether in a replevin action (to recover specific piece of property), defeated litigant can (1)
retain property as his own against the will of the other party (2) impose court to render $$
damages judgment and (3) tender $$ damages
ii. RULE REPLEVIN -- action to recover a piece of property -- the wronged party (winner)
has a choice between the property or money, but defeated litigant may not choose, he must
relinquish property
iii. Notes
(i) Irreparable injury rule only applies to equitable claims replevin is an action at law
(ii) With an injunction there is contempt, with replevin the sheriff comes and seizes the
property.
c) Continental Airlines, Inc. v. Intra Brokers, Inc. (9th Cir.1994) (377) Intra acquired Continentals
discount coupons and sold them to travel agents, for resale to customers. Continental sought
injunctive and declaratory relief ordering broker Intra to stop selling its coupons. District Court
granted the injunction, 9th Cir. affirms.
i. RULE Where there is in fact harm, the fact that its hard to calculate or establish economic
harm supports the proposition that damages would be inadequate, thus equitable relief is
better
ii. Applied Here:
(i) the effect on the revenue of the brokering of its coupons was hard to prove and measure
here there was no evidence of economic harm, as there couldve been various results of
brokering coupons
(ii) damage to Continentals power control of its own business Ds are substituting their
judgment for Ps as to whether to distribute coupons
(iii) collectively this situation calls for an injunction
d) Campbell Soup Co. v. Wentz (3d Cir. 1948) (383) Specific Performance
i. Campbell entered into K with Wentz for all the Chantenay red cored carrots on his farm for a
season for certain price. The market price spiked and Ds didnt want to sell. Campbell
brought suit to enjoin Ds from selling carrots to others and an order for specific performance
ordering D to comply with K. Trial court found that based on objective standards, Ps hadnt
proven that goods were unique. 3d Cir. reverses to grant specific performance
ii. RULE - Specific performance is warranted when a legal remedy would be inadequate
inadequacy of legal remedy is necessarily a matter to be determined by an examination of the
facts of each case
iii. Applied Here:
(i) On question of adequacy of legal remedy appropriate for specific performance
1. at time, goods were of special type and unavailable on open market virtually
impossible to obtain this carrot type in open market
2. P contracted for goods long in anticipation of needs, and built up general reputation
for its products of which uniform appearance was important Campbell needed
Chantenay carrot to ensure would preserve uniformity in appearance
iv. Notes on Specific Performance:
(i) Why did damages seem adequate? ability to cover, market price was calculable
(ii) Why did damages seem inadequate? unique carrot, harm to reputation if use different
product, scarcity
(iii) Why give Campbells carrots theyre attaching a lower value to?
17

1.
2.
3.
law and economics carrots worth more so more efficient use of good
counter allow Campbell to buy at lower price, and then decide what to do use or
sell its carrots
(iv) The Cover Principle UCC 2-716 codifies SP, SP if goods unique or in other proper
circumstances
1. inability to cover is strong evidence of other proper circumstances in which SP is
appropriate
2. Courts will often given specific performance for ordinary goods when:
a. there is a scarcity
b. time constraints
c. or the size of the order
d. when supplier has monopoly correlate w/irreplaceable
i. all things that make the order nearly impossible to cover
3. P in SP also required to perform their part of K so must be able to or SP will not be
granted
e) Van Wagner Advertising Corp. v. S & M Enterprises (N.Y. 1986) (402) - Van Wagner advertising
leased wall of building facing midtown tunnel for billboards. He leased it to Asch Advertising for
3 years starting March 1, 1982. Michaels, who leased the property to Van Wagner, sold it to S&M
earlier in 1982, and in August of 1982 sent letter to Van Wagner canceling the lease as of Oct. 18.
S&Ms cancellation of the lease was breach of contract. S&M says money damages are adequate.
Van Wagner wants specific performance since sign location unique - off busy tunnel, no property
is the same
i. RULES
(i) SP is properly denied where damages are an adequate remedy and equitable relief would
impose a disproportionate burden on the D
1. equity shouldnt itself work an inequity on D
(ii) Issue isnt about uniqueness or substitution, rather the uncertainty of valuing it
ii. Applied Here:
(i) Value of the unique qualities could be fixed with reasonable certainty and without a high
risk of undercompensating P,
1. Not unique -- P in business had 400 other signs posted in city so value easily
calculated since there is a mket for this, so not unique even though real property
(ii) Moreover, SP would be inequitable to D as property was supposed to be redeveloped
SP too costly 2 D
iii. Notes
(i) Undue hardship is a separate means of denying relief
(ii) EQUITY balance of hardships (benefit P balanced by burden of injunction imposed on
D
[N/A if D intentional wrongdoer]
1. CRT CONSIDERS no irreparable injury, burden to D
(iii) Uniqueness not end-all-be all are there adequate substitutes that can replace? If yes,
SP will be denied
(iv) Cases exist which grant SP for Ks to sell used goods new goods arent adequate
replacements
Burdens on D
a) Whitlock v. Hilander Foods, Inc. (Ill. App. Ct. 1999) 409
i. Facts: D was building a wall near his land, P gave him permission to allow the construction
crew on his land while the wall was being built. P noticed wall's footings abutted P's
land/encroached on his property 18 inches. P attempted to negotiate with D about
compensation, but no agreement was reached. Dist crt grants D summary judgment on
laches (you waited to long to bring P), D found nonintentional wrongdoer so balanced
equities 18 inches encroachment < cost of moving structure Appeals Crt Reverses
ii. Issue: Whether an injunction was an appropriate remedy
iii. Holding: The trial court erred in concluding that, as a matter of law, the encroachment on
plaintiff's property was not intentional. Whether to categorize defendant's encroachment as
18

intentional or unintentional is potentially of crucial significance therefore need to go to trial
to determine
(i) material facts still need to be decided.
1. D could be intentional wrongdoer
2. D may have caused delay therefore laches wouldnt apply
(ii) Ordinarily, in deciding whether to order a D to remove an offending structure, the trial
court must balance the hardship to the D against the benefit to the P; if the former is great
and the latter slight, the court will ordinarily leave the plaintiff to his remedy at law.
However, if the encroachment is deliberate, the court may issue the injunction
without considering relative hardship on D (no balance of equities if D intentional
wrongdoer)
4.
b) Undue Hardship to D Boomer v. Atlantic Cement Co. 411

i. Facts: Court found cement plant was causing nuisance to neighboring homes but refused to
grant injunction so cement plant could stop spewing cement dust on neighboring homes
causing health problems. Instead court ordered cement plant to pay damages of value of
neighboring homes
ii. Why? Balance of burdens
1. cement plant, employs over 300 people and the owner invested $45 million into the
plant > than health risks & property value of Ps
iii. -Hardship to defendant
(i) the hardship must be disproportionate to any benefit plaintiff will derive from the
injunction.
1. Courts also give heavy weight to D's culpability
2. P's diligence or acquiescence,
3. Relationships between the parties
(ii) a wide range of factual variations can influence these assessments
iv. When a court denies the injunction because of undue hardship on the , they will usually
award damages.
Burden on the Court a) Co-Operative Insurance Society Ltd. v. Argyll Stores (Holdings) Ltd. (1997) (417) English Case
i. Facts: Ds decided to close Safeway supermarket in shopping center, breaching lease, D
consented to order for damages. Ct. of Appeal reversed trial judge and ordered that K be
specifically performed. This Court reverses
ii. RULE General practice is to not order specific performance for D to carry on a business in
K disputes
iii. Applied Here:
(i) Undue burden on D
1. Public interest against requiring someone to operate a business at loss
(ii) Burden on court to have to supervise performance for so many years
1. waste of resources and prolongs the battle
2. concern that court difficult to measure Ds compliance too vague if scale back store
to only sell 1 item, etc.
iv. Damages brings litigation to an end
1. Notes:
a. Universal Health Services v. Thompson (Tex. Ct. App. 2000) 420
i. Hospital had 15 year lease w/physicians that wanted to break because
operating hospital at a loss. Physicians wanted SP. Crt- denied SP, awarding
physicians damages instead
b. Metropolitan Sports Facilities Commisssion v. Minnesota Twins Partnership
(Minn. Ct. App. 2002) [421]
i. Twins only contracted 1 season at a time. Renewed K Sep 2001 couple
weeks later major leagues announced would eliminate the team. Crt
required SP. Amt revenues lost was minimal BUT intangible & tangible
benefits major league brought to metropolitan area > D burden on staying in
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K. Stadium funded by public who relied on team. Not ordinary commercial
lease. Had public significance.
CRTS value some rights more than others school desegregation constitutional right, belonging to public as a
whole, private rights less likely to require equitable relief
5. Balancing of the Equities TEST FOR PERMANENT INJUNCTION VIP!!!!!!
a) EBay Inc. v. Mercexchange, LLC (U.S. 2006)
i. Facts: EBay violated Mercexchange's patent. Merc. Sues for patent infringement. Dist Court
grants damages, denies Mercs motion 4 injunction. SC reverses.
ii. Issue: Whether 4 part test for permanent injunction applies to disputes under Patent Act
iii. Rule: A plaintiff seeking a permanent injunction must demonstrate:
1. that it has suffered an irreparable injury;
2. that remedies available at law are inadequate to compensate for that injury;
3. that, considering the balance of hardships, a remedy is equity is warranted; and
4. that the public interest would not be disserved by a permanent injunction.
iv. Holding: Yes -- decision whether to grant or deny an injunction rests within the equitable
discretion of the district courts, and such discretion must be exercised consistent with the
traditional principles of equity, in patent disputes no less than in other cases governed by such
standards.
v. Concurring (Roberts): This historic practice does not entitle a patentee to a permanent
injunction or justify a general rule that such injunctions should issue.
vi. Concurring (Kennedy): The existence of a right to exclude does not dictate the remedy for a
violation of that right.
1. NOTES ON EBAY pg. 426-27 (note #3)
a. -Irreparable injury is a traditional prerequisite to injunctive relief, although it is
easy to show at the stage of permanent injunctions. Also SC puts must show P
has suffered irreparable injury rather than P threatened against irreparable
injury also irreparable injury requires no adequate remedy at law so not sure
why thats another element
b. Undue hardship has always been a defense but now P must show
c. Undue hardship and effects on the public interest can both be reasons to
withhold an injunction, but each is unusual so P must bring up each time and
then negate them.
2. Patent Cases
a. A distinction has emerged between suits by Ps who compete in the market
with their D & P who dont, former usually get injunctions, and the latter do
not.
b. When P & D compete, measuring damages requires an estimate of P's lost
profits, which can depend on how much the infringement changed each side's
market share and pricing.
c. When they do not compete, damages can be measured by estimating a
reasonable royalty for D's use of P's patent.
3. Undue Hardship in IP
a. These cases easily fit the pattern of classic undue hardship cases; D invested
much $ and effort and now must pay ransom or abandon large parts of his
investment.
a. If D not reckless with regard to Ps patent rights, the undue hardship defense
readily applies.
6. PRIOR RESTRAINT RULE
a) Willing v. Mazzocone (Pa. 1978) (421) Crazy lady was protesting law firms saying they stole
money from her. It was untrue. Firm sought injunction to stop her from giving libelous &
defamatory statements about firm. She was insolvent so there was no way to get money from her.
Thus, lower court granted injunction barring her from saying libelous & defamatory statements (in
general). Appeals court narrowed to only include libelous & defamatory only about the firm.
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Penn SC said that violated her constitutional rights to freedom of speech: cant take her rights
away since she is insolvent.
i. RULE
(i) Equity will not enjoin defamation
(ii) Insolvency of D doesnt create situation where there is no adequate remedy at law (thus
allowing equity to step in) in deciding whether a remedy is adequate, it is the remedy
itself, not the possible lack of success that is the determining factor
ii. Applied here
(i) The fact that D is insolvent doesnt justify injunction to infringe on right to freedom of
expression damages appropriate since available remedy for violation of law, Crt
shouldnt take into account likelihood of payment
iii. Notes:
(i) COULDVE ARGUED Law firm couldve said damages so speculative from her
actions that too difficult to calculate/measure, harm to reputation difficult to calculate
(ii) WOULDVE BEEN BETTER TO HAVE JURY TRIAL 1st to determine defamation,
libelous statements, then may enjoin right 2 free speech
(iii) PRIOR RESTRAINT RULE -- legal restrain on speech that has not been uttered or
published.
1. Reckless or deliberate libel and obscenity are categories of unprotected speech.
2. NOT PRIOR RESTRAINT if injunction against speech is not based on the
content of the speech and forbids speech only in a particular time, place, or manner.
3. It is no longer a rule against restraints prior to publication; it is a rule against
restraints prior to adjudication.
(iv) Sexual harassment cases pgs. 435-37
III. PRELIMINARY OR PERMANENT RELIEF
A. PRELIMINARY INJUNCTIONS
1. 2 Types of Preliminary Injunction Relief [under Civ Pro Rule 65]
a) Preliminary Injunction Order - need all 4 now requires crts to fact find b4 trial
1. Likelihood of success on the merits [most important if dnt hve walk away]
2. Likelihood of irreparable harm in absence of the injunction [2nd most vip]
3. Balancing of hardships (interests/equities) --- favors Ps
4. Public policy unimpaired pub policy favors injunction
b) Temp Restraining Order [TRO]
i. Ex parte no notice for D if in same jurisdiction
2.
Substantive Standards for Preliminary Relief

a) Winter v. National Resources Defense Council, Inc. (U.S. 2008) pg. 440
i. Facts: National Environmental Policy Act (NEPA) requires the Navy to prepare an EIS
(environmental impact statement) before deciding whether to continue with its training
exercises. It did not. Dist crt. & 9th Cir. Ps have shown likelihood of success on merits. SC
Reverses.
ii. Issue: Whether a preliminary injunction is appropriate
iii. Rule: A P seeking a preliminary injunction must establish:
1. that he is likely to succeed on the merits,
2. that he is likely to suffer irreparable harm in the absence of preliminary relief,
3. that the balance of equities tips in his favor,
4. and that an injunction is in the public interest.
iv. Holding:
(i) Navy challenges 9th Cir std that irreparable injury is possible
1. SC agrees. Need more than likely. Our frequently reiterated standard requires
plaintiffs seeking preliminary relief to demonstrate that irreparable injury is likely in
the absence of an injunction. Issuing a preliminary injunction based only on a
possibility of irreparable harm is inconsistent with our characterization of injunctive
relief as an extraordinary remedy that may only be awarded upon a clear showing
that the P is entitled to such relief.
21
3.
4.
(ii) Public policy is a critical analysis here. even if have likelihood success
1. SC NAVY training national security paramount public interest> mammals
possibly harmed
a. Harm to unknown number of marine animals < natl security
2. SC Abuse of Discretion for lower court to order perm injunction
a. Since test essentially same requirements except for dont need to prove
success on the merits. Since only issue Navy must prepare EIS report not
must cease sonar training no basis for enjoining training since can narrowly
tailor injunction to require NAVY to produce EIS report, etc.
(iii) DISSENT: substantive claim will inevitably prevail on merits since NAVY required by
law to produce EIS report before training there is a balancing scale for weighing factors
if high likelihood prevail on merits other factors can be lower. Substantial likelihood
harm to environment, public policy, success on merits likely would not be abuse of
discretion if granted perm injunction
Sliding Scale or Not for Preliminary Injunction 4 Part Test
a) Lakeshore Hills, Inc. v. Adcox (Ill. App. Ct. 1980) 445 - prof uses as good ex/of sliding scale
i. D has moved 2 suburbs w/pet bear which was 5th gen. captive, defanged, double caged, &
declawed. The bear violated covenant in deeds. Homeowners association claimed success
almost certain since violated their rule, based on covenant in deeds, to have bear. Possibility
of injury low but risk to public if death or injury high.
b) Shivo case -- no likelihood success on merits cuz husband had right to remove tubes. FL crt said
likelihood of success on merits weeks so injunction denied. However, irreparable injury very
strong -- not even considered.
c) RECONCILING THE 4 PART TEST many courts require all 4 to be present but just give same
language to test and then in practice really are applying a sliding scale
Procedure For Obtaining Preliminary Relief
a) Coyne-Delany Co. v. Capital Development Board(7thCir.1983)Injunctin Bonds -450
i. C-D suing under 1983, under color of law, arguing that they were deprived of their property
right without due process of law since state denied right of P to participate in bid sought
TRO 2 days b4 bid wanted a 50K injunction bond, but magistrate set 5k bond thinking
process dealt with quickly. District judge then issued a preliminary injunction without
changing injunction bond amount. 7th circuit overruled case relied on by C-D no property
right in gov bid. Case was decided incorrectly. D therefore entitled to damages since wrongly
enjoined in suit and therefore cost money to re-bid K $56K.
ii. RULES
1. Injunction wrongfully issued party wrongfully enjoined entitled to seek damages
by capped at amt of damages = cost of injunction bond
iii. Applied Here
(i) Change in law is legitimate consideration, but not grounds alone for denying damages
(ii) Bond only covers a fraction of the loss supports issuance of damages
(iii) Here D failed to appeal interlocutory for an increase in the bond amount, shouldve done
so so damages limited to amount of bond
iv. Notes
(i) In fed courts Fed Rule Civ Pro 65(c), the bond is discretionary. In determining how
much (or if) of a bond is required, courts will look at: pg. 453 note #2b
1. Potential loss to the
2. Financial hardship to the
3. Public importance of the rights being enforced.
(ii) It is s responsibility to ask for the bond
(iii) What triggers liability on the bond?
1. Texas v. Camenisch says that the L on the bond couldnt be equated with whether the
preliminary injunction had been properly issued its based on the ultimate
disposition of the case success not likelihood of success
(iv) What damages are covered by the bond?
22

1.
The damages must be caused by the wrongful prelim not just caused by the
litigation
2. Federal courts disallow attorneys fees, but some states allow them.
(v) Liability above the bond: most of the time, no. But there are generally 3 exceptions:
1. Liability by statute in some states
2. who are clearly able to pay damages
3. Some independent ground for liability, like malicious prosecution.
Injunction Bond -- Assuming bond is discretionary (depends on jurisdiction), courts consider potential loss to the
D, financial hardship to the P, and the public importance of the right being enforced.
It is defendant's responsibility to ask for a bond. If the court fails to require a bond, through oversight or an
erroneous decision to waive bond, the preliminary injunction is nonetheless binding.
Some courts claim discretion not to enforce the bond even if the injunction was wrongfully issued.
Damages Covered --- The damages must be caused by the wrongful preliminary injunction or temporary TRO; it is
not enough that they were caused by the litigation
Some jurisdictions disallow fees; some allow fees for seeking dissolution of the preliminary order.
Courts can waive bonds: indigent P, D can agree to waiver of bond -- There must be REASONS for waiving the
bond. -- Each party must pay its own litigation costs.
5.
TEMPORARY RESTRAINING ORDERS (TROs)

i. TROs are designed to prevent irreparable harm that will occur even before a preliminary
injunction hearing can be held.
ii. FRCP 65(b) pg. 459
iii. -The Federal Rules of Civil Procedure allow for ex parte TROs
a)
Carroll v. President of Princess Anne (1968) (456)

i. Officials of Princess Anne and Somerset County applied/obtained TRO enjoining white
supremacy group ex parte -- from holding rally for 10 days. Trial court then had hearing ex
parte and granted a preliminary injunction for 10 months. On appeal, the Maryland Court of
Appeals affirmed the 10-day order, but reversed the 10-month order on the ground that the
period of time was unreasonable and that it was arbitrary to assume that a clear and present
danger of civil disturbance and riot would persist for 10 months. Petitioner - white
supremacy org National States Rights Party challenged TRO. SC reverses TRO finding.
ii. Issue: Whether, by what processes, and to what extent may the authorities of local
governments restrict petitioners in their rallies and public meetings?
iii. SC:
(i) TRO issue not moot since 10 days past cuz harm likely 2 happen again, again w/o court
ever being able to hear claim
(ii) 10 day order procedurally defective no reason given by trial court why couldnt give
notice
(iii) 1st amendment rights order in this area must be narrowly tailored 2 exact needs 2
prevent harm therefore both parties must give their sides to judge so can figure out real
interests (if any) that need to be tailored 2
iv. RULE in area of basic freedoms guaranteed by the First Amendment TRO orders wont
survive where no showing is made that it is impossible to serve or to notify the opposing
parties (formally or informally) so have opportunity to participate.
v. TAKEAWAY: Unless have compelling reasons 4 not giving notice ex parte -- TRO
proceeding will not survive judicial scrutiny
vi. Notes VIP pg. 459 note 1 Fed Rule TROs
(i) Preliminary injunctions require notice to the other party always
(ii) TROs can be ex parte but only last 10 days (even with notice there is still the limitation)
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1.
With TRO, you have to notify the other side after you get the TRO, since a party
isnt bound by a TRO they dont know about.
2. TRO must state reason why its issued FRCP 65(d)(1) pg. 467
3. TROs are not appealable
(iii) A TRO cannot be appealed (unless the denial of the TRO decides the merits or is the
equivalent of a dismissal), a preliminary injunction can
b) BIG TRO CASE -- Sampson v. Murray (1974) (460)
i. P was a probationary employee of the federal government and was fired. P met w/personal
officer after fired [gov worker so get broader procedural rights when terminated] n officer
suggested P was fired due to reports of previous employment at another agency. P filed a
lawsuit seeking preliminary injunction to prevent her discharge pending an administrative
appeal. The district judge grants 10 days TRO then extended indefinitely until the government
produced Sanders, the acting commissioner who fired her, to testify. Sanders refuses saying
court lacks jurisdiction. SC reverses.
ii. SC Rehnquist:
(i) SC characterizes TRO as preliminary injunction (since lasts over 14 days (now 10)) so
entitled to hear since preliminary injunctions entitled to interlocutory appeals (otherwise
would have to wait til case ended)
1. Can P get damages for loss of income rather than specific remedy of preventing
discharge (via preliminary injunction)?
a. Since there is an available remedy for wrongful termination at law (back pay
awards) then preliminary injunction not available to P
b. Can be reinstated after if wrongfully discharged as well
2. Can discharge be considered an irreparable injury?
a. Not in this case -- CAN IN EXTRAORDINARY CASES but not being able to
obtain employment, not enough $ to live, etc. not enough to be irreparable
injury must be extraordinary harm in these cases of employment
b. Loss to reputation not enough since can get agency determination in Ps favor
(ii) Separation of Powers we the court dont want to micro manage governments internal
affairs
iii. Marshall Dissent
(i) not preliminary injunction since that requires finding of fact, no finding of fact here
so TRO
(ii) No separation of powers issue issue is to determine if gov violated their own statute
then not against congressional intent, also procedural irregularities in her discharge, no
statutory support or administrative right to discharge
c)
Notes
i. SC says that government traditionally granted widest latitude in dispatch of its own affairs
(i) Look at public policy and separation of powers
(ii) Traditional unwillingness to enforce personal service Ks
(iii) Consider the disruptive effect of injunction
d) Right after Sampson -Granny Goose Foods, Inc. v. Brotherhood of Teamsters: 465
i. SC -- s were not in contempt of a TRO with notice, because it had expired ten days after its
issuance and before they violated it.
Scope of hearing for TRO or preliminary injunction:
(i) Depends on the complexity and urgency of the case.
(ii) TROs are usually much shorter findings of fact and law arent really required
(iii) Evidence admitted at a preliminary injunction hearing may be considered at the trial of
the case and need not be repeated.
(iv) TROs are not appealable
(v) Notice for TRO less restrictive (can be same day notice) preliminary injunction need
more notice
24

(vi) Preliminary injunctions are reviewed for ABUSE OF DISCRETION so if close case
courts usually affirm
III. PROSPECTIVE OR RETROSPECTIVE RELIEF, Creating COAs, Right to Jury
A. State Sovereign Immunity (SSI)
1. 11th Amendment provides that you cant sue state in which you dont live
i. Courts have interpreted this many different ways
ii. Conservatives = SSI strong states have immunity from certain regulations
iii. Liberals = SSI weak states agreed to be bound by fed rules & regs conceded to SSI when
signed Constitution
(i) At minimum go to case law to see if state has immunity
iv. TODAY: SSI citizens cannot sue their own state in state/fed courts, admiralty suits (state
cannot be sued in admiralty court)
v. 11th Amendment does not bar enforcement of consent decrees in which state officials agree to
do more than the federal law requires
2.
3.
SSI bypassed by =
i. states passing state laws which allow themselves to be sued,
ii. Congress can also abrogate SSI by passing laws (via 14th amendment) which provide certain
protections for all individuals
(i) US v. Georgia (2006) look to nature of act to see if 14th amendment applies if does then
P can get damages, no injunction though
Power of Congress
a) -Fitzgerald v. Bitzer: When it acts to enforce the Fourteenth Amendment, Congress can override
sovereign immunity and authorize retrospective relief against states.
b) US v. Georgia (2006) look to nature of act to see if 14th amendment applies if does then P can get
damages, no injunction though
i. PROBLEM SC is one to interpret whether the 14th Amendment applies to statute
(i) so limited to SC precedent of what has been covered in past AND
(ii) how todays court interprets precedent
1. Ex/Garrett Decision ADA state cant be forced to comply w/law since law not
under the 14th Amendment , disability discrimination not unconstitutional
2. Civil Rights south having hard time suing state w/civil rights violations
3. Mental retardation not a suspect class
4. Welfare not 14th Amendment
c) -Seminole Tribe: Congress cannot override immunity under the Commerce Clause or most of its
other Article I powers.
i. Congress lacks powers to impose retrospective remedies on states that violate the patent laws,
the Age Discrimination in Employment Act, or the employment provisions of the Americans
with Disabilities Act.
d) -United States v. Georgia: Congress can override state immunity on statutory claims to the extent
that the facts alleged in support of those claims would also support constitutional claims.
4.
CLEAR STATEMENTE RULE State waivers of state immunity, congressional waivers of the
federal immunity, and congressional overrides of state immunity all must be expressed in a clear
statement in statutory text that excludes any other possible interpretation.
i. -There is no implied waiver or abrogation.
5.
Prospective vs. Retrospective relief

i. Prospective = equitable relief prohibit future conduct
ii. Retrospective = limited to 3 areas = $$ damages
(i) When state consents to be sued
(ii) Congress abrogates SSI 2B sued
(iii) Personal suits against gov employee who was acting in his official capacity
25

6.
How does not having damages erode enforcement of federal statutes?

i. If no remedy 2 violation of law, no incentive to follow it since w/injunction can violate just
held in contempt after so damages important
ii. States claim that have limited funding which legislature relies on to respond to public needs
takes away from public resources
(i) This rebutted since $$ use to pay for injunction can be just as costly 2 enforce
a)
Hans v. Louisiana (1890) pg 479 expands SSI no citizen can sue state
i. Hans was Louisiana citizen who sued state to collect on state bonds. Louisiana argued
immunity.
ii. SC Louisiana has immunity from suit. States are immune from suits brought by their own
citizens or citizens of another state.
b) ExParte Young pg. 472
i. 11th Amendment didnt bar fed court from enjoining AG of Minnesota from enforcing a statute
which claimed to violate 14 Amendment.
ii. RULEAG only enjoined for future conduct = prospective relief
(i) ExParte Fiction
1. Suing state official acting within their official capacity not suing state
a. Lots times state indemnifies their employees so state actually pays damages not
individual crt just saying state has choice to indemnify
2. Only get prospective relief relief from their actions going forward
3. Cant use ExParte Young 2 recover property from government
c) Alden v. Maine state cant be sued in state court
d) Edelman v. Jordan (U.S. 1974)
i. Facts: Regulations required states to determine eligibility in 45 days, but Illinois took up to 4
months to pay benefits. P sued the director of the Illinois Department of Public Aid. They had
to pay back benefits.
ii. Issue: Whether an injunction ordering the D officials to comply with federal regulations in the
future was appropriate
iii. Rule: A suit by private parties seeking to impose a L which must be paid from public funds in
the state treasury is barred by the Eleventh Amendment.
iv. SC Reasoning:
(i) Ex parte Young: - different than this case in Young relief awarded was prospective only
here its $ so not prospective relief
(ii) Lower court wrong when said not compensatory relief but equitable restitution for harm
already occurred/profits in future SC -- $$ is $$ no difference
(iii) No constructive consent from state for merely participating in program consent needs
2B explicit, clear unambiguous statement 4 states to wave sovereign immunity or for
congress to abrogate SSI
v. Holding: A federal court's power, consistent with the Eleventh Amendment, is necessarily
limited to prospective injunctive relief, Young, and may not include a retroactive award which
requires the payment of funds from the state treasury, Ford.
vi. Douglas Dissent: 11th Amendment doesnt make distinction btwn law & equity so you
shouldnt either
vii. Brennan Dissent: State conceded to be sued when signed convention so no issue w/11th
Amendment
1. NOTES:
a. This case inverts principle that injunctions are remedy of last resort this
makes damages remedy of last resort
b. Why? Not wanting courts to have control over state treasury -- $ 4 lawmakers
not court (sep powers issue)
B. Suits Against Officers in Their Personal Capacities
1. Can sue gov official for their conduct while acting under color of law in their official capacity
2. Absolute Immunity: US, State Constitution, by law
26

3.
Suits Against Officers:

i. P may sue the officer in her official capacity, to make her exercise or refrain from exercising
some of the powers of her office.
ii. P may sue the officer in her personal capacity, to make her pay compensation out of her own
pocket.
iii. When a government official is sued for damages in her personal capacity, the suit continues
against her personally after she leaves office, and P can collect from the official's personal
assets. The official in her personal capacity is protected by a qualified immunity
4. Qualified Immunity: most gov officials could claim only immune if your behavior violates a right
which was clearly established at the time of the harmful conduct/wrongful act & reasonable person
wouldve known
i. Exception: Predator Judge behavior so unconceivable that no one had to ask if wrong
b) Harlow v. Fitzgerald (U.S. 1982) 486 Qualified Immunity
i. Facts: Fitzgerald alleged that petitioners entered a conspiracy in their capacities as senior
White House Aides to Nixon to have him fired. Dist Court ruled petitioners were not entitled
to absolute immunity. Petitioners appealed but dismissed by Appellate Court.
ii. Issue: Whether the aides have immunity
iii. SC: Qualified or "good faith" immunity is an affirmative defense that must be pleaded by a D
official. Immunity is available only to officials performing discretionary functions. Qualified
immunity is decided on case-by-case basis.
(i) Absolute immunity = small group of officials in executive branch, exec officials (only
certain ones not including cabinet), judges, ALJs, President. Prosecutors
a. Gov official bears burden that public policy requires an exemption
(ii) Qualified Immunity = executive officials but determined in case-by-case basis by
balancing damages remedy to protect citizens w/protecting officials using their discretion
in their official capacity
iv. Holding: Bare allegations of malice should not suffice to subject government officials either
the costs of trial or to the burden of broad-reaching discovery. Government officials
performing discretionary functions generally are shielded from L for civil damages
insofar as their conduct does not "violate clearly established statutory or constitutional
rights of which a reasonable person would have known." purely objective standard
1. NOTES:
a. Absolute immunity applies to a very small group.
b. The old qualified immunity rule had objective and subjective prongs.
c. The Court here drops the old standard w/subj prong probably 2 prevent cases
from going to jury trial since subjective intent is a factual questions so need jury
d. Safford Unified School District #1 v. Redding (SC 2009)
i. SC found school strip search of 13 yr old girl suspected of having over the
counter drugs was unreasonable, w/no constitutional basis. BUT, court
found that law regarding school strip searches were not clearly
established since lower court cases were going different ways so officials
had immunity.
e. Wilson v. Layne (SC 1999)
i. clearly established defined controlling authority in Ds jurisdiction or
consensus of cases of persuasive authority
Developments of Harlow more notes
-Anderson v. Creighton: The right the official is alleged to have violated must have been "clearly
established" in a more particularized and more relevant sense. The contours of the right must be
sufficiently clear that a reasonable official would understand what he is doing violates that right.
-United States v. Lanier: If a rule is too obvious ever to have been litigated, it does not follow that the
first official to violate the right gets immunity.
-Pearson v. Callahan: Officers are entitled to rely on cases from other circuits, and when the courts
were divided, officers should not be liable for choosing the wrong side.
-Safford v. Redding: Conflicting lower court decisions can be sufficiently numerous and well-reasoned
to counsel doubt that the prior statement of law was clear.
27

-Wilson v. Layne: Two ways to show the law had been clearly established: (1) controlling authority in
defendant's jurisdiction or (2) a consensus of cases of persuasive authority.
-Most states have adopted some version of qualified immunity for state-law claims against state officials, but
Maryland and Montana have expressly rejected it as inconsistent with judicially enforceable constitutional
rights.
Enforcing New Rules of Law
-Reynoldsville: Retroactive application of a new decision requires a retrospective remedy, unless there is
some other legal rule, based on something more than mere reliance on the old law, that independently
precludes a remedy.
-The Court's insistence on retroactive application of new court decisions was accompanied by a renewed
presumption against retroactive application of new statutes.
Fear of Damage Remedies
-The law of governmental immunity and the law of non-retroactivity are substantial bodies of law that prefer
prospective to retrospective relief.
-The preference for injunctions in government litigation has two important exceptions:
(1) Governmental preference for collecting taxes and making taxpayers sue for refunds.
(2) With respect to contracts, Congress and most states have consented to be sued for damages but
assert sovereign immunity to specific performance
What to look for on test
Not immune from all damage litigation, only immune if your behavior violates a right that
wasn't "clearly established" at the time
-Things to look for:
-What's clearly established?
-If Supreme Court or Circuit Court's have ruled, it's clearly established.
-If there is a District Court or Circuit Court split, it might not be clearly
established.
-Does the broad right cover a narrower set of facts?
-Ex. Broad rule: have a right to bodily integrity; does that cover strip
searches? Does it matter if the plaintiff is an adult or child? Etc.
-Was it so obvious no one had to sue about it?
B. CAUSE OF ACTION
1. Bivens confined to constitutional rights violations enforced by fed courts w/o statutory remedy
--- since up to courts (not congress) to determine remedy of constitutional violations
i. Marbury v. Madison where there is a right, there is a remedy
ii. Bivens where there is a constitutional right there is a federal remedy
a) Bivens v. Six Unknown Named Agents(US 1971) 530 Fed Agnts&Const. Violatin
i. Facts: federal agents entered Bivens home, arrested him for alleged narcotics violations &
searched his home w/o warrant or probable cause. Then taken to police station, interrogated,
stripped searched. Bivens brought suit asserted an unlawful arrest, wanting $15K per officer.
The district court dismissed, and the appellate court affirmed.
ii. Issue: The question is merely whether petitioner, if he can demonstrate an injury consequent
upon the violation by federal agents of his Fourth Amendment rights, is entitled to redress his
injury through a particular remedial mechanism normally available in the federal courts.
iii. Holding: Having concluded that P's complaint states a COA under the 4th Amendment,
the P entitled to recover money damages for any injuries he has suffered as a result of
the agents' violation of the Amendment.
(i) Reasoning:
1. Why damages -- where fed protected rights have been invalidated, it has been the
rule from beginning that courts will be alert to adjust their remedies to grant the
necessary relief so even though Congress didnt provide damages in a statute, also
didnt preclude damages, damages are typically type of remedy for this type of
invasions
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2.
Why not tort law? more harm created when fed officer violates private citizens that
tort law cant comprehend (since only looking at private citizen) greater magnitude
of injury so even if tort law overlaps authority of national gov carries more force
i. Sidenote: state wanted L to be state claim since less L probably also if
made constitutional then broadened avenue 4 litigants to get into fed court
iv. Harlan Concurrence: When determining if right remedy must use standard if remedy is
necessary and appropriate, however it is necessary & appropriate since injunction useless
since harm unlikely to happen again, exclusionary rule wont work since not brought to court
(i) Notes: Implied Remedies for Constitutional Violations
a. -Scope of Bivens
i. -Davis v. Passman: The Court found an implied cause of action under
Bivens in a sex-discrimination suit.
ii. -Carlson v. Green: The Court implied a right to sue for damages from
unconstitutional prison conditions.
iii. TODAY mostly case-by-case basis so exact opposite from cases above
now not automatic at all
b. When Congress creates a statutory remedy, the statutory remedy 4 most part
will control
i. Criticisms- Congress can pass law exempting remedy court must comply
w/possible infringement of right since would be unenforceable since no
damage relief
ii. Exception to criticism if protected class will have remedy since law
would be unconstitutional
c. Why does court go into damages before hearing issue? Doesnt do this
w/injunctions
d. Civil Rights Statutes current court anti-anti discrimination, Congress doesnt
usually go back to correct courts (make statute to correct) since cant get
majority to give damages
e. -Plaintiffs seeking a federal remedy against a state of the federal
government must identify:
i.
a substantive right,
ii. a grant of jurisdiction,
iii. a private right of action, and
iv. a waiver of immunity.
b) Alexander v. Sandoval (U.S. 2001) 536 Crt refused 2 look beyond text of statute
i. Facts: The Alabama Department of Public Safety accepted grants of federal assistance in
exchange for compliance w/Title 7. It later decided to administer state drivers' license
examinations only in English. Federal Regulations prohibited exclusion based on race, color,
or national origin.
ii. Issue: Whether there is a private cause of action to enforce the regulation
iii. Holding: There is no evidence in the text to suggest that Congress intended to create a private
right to enforce regulations.
(i) 601 goes towards enforcing intent of title 7 statute Congress gives private COA to
individuals
(ii) 602 Congress gave agency write to regs to prohibit policies which have disparate
effect -- no private right 2 enforce, agency enforces
iv. Rule: Intent of Congress to create private COA must be explicitly depicted in statute
C. RIGHT TO JURY TRIAL law based lawsuits not equity based lawsuits
1. What need to know for Right to Jury Trial
i. 7th Amendment required nature of COA must give history 2 determine if equitable or
legal
ii. If have mixed claim must decided legal issue 1st by jury --then judge must decided equitable
issue 2nd (note #1 pg. 565)
29

iii. State courts most have rejected need to parce out legal and equitable and if have both will
try as if equitable (no jury trial for legal claims) (note #2 pg 565)
b) Chauffeurs Local No. 391 v. Terry (U.S. 1990)
i. Facts: Ps were truck drivers who were transferred to terminal in Salem, union took side of
original drivers n laid transferred drivers off. Ps sued for collective bargaining with union &
their employer under the National Labor Relations Act. Originally, they sought an injunction
and compensatory damages; later they dropped the injunction request. Only wants jury trial 4
$ damages
ii. Issue: Whether Ps are entitled to a trial by jury
iii. Rule: To determine whether a particular action will resolve legal rights, there is a two
part test:
1. Nature of COA -- Compare the statutory action to 18th-century actions brought in
the courts of England prior to the merger of courts of law and equity to determine if
legal or equitable
AND
2. Nature of Remedy Sought --examine the remedy sought and determine whether it is
legal or equitable in nature.
-Often, the first factor is often mixed or unclear. The second factor seems to be more important since always
clear
iv. SC 1st part -- must look at issues individually to determine = when do mixed law/equity
(i) In isolation - Duty of fair representation - looks like breach of fiduciary duty like
trustee therefore looks equitable
(ii) In isolation collective bargaining agreement violation more like breach of contract
so legal issue
v. SC 2nd part Damages need to be legal in nature duty of fair representation (legal) and
backpay (under Title VII equitable usually but not here) more restitutionary therefore legal
V. PREVENTING HARM WITHOUT COERCION: DECLARATORY REMEDIES
A. DECLARATORY JUDGMENTS
1. -No monetary relief or requirement to engage in a course of conduct.
2. -If a court issues a declaratory judgment, it issues an opinion stating the rights and Ls of the parties in
litigation.
3. Subtly prevents harm -- known as a good faith rule -- since parties conform behavior around court
declaration
4. -Declaratory judgment v. Injunction
i. Injunction requires you to do something and can lead to contempt (does more/harsher
remedy) so higher std to get it
ii. Declaratory judgments outline rights and L; there is no order requiring either party to do
anything at all.
5. The federal act explicitly requires an "actual controversy" and does not authorize declaration of status
so must have claim at that moment when seek (576 note 1)
6. P need not show irreparable injury to get a declaratory judgment. The existence of another adequate
remedy does not preclude a declaratory judgment that is otherwise appropriate.
7. Supplemental relief can also be compensation for damages caused by failure to comply with the
declaratory judgment.
8. A declaratory judgment has the force and effect of a final judgment or decree.
i. A declaratory judgment is therefore issue preclusion in subsequent litigation with respect to
all issues actually decided.
ii. -Claim preclusion is a bit different, because of the statutory provisions for supplemental relief.
A request for such further relief is not barred because it was not included in the original
request for declaratory judgment. But this rule has limits. It the initial action sought more than
just a declaratory judgment, most courts hold that all related relief should have been sought at
the same time.
9. In federal court can get declaratory judgment (if appropriate) even if there is another adequate
remedy available
10. Declaratory Judgment DENIED WHEN would not terminate the uncertainty or controversy giving
rise to proceeding ie/if wouldnt end conflict
30
a)
General Case -- Nashville, Chattanooga, & St. Louis Railway v. Wallace (U.S. 1933) 573
i. Facts: Appellant brought suit under the Uniform Declaratory Judgments Act to secure a
judicial declaration that a state excise tax as applied to appellant was unconstitutional
violating commerce clause. Trial court granted decree for appellees, affirmed by state SC.
On appeal, SC rules for appellant.
ii. RULE - There must be a case or controversy in order for a court to issue an opinion. Case or
controversy means that there are rights affected by someones actions. No advisory opinions
(i) Concerned with substance not form
iii. Applied Here SC-- controversy presented is real and substantial
(i) Looking at the nature of the proceedings which the statute authorizes (rather than the
legislative label), and the effect of the judgment rendered upon the rights which
appellants asserts----so long as the case retains the essentials of an adversary
proceeding, involving a real, not a hypothetical controversy --1. the proceeding which terminated appellants decree was between adverse parties,
asserting valuable legal rights, which were threatened with imminent invasion by
appellees
b) -Public Service Commission v. Wycoff Co. 576:

i. The complainant in this case does not request an adjudication that it has a right to do, or to
have, anything in particular. It does not ask a judgment that the Commission is without power
to enter any specific order or take any concrete regulatory step. It seeks simply to establish
that, as presently conducted, respondent's carriage of goods between points within as well as
without Utah is all interstate commerce.
ii. One naturally asks, "So what?"
iii. The Uniform Act says the declaratory judgment may be denied if it "would not terminate the
uncertainty of controversy giving rise to the proceedings."----------A declaratory claim is
unlikely to be ripe if it seeks only to resolve disputes about the procedures or substantive
guidelines under which more specific disputes would be resolved.
c)
Cardinal Chemical Co. v. Morton International Inc. (U.S. 1993) 579

i. Facts: Morton sued Cardinal alleging that Cardinal had infringed its patents. LA case ended in
judgment for D. Federal Circuit affirmed. SC court dismissed the action and declared the
patents invalid. Federal Circuit affirmed dismissal and vacated declaratory judgment. The Fed
Cir's practice is to uniformly declare the issue of patent validity moot if it affirms the District
Court's finding of non-infringement.
ii. Issue: Whether the Federal Circuit's practice is valid
iii. Holding: The Fed Cir's practice of routinely vacating judgments of validity after finding noninfringement creates a potential for relitigation and imposes ongoing burdens on competitors
who are convinced that a patent has been correctly found invalid.
a. Finding of non-infringement NOT SAME
b. Finding patent is valid (therefore declaratory judgment should stand)
iv. The Fed Cir's practice denies the patentee appellate review, prolongs the life of invalid
patents, encourages endless litigation over the validity of outstanding patents, and
thereby vitiates Blonder-Tongue.
(i) Note
1. SCARECROW PATENTS potential Ps who assert claims w/o filing suit to seek $$
settlement or to control potential Ds behavior threat of infringement may be more
valuable to potential P than actual award of infringement
a. 2 things you can do to avoid it:
i. sue first for a declaratory judgment or file counterclaim for a declaratory
judgment
ii. sue to enjoin a suit but you must show irreparable injury
2. Young dilemma the choice between forfeiting asserted constitutional rights or
risking penalties
31

i.
b.
If RR complied with rate law, forfeits constitutional rights loss of

constitutional rights is nearly always an irreparable injury
ii. If RR violates rate law but risks criminal penalties penalties inflict
irreparable injury
Solution: Raise initial claim that statute is unconstitutional 1st that way (since
federal issue) wont be dropped to state court. If wait to file raising as
defense will be state jurisdiction since part of same controversy therefore
heard in state court (fed defense fed jurisdiction)
B. Declaratory Judgments, Injunctions, and Federalism

1. Race to Courthouse
(i) If a state prosecution is pending, D must present his federal defense in state court, or wait
until state action done (absentation)
1. D cannot sue in federal court to enjoin either pending prosecution or any threatened
future prosecutions. Younger v. Harris (590)
i. Doesnt preclude/forbid parallel state & federal litigation in ordinary civil
cases
(ii) However, if no state prosecution is pending, D can sue in Federal court to have law
declared unconstitutional because otherwise he would face the Young dilemma of
forfeiting his rights or risking further penalties. Steffel v. Thompson (589)
(iii) Moreover, federal P may seek preliminary injunction to prevent enforcement of state law
during pendency of declaratory judgment action (dilemma of forfeiting rights or incurring
penalties shows irreparable injury)
2. Reasons for race to court:
(i) Federalism want to respect state courts states are =ly competent as fed courts to
decide fed issues
(ii) Protecting duplicative legal proceedings (disruption of state process)
(iii) Have option so not w/o remedy can raise in state court
b) Steffel v. Thompson (1974) (531) Steffel and friend threatened with arrest and prosecution for
trespassing if they persisted in passing out antiwar leaflets in shopping center. Steffel quit, while
Becker continued and was prosecuted. Both filed actions seeking injunction against enforcement
and declaratory judgment that criminal trespass statute was being applied in violation of 1st
Amendment rights. Dist. Ct. denied relief, 5th Cir. affirmed. SC reverses and remands
i. RULES
(i) Still need actual controversy
(ii) Where state criminal prosecution begins before a federal suit, same thing that prevents
injunction will also prevent P from obtaining declaratory judgment (absentation doctrine
will kick in)
(iii) Regardless of whether injunctive relieve may be appropriate, federal declaratory relief is
not precluded when no state prosecution is pending and a federal P demonstrates a
genuine threat of enforcement of a disputed state criminal statute, whether an attack is
made on the constitutionality of the statute on its face or as applied
ii. Applied Here
(i) While P does not have to expose himself to actual arrest or prosecution, must look at
whether reduction in Vietnam has altered Ps desire to continue handbilling remanded for
determination
(ii) Choice between forfeiting asserted constitutional rights or risking penalties is an
irreparable injury if cant bring to court issue would never be resolved unless violate
law to bring on state action [Ex Parte Young Doctrine]
(iii) Friends arrest demonstrated imminent harm therefore
iii. Concurrence Stewart Rare P shouldnt be able to satisfy jurisdiction by Ps sub relief that
law unconstitutional need to be obj std
iv. Note
(i) Arrested friend had to raise his defense in state court as he was criminally prosecuted,
cant bring suit in federal court
32

c)
-Hicks v. Miranda: 595 NEED 2 GET TO FED COURT BY WIDE MARGIN

i. Hicks went to fed court to fed court challenging TRO denial. Each side submitted briefs &
court had under advisement for 1 month. Then court dismissed when state filed charges.
ii. The federal proceeding must be dismissed if a prosecution is commenced before any
proceedings of substance on the merits.
(i) If federal proceeding embryonic state no summary judgment, if submitted briefs,
waiting for court to decide still embryonic.
d) Doran v. Salem Inn, Inc. (1975) (597) Salem, Tim-Rob, and M&L were restaurants with topless
dancers. The town passed an ordinance forbidding such entertainment. On 8/9 they filed suit; on
9/10 M&L reopened, in violation of law, and in September, M&L and its dancers received criminal
summonses. M&L resumed, and was served with criminal summons, yet federal court
preliminarily enjoined enforcement of ordinance despite Younger, noting that it would have been
anomalous to grant relief to 2 Ps and not one. Ct. of Appeals affirmed. SC grants relief to 2 Ps
but reverses decision to grant relief to M&L being prosecuted in state court..
i. Issue: Whether the holdings of Younger, Steffel, and Samuels must give way before such
interests in efficient judicial administration as were relied upon by the Court of Appeals
ii. Holding: Each respondent should be placed in the position required if it stood alone.
iii. -M&L's prayers for relief are subject to Younger.
1. If a state prosecution is pending, D cannot sue in federal court to enjoin either
pending prosecution or any threatened future prosecutions. Younger v. Harris (524)
iv. -Salem and Tim-Rob were entitled to have their claims for preliminary injunctive relief
considered without regard to Younger.
v. Absentation disallows absentation for one party but doesnt allow for others
1. NOTES:
a. Still may be a problem for Ps that are granted preliminary injunction, allowing
to violate act/ordinance they claim unconstitutional, then courts final ruling is
its constitutional since its unclear whether the state could then prosecute for
previous acts under preliminary order.
C. Reformation parties that have agreement but written document doesnt confirm parties intent. Court
may reform K by changing language of the K so that it reflects what the parties originally thought they
were contracting for
1. Cases of mutual mistake of fact, which dont involve fraud, no choice must have reformation of K
2. If fraud then reformation could be by unilateral mistake of fact but must be supported by clear and
convincing evidence
3. Reformation is equitable remedy but doesnt seem to have irreparable injury or ripeness requirements
4. Rescission v. Reformation
i. Reformation changes K parties are still bound
ii. Rescission parties leave w/what they had before K, no K, as if never had K
a)
Hand v. Dayton-Hudson (6th Cir. 1985) 610 Hand, an attorney working for Dayton, lost job
allegedly due to major restructuring. Dayton agreed to pay $38K, if Hand agreed to release claims.
Dayton prepared a release for Hand to sign, Hand changed the document asserting that he was
NOT releasing claims of age discrimination and breach of K. Hand altered the release such that it
looked identical. Hand then filed suit in Dist. Ct. alleging age discrimination and breach of K
against Dayton. Based on fraud, Dist Ct. reformed the release, and in light of it, granted SJ to
Dayton.
i. RULE general rule is that Reformation requires a mutual mistake of fact, rather than a
unilateral mistake, BUT where there is a unilateral mistake due to fraud or inequitable
conduct on the other side, reformation is ok
ii. Finding that one person knew the K did not reflect the other persons intent must be supported
by clear and convincing evidence
(i) Applied Here
33

1.
Hand committed fraud by not informing D of changes in release, and while fraud is
usually an issue for the jury, here P admitted to misleading D, thus reformation is
appropriate.
2. There was a meeting of the minds since Hand presented K as if he was agreeing to
Daytons initial offer. Hands awareness of Daytons understanding prevents any
claim that there was no meeting of the minds. Holbeck
iii. Notes on Reformation
(i) Remember most mistakes of fact are either fraudulently induced or clerical, but parties
can correct these
VI. RESTITUTION Benefit to D as the Measure of Relief

A. Introductory Notes
1. DEFINED: Restatement Third (not yet out yet) Unjustified enrichment is enrichment that lacks an
adequate legal basis; it results from a transfer that the law treats as ineffective to work a conclusive
alteration in ownership rights.
i. ie/no legal basis for you to hold onto the $$
2.
3.
4.
5.
6.
7.
8.
Restitution can either be a COA unjust enrichment or a remedy

i. Unjust enrichment is only a COA
(i) COA when P doesnt have any other way (no remedy at law) to get remedy
(ii) Generally describes benefit D gained & the COA to recover those benefits
(iii) Source of L and COA is unjust enrichment
ii. Restitution as a remedy: restoring D to his rightful position -- measures the benefit D got
[doesnt measure Ps loss]
(i) Ex/Constructive trust must have identifiable property
(ii) Ex/if sales went down due to trademark infringement P gets amt of lost profits
INTENTIONAL WRONGDOER =
(i) Restitution as remedy for intentional wrongdoer D = amt D gained from wrongdoing
Disgorgement of Profits=P retains all profits D made on property D had taken from P
Restitution can bring more $$ as remedy when Ps injuries are pretty slight or where damages are
really hard to calculate
(ex/mirror brewing case)
Unjust enrichment is enrichment that lacks an adequate legal basis; it results from a transfer
that the law treats as ineffective to work a conclusive alteration in ownership rights.
Forced Exchanges = Restitution is generally unavailable to a claimant who should have made a
contract with the recipient but failed to do so.
i. ex/Would-be Ps cannot deliver unrequested goods or services and then demand payment for
the benefit.
ii. There is also a strong presumption against forcing an innocent D to pay for benefits she never
requested and might not want.
1. EXCEPTION - EMERGENCIES -- An exception (to forced exchanges) not
securing promise to pay in advance, sue for unjust enrichment. law presumes D
wants EM assistance
a. If treated at hospital or by doctor - benefit received measured by market value of
treatment
b. If one intervenes in an emergency to protest property, benefit received measured
by the value of the services or the value of the property damage avoided,
whichever is less.
i. Unwilling suicidal patient admitted to hospital. Patient had to pay for cost
of stay. Pg. 632
Claim for unjust enrichment is often available in cases of:
(i) intentional tort or breach of fiduciary duty,
(ii) in cases of statutory torts such as infringement intellectual property,
(iii) and sometimes in suits for breach of K
34

9.
Examples of Unjust Enrichment

i. Mistakes receiving money or property by mistake is unjust enrichment
(i) Overpay a bank for a debt, mistakenly convey property, mistakenly perform a service
(ii) Mistakes Restatement Third 5 general right to recover benefits conferred by mistake
VIP in restitution
(iii) MUST BE TOTALLY CLUELESS to be considered mistake, if were uncertain then not
mistakencomplete unawareness
1. Voluntary Payment Rule - One cannot recover payments made in the face of
uncertainty
a. The key to the rule is not that plaintiff paid voluntarily, but that she paid despite
notice or awareness that she might not owe some of the money.
ii. Actual or supposed Ksunder quantum meruit, party who performs partially can recover
benefits conferred even if statute of frauds or impossibility voids K
iii. Judgments money paid as a result of a judgment, which is subsequently reversed must be
refunded
iv. Emergencies parties who reasonably provide essential goods and services in an emergency
is excused from not securing promise to pay
v. Joint obligations paying more than share of joint obligation entitles restitution from other
obligors
(i) Roommates, one pays for the others share of the rent actionable cause for rent
vi. Wrongful acts if acquire benefit from someone through theft, conversion, fraud, etc. liable
in restitution
vii. Examples of restitutionary labels
(i) Rescission, equitable liens, indemnity, constructive trust, quasi-K
B. RESTITUTION FROM INNOCENT DEFENDANTS

1. Constructive Trust: restitutionary remedy if D
a) Blue Cross Health Servs. Inc. v. Sauer (Mo. Ct. App. 1990) 619
MISTAKE
i. Facts: William R. Sauer informed the clerk that he carried Blue Cross Health Insurance and
did not have his card. In fact, his coverage had recently been terminated. The address he gave
was the PO Box of his father's business. The clerk entered the information and found a
William J. Sauer. Clerk then changed that address to the PO Box of WRS. For a few months,
Blue Cross mistakenly mailed $22,000 (6 checks) to the PO Box intended to cover William J.
Sauer's child's medical expenses. Each check had explanation of benefits and were made
payable William Sauer. The father, and WRS, and fathers business cashed the checks (they
did nothing wrong by cashing checks). Blue Cross wants $ back says D unjustly enriched by
Blue Cross mistake.
ii. Issue: Whether the defendants were unjustly enriched
iii. Rule: The remedy for unjust enrichment is restitution. A person who pays money to another
by mistake is entitled to restitution from the payee or other beneficiary of the payment. This is
true even though the mistake is due solely to the payor's lack of care, inadvertence or when
the payee shares in the payor's mistake. Generally, restitution will be ordered when a
payment is made under a mistake of fact. A payor's lack of care will not diminish his
right to recover, or somehow justify retention of the unintended beneficiary's windfall.
iv. Holding: The payment by Blue Cross to defendants, rather than William J. Sauer, was such a
mistake of fact and no circumstances disclosed by the evidence would make it inequitable to
require return of payment. Therefore, D unjustly enriched. Blue Cross wants constructive trust
as remedy but cant get since Ds spent $, cant locate assets, so must give damages as
remedy. Since not dispute of fact so dont need jury for this legal remedy.
C. MISTAKEN IMPROVEMENTS
1. Encroachments
i. -There is no bright line between encroachments and improvements.
ii. in encroachment cases, there is no unjust enrichment because there is no benefit to the
neighboring landowner.
35

2.
3.
4.
5.
6.
7.
The buy-sell remedy -- The court sets values on the land and the building, and then the innocent
landowner gets to choose whether to buy the building or sell the land.
i. Restatement Third endorses but balances the equities to determine if owner should be
forced to sell or should buy
Innocent defendant - The benefits will be valued at what the improvements cost or what they are
worth, whichever is less.
i. Normally Ds get market value of improvement = appreciation of property not cost of
improvement (which can be much higher than their worth) UNLESS D is not innocent
Not innocent defendant The cost or value of improvements, whichever is greater.
Comparative Fault -- Generally P who builds despite actual notice that she might be making a
mistake will not recover; a plaintiff who only has constructive notice (such a filing in land records that
she neglected to check) will not be barred on the ground that the mistake is her fault.
Knowing Misconduct --The improver who knows he is building on someone else's land will get no
remedy.
Modern Rule = same as Somerville majority came about to encourage development
a)
Somerville v. Jacobs (W. Va. 1969) 627

i. Facts: Ps owned lots 44, 45 and 46. P built a warehouse on what they thought was lot 46, but
it was actually on lot 47, owned by Ds. No evidence P knew the land they were improving
wasnt theirs. D discovers warehouse on his lot, P wants to keep warehouse so offers to buy
lot from D, D refuses to sell.
ii. Issue: Whether Ps can sue D to recover Ds property P made perm improvements on?
iii. Rule: Equity (COA of unjust enrichment) will grant relief to one who, through a
reasonable mistake of fact and in good faith, places permanent improvements upon land
of another, with reason to believe that the land so improved is that of the one who makes the
improvements, and that the Ps are entitled to the relief they seek in this proceeding.
iv. Holding: D has choice here and chose to give P value of property. An improver of land owned
by another, who through a reasonable mistake of fact and in good faith erects a building
entirely upon the land of owner, with reasonable belief that such land was owned by the
landowner, is entitled to recover either:
1. Give P $$ value of the cost of improvements from the landowner id D doesnt
have $$ P may force to sell land (w/ equitable lien) to enforce payment of such lien,
OR
2. to purchase the improved land from landowner for amt = value of the land without
the improvements.
Land owner can either sell the land or pay for the improvement.
b) Manning v. Wingo pg 630
i. Man died and his ex-wife still owned interest in house. The children lied to ex-wife, saying
house was being foreclosed so they could sell the house to interested buyers (who were
unaware). Years past before ex-wife found out the truth. Ex-wife sued to recover her
interest in house. Court gave ex-wife whole house (w/o explanation) subject to buyers claim
for restitution for improvements made.
D. COURT ORDERS LATER REVERSED
1. Court Orders Later Reversed
i. $$ paid or collected pursuant to the order of a court of an administrative agency, subsequently
vacated or reversed, must be refunded.
ii. Profits earned under the protection of an injunction later reversed are also subject to
restitution.
iii. Two theories of recovery here:
1. should receive the market value of the items sold or
2. the money earned in selling the items
a) State v. A.N.W. Seed Corp. (Wash. 1991) 634
36

i.
Facts: Default judgment was entered against Dt. Judgment creditor obtained a writ of
execution, seized and sold farm equipment for $16,588.50. Months later, the default judgment
was vacated. The house had been sold at auction for much less than FMV. P moved for
restitution, and the trial court entered an order of restitution for the FMV of the property,
$57,631.50.
ii. Issue: When a P executes on a judgment which is later reversed on appeal does P get the
market value of property lost or the amount = proceeds of sale?
iii. Rule: only get what state made at sale of property NOT FMV of property sold
iv. Holding: Why? State acted in good faith. Statute allowed state to sell property while appeal
pending. P wouldve not lost property if had gotten bond to protect property sale. So only get
amt D benefited by for unjust enrichment.
1. NOTE: P also couldve gotten agreement filed w/court that the property will not be
sold pending appeal
E. UNENFORCEABLE CONTRACTS AND QUANTUM MERUIT

1. Quasi-Contracts= Quantum Meruit =
2. measure of K damages when there is an enforceable K w/o a specific price term OR
3. measure of restitution when there is no enforceable K, fictional K 2 do justice & equity, no meeting
of the minds (no intent of parties), K implied in law and imposed to bring about justice and equity
4. Measuring Benefits:
i. Benefits were given on Ps request presumptive measure is FMV or amt P agreed to
ii. P can never recover more in restitution than ??????????????
a) Anderson v. Schwegel (Idaho Ct. App. 1990) 638
i. Facts: Schwegel orally agreed to restore Anderson's car for $6,000. Anderson thought the
price included everything exception upholstery; Schwegel thought it included only the body
work, which was the only work he did himself (since gave Anderson itemized list > $6K
before sent out for body work). The final bill totaled $9,800.27. Anderson paid $5,000, and
insisted that only $1,000 was due. Schwegel sued for cost of services not value to car since
the value was much less. Magistrate determined that the parties had failed to reach an
agreement and held that Anderson was L to Schwegel under quasi-contract, permitting
Schwegel to recover $4,800.27 for the reasonable value of services and materials retained by
Anderson.
ii. Issue: Whether the trial court employed a proper measure of recovery
iii. Rule: In cases where restitution is available for mistaken improvements to anothers property,
the usual measure of recovery is the value to the property of the enhancement. In quasicontract cases, like this one, a property owner has asked for the services and so demonstrated
a desire to have them, he may appropriately be held L for their value, whether they add any
economic value to his property or not.
iv. Holding: Here, Anderson either requested the services or at least didnt object when given
itemized list of repairs exceeding $6K. Thus, treat transaction as Anderson requesting for
services so must pay for services. So dont look to amount car in value. Lower court
affirmed.
a. NOTES: if no invoice sent/car owner didnt know Schwegel probably
wouldve only gotten $6K since quasi-K linked to facts that show what partys
understanding was
b) Farash v. Sykes Datatronics, Inc. (N.Y. 1983) 643 Fictional Benefit Rule
i. Facts: P and D entered into an oral contract where P would lease building 2 D after P made
certain building renovations/modifications. D never signed any K and never occupied the
building. P brings 3 COAS. (1) enforce oral lease < 1 yr, (2) enforce oral K for lease in
exchange for improvements <1yr (3) value of work performed by P in reliance of Ds
statements
37

ii. Issue: Whether P can recover for the value of the work performed in reliance of oral
agreement that was for <1yr so barred by statute of frauds?
iii. Rule: Restitution measure of value of gain to D
iv. Holding: 1st 2 COAs barred by statute of frauds. Restitution problem here since D didnt
actually receive anything of value, since never took possession of property/never took over
lease. However, receipt is a term of art, a fictional benefit. D deemed to have received since
acts were for D.
1. NOTES:
a. Prof things decided wrong since both sophisticated businessmen wouldve
known consequences of not writing K so thinks P got $ for improving his own
property
b. In NY, you can't use promissory estoppel when the statute of frauds is violation
c. FICTIONAL BENEFIT RULE
i. VIP courts apply fictional benefit rule if other party asked for it they
must pay for it
ii. However -- Restatement Third does away with this since would require
an actual benefit/enrichment to award quantum meruit.
d. PAST PERFORMANCE DOCTRINE
i. = if part performance evid K existed and therefore can take out form statute
of frauds (in some jurisdictions)
F.
DISGORGING PROFITS FROM INTENTIONAL WRONGDOERS

1. Intentional Wrongdoer = a person guilty of misconduct who acts w/notice of the underlying
wrong pg. 656 #2
i. misconduct = an interference w/the claimants legally protected interests that is tortuous or
otherwise wrongful and that leads to L in restitution by the substantive rule of this
Restatement. 51(1)
(i) otherwise wrongful = fraud, duress, undue influence, opportunistic breach of K (not
ord breaches), trespass & conversion, misappropriation of financial assets, infringement
of IP, breach of fiduciary duty, homicide, intentional & wrongful w/a donative transfer
pg. 655 note #1
2.
4.
Disgorgement of all profits = if he was conscientiously tortious in acquiring the benefit, he is also
deprived of any profit derived from his subsequent dealing with it
i. P gets all profits D made on property taken from P
(i) Courts will try (but not required) to relax the windfall to the P, N situations or
unintentional wrongdoers, as innocent parties shouldnt be required to relinquish all
profits (relaxed standard for innocent wrongdoer)
ii. Third Restatement:
(i) intentional wrongdoers are L for the net profit attributable to the underlying wrong
1. object of restitution in such cases is to eliminate profit from wrongdoing while
avoiding, so far as possible, the impossible penalty.
a. profits = use value of all property taken
b. consequential gains = gains from a subsequent transaction in which the
recipient makes profitable use of property
Ds Culpability Determines if P get Disgorgement
i. Conscious wrongdoer L for all the profits
ii. N, illegal but in good faith, Court will likely find D only L for the FMV of property since
unintentional wrongdoer
(i) Some courts might be too careful not to award all profits UNLESS intentional wrongdoer
1. Ex/egg washing case -- $$ saved on labor vs. market value of rent of property that
took/COA conversion
Apportionment =
5.
P has right of election
3.
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i.
When choice between damages & restitution, P can choose what wants to get
a) Olwell v. Nye & Nissen Co. (Wash. 1946) (657) P sold and transferred his share in company to
D, but retained egg washing machine. P stored machine near D for a little over yr. Then D took put
machine and began to use, once a week, for a few years until P discovered it. Upon discovery, P
offered to sell machine to D for $600 (1/2 orig cost). D refused saying 2 high offering $50. P sued
D to recover reasonable value of Ds use of machine. Trial Ct. entered judgment for P of $1560
(sum of Ds average labor savings from using machine) for 156 wks.
i. Issue: Whether P could recover in restitution when the D committed conversion
ii. Rule: In cases where D tortfeasor has benefitted by his wrong, P may elect to "waive the tort"
COA and bring a COA in assumpsit (quasi-K/restitution).
iii. Holding: 1st injury was violation of Ps property rights of exclusive use & #2 restitution not
about what P lost but what D gained. D knowingly took Ps property so intentional
wrongdoer. P elected to waive right of action in tort, so entitled to the measure of restoration
which accompanies the assumpsit remedy of quasi-K. He sues in restitution and receives the
D's labor savings ($1,560) since benefit D received for use of machine -- rather than
damages (Ps loss = rental value to of eggwasher, which would be $300).
1. NOTES:
a. Law & Economics -- Economic efficiency arguments against this case D
argues that P was storing it, wouldnt use it, didnt even know D was using it for
3 year
b. However Law & Economics requires voluntary transactions so remedy deters
future wrongful acts & promotes voluntary transactions
2. Why does P get to choose what he wants?
a. Laycock right that irreparable injury rule [= P cant chose only get restitution if
no remedy at law available] is gone since crts mostly side w/P and find
irreparable injury some way
b. especially when it comes to restitution, as P has right of election
c. Important calculation to think about, what remedy gets the most money
b) Edwards v. Lees Administrator (Ky.1936) 651 - D found an entrance to a cave on his land and
turned it into a tourist attraction. The cave went under Ps land but P could not access it. Crt
awarded P part of the profits.
2. Intellectual Property Infringement:

i.
c)
Trademark Infringers: are L for all profits derived from infringement BUT court has
discretion to award or
ii. Copyright Infringers: L for all damages + profits not taken into account in computing the
actual damages
iii. Patent Infringers: L only for damages, in no event less than a reasonable royalty. Court may
award up to 3xs actual damages
iv. Trade Secret Infringers: L for both actual loss caused by misappropriation & unjust
enrichment cause by misappropriation that is not taken into account in computing actual loss
Maier Brewing Co. v. Fleischmann Distilling Corp. (9th Cir.1968) 658 - P had a trademark for
Black and White scotch whiskey, D began brewing a cheap beer under the Black and White label,
and distributed the beer exclusively through certain grocer. Lower court found that D deliberately
infringed on trademark, although no competition between the 2 products, but that consumers
might think that the beer and the scotch were produced by the same company so damaged
trademark reputation. Lower Court --P awarded profits D made from beer ($34,912 from D, and
$29,849 from grocer). D appealed wanting to only pay value of license. 9th Cir. awarded profits
i. Issue: is the restrictive approach to accounting for profit appropriate?
ii. RULES
(i) Where there is infringement, but no direct competition, accounting of profits based on
unjust enrichment rationale is appropriate such an approach would remove motive for
infringement, thus deterring future infringement
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(ii) Where infringement is knowingly, willfully and deliberately done, accounting of profits
is appropriate
(iii) Where infringement is entirely innocent, an injunction would be appropriate
iii. Applied here
(i) Ds knowingly, willfully and deliberately infringed on Ps trademark, thus accounting of
profits was appropriate
(ii) Moreover profits from grocer was appropriate dollar amount of recover in accounting
for profits under unjust enrichment rationale has no relation to the damages sustained by
the P
1. Notes
a. TODAY P can go for all profits D got for infringement (restitution) or lost
profits from infringement (really damages)
b. How would it measure market value damages? - Licensing scheme, etc
c. Opportunity to discuss damages vs. restitution
i. P wanted accounting of profits (restitutionary label) for unjust enrichment
ii. D argued that there is no competition, thus no diversion of sales from Ps ,
thus no showing of injury
G. MEASURING THE PROFITS
i. usually 2 types of fights
(i) Revenue fights while we made some revenue from infringement, we also made revenue
from things we legally did
(ii) Cost fights because profits equal revenue-costs, Ds want costs to be high
ii. There are too ways of look at the apportionment of profits:
(i) Pro rata method: when you have to figure out the relative importance of the infringing
product. The infringing product is generally a separate entity. (Sheldon)
(ii) Actual profits method: looks at all the revenues and expenses attributable to the
infringing product (Hamil).
iii. Federal rule is that the conscious wrongdoer gets no credit for income taxes paid on disgorged
profits.
a)
Sheldon v. Metro-Goldwyn Pictures, Inc. (U.S 1940) 665 MGM VIP

i. Facts: MGM negotiated rights to use play but negotiation for play but negotiations for play
fell through. Then MGM deliberately used play (w/o Ps consent) as an unpublished work to
make a motion picture. Trial Court intentional wrongdoer so entitled to all profits of movie
(no apportionment of copyright). Appeals Crt should be apportionment of 1/5th of profits.
ii. Issue: Whether there can be apportionment of profits in a suit for copyright infringement
iii. Rule: The Copyright Act = infringer shall be L to pay to P damages as the copyright proprietor
may have suffered due to the infringement + all profits infringer made from infringement, or
in lieu of actual damages and profits, such damages as to the court shall appear to be just.
iv. SC: Cir Appeals court holding affirmed. Both the Copyright Act and our decisions leave the
matter to the appropriate exercise of the equity jurisdiction upon an accounting to determine
the profits "which the infringer shall have made from such infringement."
v. Issue: Whether the court properly measured profits due to P
vi. Rule: What is required is not mathematical exactness but only a reasonable
approximation is needed
(i) Where commingling of gains(when cannot separate profits from infringement from
profits generated from rightful acts ) P entitled to all profits derived from infringement.
a. Belford copyright of cookbook where the Ds intermingled copyright material
throughout the book making it almost impossible to separate one from the
other
(ii) However: If D can prove reasonable approximation: rational separation of net profits
so that no party may have what rightfully belongs to the other can deduct those amounts
out of net profits (leaving only those linked to the nexus of infringement of copyright)
vii. SC: Cir Appeals court holding affirmed. The controlling fact in the determination of the
apportionment was that the profits had been derived, not from the mere performance of a
40

copyrighted play, but from the distinctive profit-making features, apart from the use of any
infringing material, by reason of the expert and creative operations involved in its production
and direction, stars in movie- their reputation, marketing expertise, directors & filming
experts.
b) Three Boys Music Corp. v. Bolton (9th Cir. 2000) GOOD APPORTIONMENT
i. 2 similar songs love is a wonderful thing, one a minor (Isley Brothers) hit then one major
hit by Bolton. Isley Brothers sue Bolton for infringement. Jury was able to approximate that
the song accounted for 28% profits from CD and the song itself contained 66% infringing
elements. So P received 66% of the 28% of profits from song.
c) Mishawaka Rubber & Woolen Manufacturing Co. v. S.S. Kresge Co. (U.S.): 670 note 5 --- D didnt
have to account for profits generated from consumers who werent confused by mislabeling, but D
bears the burden of proving the amount of those consumers which is as often as is not impossible
to obtain
d) Truck Equipment Service Co. v. Fruehauf Corp. (8th Cir. 1976) D funded a marketing survey
which a random sample showed 20% customers purchased due to Ds infringement in attempt to
appropriate those profits. 8th Cir. Rejected this on equitable grounds stating was clearly
inadequate to deter infringement if D still was able to keep 80% of profits.
e)
Hamil America, Inc. v. GFI (2d Cir. 1999) 671 (ignore language of lost profits in this case since
thats damages court used wrong language)
i. Facts: Hamil sued GFI for copyright infringement. GFI copied one of Hamil's floral fabric
patterns and sold the garments to JC Penney.
ii. Rule: Under 504, Hamil could recover the "actual damages suffered by it as a result of the
infringement, and any profits of the infringer that are attributable to the infringement and are
not taken into account in computing the actual damages.
iii. Issue #1: Whether the district court erred in excluding an allocation of general overhead
expenses in its calculation of GFI's profits
iv. Rule: Sheldon contemplates a two-step procedure for deducting overhead expenses from an
infringer's profits:
1. Determine what overhead expense categories are actually implicated by the
production of the infringing product.
i. The infringer must show a sufficient nexus between each expense claimed
and the sales of the unlawful goods.
(i) Arrive at a fair, accurate and practical method of allocating the implicated overhead to the
infringement --- determine what overhead expense categories (rent, business,
entertainment, personnel and PR) are actually implicated by the production of the
infringing product and theres sufficient nexus between category of overhead &
production or sale of the infringing product
ii. The infringer has the burden of "offering a fair and acceptable formula for
allocating a given portion of overhead to the particular infringing items in
issue.
v. Holding #1: Sheldon's two-step approach must be applied with particular rigor in the case of
willful infringement. When infringement is willful, the court should give extra scrutiny to the
categories of overhead expenses claimed by the infringer to insure that each category is
directly and validly connected to the sale and production of the infringing product. Unless a
strong nexus is established, the court should not permit a deduction for the overhead
category. The allocation formula of a willful infringer should be held to a particularly high
standard of fairness.
vi. Issue #2: Whether the court erred when it determined that Hamil could not recover for profits
realized by GFI for their infringement
vii. Holding #2: GFI's sales to the shared customers too speculative. Double profits not sure
amount of additional customers wouldve had
G. DISGORGING THE PROFITS FROM OPPORTUNISTIC BREACH OF K

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1.
2.
Disgorgement is available in K, if consciously wrongful breach

(i) Disgorgement is attractive remedy where D withholds portion of what he promised under
the K but damages to P small
Opportunistic Breach = where D benefits more to breaching K w/P (either better offer or found
something better to do w/property)
(i) Courts lean to disgorgement in these situations, willing to give P more $
(ii) Restatement (Third): If a deliberate breach of K results in profit to the defaulting
promisor and available damage remedy affords inadequate protection to the promisee's
contractual entitlement, the promisee has a claim to restitution of the profit realized by
the promisor as a result of the breach.
a. Unavoidable breaches: are the opposite. They are where D doesnt have choice
but to breach K. No profits gained by breach. Ex/crop destroyed in drought.
a)
Snepp v. United States (1980) (678)

i. Facts: As an express condition of his job at CIA, he pledged not to divulge classified
information and not to publish any information without prepublication clearance. He
published an account of his experiences in South Vietnam without prepublication
clearance but there was no classified information disclosed in the book. The district
court awarded a constructive trust of all profits he might earn on the book. Appeals
Crt reverses constructive trust.
ii. Issue: Whether the government is entitled to a constructive trust
iii. Holding: Agent intentionally breached K w/CIA since told CIA (prior to book
release) that would clear book prior to publication.
(i) Damages to CIA are too difficult to measure since:
1. national security hard to measure in $$$. So go with constructive trust.
2. If prove gov would have to disclose classified information to prove
damages since discovery can be broader than material at issue 2 prove
infringement
3. Damages wont stop others from disclosing classified info since can
infringe n just give $ later
(ii) Court may order disgorgement when P has suffered an irreparable injury. Crt
may also order where D is intentional wrongdoer.
1. Irreparable injury occurred when Snepp failed to submit material for
prepublication review possibility of compromising info & other agents
(iii) A constructive trust protects both the government and the former agent from
unwarranted risks. The remedy is the natural and customary consequence of a
breach of trust. If the agent publishes material that has not been reviewed in
violation of his fiduciary and contractual obligation, the trust remedy simply
requires him to disgorge the benefits of his faithlessness.
iv. Dissent: If only published unclassified info then can be no unjust enrichment has
constitutional right to publish
b) May v. Muroff (Fla. Dist. Ct. App. 1986) 683

i. Facts: D sold land to P then seller D improperly sold fill from the land to 3rd party for
$240,000. Trial court found value of land by $122,067.
ii. Issue: What is the purchaser entitled to recover
iii. Holding: The seller's breach was deliberate so shouldnt profit from Ds wrong and
enjoy windfall profit of $117,933. P purchaser, under TOC, is entitled to the fruits of
this wrongfully received windfall. P purchaser entitled to the value of the materials
removed, determined from record, at $240,000. D breached K. The trial court erred
since measuring the P's injury --restitution awards what D earned by selling the fill
(his "unjust enrichment").
F.
RESCISSION
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1.
2.
Rescission Defined: A remedy for Ds who substantially [Third Restatment materially] breach K
court cancels K & gives back each party what they initially gave
Election -- Ps Choice: P may pick to rescind K or to get damages
i. EXCEPTIONS:
(i) value changed of exchanged property then P can only rescind K if P would lose $ by
performing K
(ii) generally P may not rescind Ks where P is $ lender or Creditor -- and debtor fails to pay
a.
3.
assumes unsecured transaction therefore there is no collateral attached to loan

so cant take Ds property
i. K FULLY PREFORMED & ONLY OWED $$ - cant rescind
b. If secured transaction - could take collateral since D preapproved
(iii) P cannot rescind part of contract all or none
(iv) P cannot rescind if breach was not substantial or in Restatement Third breach was not
material
(v) If property exchanged fluctuates in value P must request rescission promptly after
learning grounds for breach w/other property still crts are less likely to grant the longer
P waits to demand after breach
Why Choose Rescission: simplicity (in most cases dont have to determine value of anything), persons
preference may not be reflected in $$ terms, P lost confidence in D & transaction (exception w/$ - see
below) helps parties where risk involved & want to walk away from deal
i.
a)
Other Grounds for Rescission (since in Restatement Third)

(i) Fraud
(ii) Undue influence
(iii) Mutual mistake of fact
(iv) Unilateral mistake not relied on
(v) Duress
Mobil Oil Exploration & Producing Southeast, Inc. v. US (U.S. 2000) 686
i. Facts: 2 oil companies paid government $156M in return for lease Ks which gave them rights
to explore for and develop oil off the NC coast at a later date. Sometime later, Congress
passed a statute which disallowed oil companies to drill off NC Coast. The two oil companies
now seek restitution for $156M. Gov acknowledges breach but says oil companies not injured
(since clause in pre-existing law NC could veto any drilling anyway) so shouldnt get $ back.
ii. Issue: Whether the government is subject to rescission remedy?
iii. Holding: Gov made total breach [not material breach] of their K w/P. Therefore, P has
right to elect to rescind K and get back $ they gave gov. Therefore, irrelevant whether P
injured or not.
1. Note: P couldve gotten reliance damages but problem is that the pre-existing law
gave NC veto power over K so P wasnt really damaged
2. P here would lose $156M if had to fulfill K since risk of not being able to drill (NC
veto power) now is nearly certain so value of what received right to drill oil
changed significantly
Example of Risk Termite House

b) Cherry v. Crispin (Mass. 1963) 688 note #3
i. Sellers fraudulently conceal house they sold Ps had termites. Few days later Ps discover
termites and demanded rescission. Property was not really damaged by termites (only $1000
to get rid of). Crt orders rescission of K.
ii. Ps got $ paid for house rental expense for time in house. Seller gets house + rent for amt
time Ps were in house.
Example of Bad K P gained on Ds Breach
c) Bush v. Canfield (1818) 688 note #4
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i.
K was 2,000 barrels of flour delivered to New Orleans for $7/barrel. Flour priced then to
$5.50/barrel. However, seller failed to deliver flour. Crt rescinded K. P gained on Ds breach.
Losing Contracts Where the Benefit Cannot Be Returned
d) Boomer v. Muir: pg 692 note #1
i. Damn was 95% complete when Boomer (sub contractor) abandoned K however only did so
after Muir (gen contractor) failed to deliver the supplies to complete damn. Jury found that
Muir breached K when failed to deliver supplies.
(i) Boomer was to be paid $333K for completed damn. However, Boomers expenses for
completing damn were well above that, he wouldve lost $267K upon completing damn.
ii. CRT: K rescinded since Muir substantially breached. Boomer gets back expenses put into
damn. Muir gets value of damn expenses if damn completed.
1. BOOMER RULE: P seeking restitution rescinds K and sues in for the value of
benefit D received (value of cost of 95% finished damn which is measured by the
cost it took to build (actual value)). D cant rely on K price value because K has been
rescinded.
2. EXCEPTION TO BOOMER: If P has fully performed and D owes only money, P
is limited to the K price and cannot recover rescission.
3. BOOMER OUTCOME IMPOSSIBLE W/RESTATEMENT THIRD note #7
pg. 694
a. Right to performance based damages is measured by either reliance
damages or value of uncompensated K performance but maximum value
cannot be > K price. Consequential damages for loss caused by breach may be
added to either one.
E. CONSTRUCTIVE TRUSTS [remedy gives restitutionary rights in specific property]
1. Constructive Trust is a Remedy for Unjust Enrichment (coa)
2. The purpose of a constructive trust is to give restitution to P 4 Ds unjust enrichment D received as
result of taking Ps property
i. Any claim that arises in unjust enrichment can support a constructive trust if the enrichment is
received in the form of identifiable property or if it remains identifiable as the proceeds of
such property.
1. EXCEPTION: Bankruptcy D must be intentional wrongdoer, fraud not just
mistake
a. So doesnt protect property in constructive trust from all claims of unjust
enrichment
i. CAN FILE B4 BANKRUPTCY OR JOIN PROCEEDING
3.
4.
The irreparable injury rule (must be no adequate remedy at law) is commonly ignored in constructive
trust cases.
WINDFALLS (appreciation/profit amt) TO P IN CONSTRUCTIVE TRUST
i. There is a potential for Ps to get windfall (appreciation/profit amt) in property held in
constructive trust since remedy for unjust enrichment this is determined by court acting
within their discretion through a balance of equities analysis
1. Intentional Wrongdoer most likely to get all or some of windfall/appreciation
i. However if D put lot of work into getting appreciation of asset- may not
give or may give only a little (balance equities)
2. Mistake less likely to get windfall
3. Bankruptcy also less likely to get windfall of appreciated asset more likely just to
get value of asset
ii. If get windfall can only get windfall amt proportionate to what was invested
(i) Ex/if had $20K taken, D invested $30K now investment worth $50K can only get
windfall amount proportionate to your interest/pro rata interest of $20K
44

iii. RESTATEMENT 3rd = tracing may be limited where the property traced is grossly
disproportionate to any loss on which the claimants right to restitution is based
58(3)(c)
5.
6.
7.
8.
BURDENS OF PROOF :constructive trust P must trace the property taken from herself to the
fraudster to the identifiable property she wants to claim in constructive trust.
Identifiable Property Rule= For a constructive, you must be able ID property that should be subject to
the trust
Tracing principle= proves P is equitable owner of property so property will be excluded in
bankruptcy proceeding of person in possession of property allowing P in restitution to go after Ds
unjust enrichment when property in hands of another party or Ds, when property has changed form
i. Tracing Requirements
1. Unjust Enrichment (COA)
2. Identifiable Property
ii. Tracing Fictions
1. D spends own $ on intangibles first on all non-investments & saves Ps $ in
account
a. P CAN REBUT THIS IFF by clear & convincing evidence (would do if
more $$ came into account)
2. Lowest intermediate value
i. Assumes D uses its own $ to replenish account so P gets lowest
intermediate value in account from initial deposit to current date
ii. Unless P proves put more Ps $ in account then P entitled to that too (clear
& convincing evidence P proves)
iii. In Investments P can only claim portion of investment = to what
lowest intermediate balance was before investment
3. D spends Ps $ first on all investments & leaves own $ in account
4. D admits to using Ps $ to replenish account P gets all money D admitted to
Defense to Tracing: Bona fide Purchaser for Value [BFPV] = If asset is in the hands of a bona fide
purchaser for value, tracing stops, and you can't get the asset.
i. BFPV Requirements:
1. Consideration (you have to pay a reasonable amt for property)
i. Property cant be gift
ii. Property cant be purchased unreasonably low
2. Must act in good faith (you can't be a part of the conspiracy)
i. Cant know or have constructive knowledge (reasonably shouldve
known) person who gave you property was not rightful owner Newton v.
Porter
ii. BFPVs who meet requirements win/have superior rights to property to P and dont have to
give their property to P
1. VIP CASH/Cash Equivalents ARE NOT TRACEABLE BFPV always wins if
property taken from P was cash/cash equivalent even if obtained in theft/knew
about theft etc. no exceptions to this
a. Cash equivalent = bonds, etc.
9.
Equitable ownership rule = P who traces her property to identifiable asset is entitled to an ownership
interest in the asset, and not just to a judgment for her share of the value of that asset.
i. Court puts property taken from P in a fictional trust so P is equitable owner of assets held by
D.
ii. D cant get rid of assets by giving away since P owns the assets (via constructive trust)
iii. EXCEPTION TO THIS RULE: Bankruptcy
10. Equitable Lien = D keeps title to identifiable property but P has a lien on property and once D sells
property P will get a fixed value in property (up to 100%) given through Ps fictional lien process
i. Any P entitled to a constructive trust can choose an equitable lien instead.
45

ii. Lots of times courts force Ds to sell property if dont pay P by certain date (based on state
statute)
11. Bankruptcy
i. Std public policy once bankruptcy begins there is an automatic stay
1. Automatic stay = no more litigation against debtor until proceeding commences or
jump in bankruptcy proceeding
ii. Hierarchy of Asset Entitlement in Bankruptcy Proceedings
1. Secured creditors get paid before anyone below
2. Administrative Preference people who statutorily get greater preference
i. (written in statute ex/lawyers in bankruptcy proceedings get preference,
labor union employees get unpaid wages preference)
3. Unsecured Creditors everyone else
i. last to be paid so if an assets left get pro rata share/interest on whatever
left
ii. if dont have constructive trust then P becomes unsecured creditor
iii. EXCEPTION: Property held in constructive trust due to fraud, or intentional wrongdoer
cant just be mistake [so doesnt protect property in constructive trust from all claims of
unjust enrichment]
1. Why? Court trying to balance the equities to give others who are owed $ in
bankruptcy proceedings what they are owed as well. Dont want to give too much of
the pie away to 1 party if bunch owed
2. Would never say property held in constructive trust takes priority over
unsecured creditors since treated as Ps property therefore not entitled to go into
bankruptcy proceeding
iv. EXCEPTION 2 EXCEPTION: 6th Cir wont allow property to go against bankruptcy claims
if filed constructive trust after bankruptcy proceeding
1. Must other circuits dont follow this rule and all if intentional wrongdoer, fraud
Paoloni v. Goldenstien must ID property getting constructive trust
Fraud by Doggett (purchasing life insurance contracts) $$$ deposited in Chambley corp which
deposits into Iglesias family trust trust purchases condo where Doggett lives
No evidence trust was BFPV since evidence trust knew that it was purchase w/fraudulent funds since
created to hide fraud.
Investor Ps get condo via constructive trust Dockett must pay rental value for time spent in condo
If proportion of fraud $ traced to condo would get %age of property ownership in property therefore get
equitable lien
Ps get equitable lien & permanent injunction on property so D barred from disposing on any property
connected w/trust
TRACING BETTER THAN DAMAGES allows you to get actual property taken from you dont have to wait to
get your $$
(1) unjust enrichment + (2) identifiable property =
Ruffin v. Ruffin LOTTERY TICKET CASE NO IDENTIFIABLE PROPERTY
FACTS: W files for divorce Sept 20th Crt orders H to pay $200 wk in child support for remainder of
divorce proceedings H never pays sept 28th H gets lottery ticket then wins lottery W wants $$
from lottery ticket profits since says H bought w/$$ owed in child support
CRT: W cant trace $4.9M lottery winnings so doesnt get no evidence $$ used to purchase lottery ticket
was $$ owed in child support. Also, H bought lottery tickets throughout marriage so nothing unusual/out of
ordinary to link to Ws child support owed
o Property must be distinctively traced
o Would be different if could show the only reason didnt pay child support was cuz bought
lottery ticket
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SIDENOTE: Even if could trace $$ to Hs lottery ticket W probably would just get %age of profit owed since
getting all winnings would result in windfall to P since GROSSLY DISPORPORTIONATE
RESTATEMENT THIRD 58(3)(c)
GROSSLY DISPROPORTIONATE new Restatement Third coming out Ps right to property may be limited
where property traced when gain grossly disproportionate to any loss on which Ps claims right in restitution
--------- Grossly disproportionate not defined so can mold meaning to your case --------D saves $$ instead of paying debts can be a form of restitution owed to P
In Re Leitner
FACTS: Leitner embezzled large sum of $$ from Wetherhill & L.G.W. who claimed beneficiaries to
constructive trust since Leitner got $$ to purchase home from wrongdoing but didnt take to court until
after Leitner filed bankruptcy
CRT: Constructive trust = when date of transaction gives rise to trust NOT DATE OF JUDICIAL
DECREE
o According to state law constructive trust = date of wrongdoing (totally depends on state)
In Re Erie Trust Co. LOWEST AVAILABLE BALANCE
Estate $$$ 23.5M wrongfully obtained by executor of dead persons estate put it into Erie trust
which became insolvent Erie Trust became insolvent Receiver (bank) appointed by court (who
controls/possess company receivership) Erie (D) bankrupt so Ps (beneficiaries of estate) sued receiver
who possesses company want priority in estate
CRT: although Ps couldnt trace $$ into particular fund or bank account still entitled to lowest level of
cash (or cash items in account) FROM TIME CONVERSION OCCURRED & WHEN SECRETARY
TOOK
NEGLIGENCE NOT ENOUGH NEED SOME TYPE OF TORT =
FRAUD/CONVERSION/MISREPRESENTATION
Rogers v. Rogers --- Bonafide Purchaser of Value
H gets LE insurance policy n makes W1 beneficiary part of settlement in divorce W1 would remain
beneficiary of H LE policy H gets married W2 cancels W1s LE policy n gets new policy for W2
then dies W1 claims beneficiary instead of W2
CRT: W1 possessed equity in asset of W2 because policy 2 was a replacement for policy 1 and
therefore is traceable.
o Courts could go either way usually pick which result is more equitable
In Re-JD Services
Subsidiary deposited $7,250 check in Bank of America account. BofA improperly coded check for
725,000. Debtor noticed this and transferred $800K into a separate account. Parties agreed extra $$ was
put into account NOT IN BAD FAITH shortly after BofA discovers error places hold on debtors
account (now $ 717,000). Debtor added $6.5M in new $$ in account
Issue: What is correct measure collectible balance or available balance?
2 ways to measure $$
o Collective Balance: look at amount available on deposit (even those cant withdraw yet cuz have
holds)
This would give BofA $717,750
o Available Balance: actual funds available which can be withdrawn
This would only give $394,460.47
47
CRT: Available balance more accurately reflects/traces funds in account rebuts tracing fiction
[what court really trying to say is that $$ isnt there for D to spend since there are holds on it so debtor not
really spending his own $$]
o NOTES:
this rebuts fiction that D spends $$ first
since hold on new $$ initially placed in account so effect is lowest intermediate balance
D can spend
BANCRUPTCY CASE n EXTRA $$ in ACCOUNT BY MISTAKE SO INOCCENT D
Therefore requires higher threshold & only a mistake so $$$
In Re Mesa
Debtor Mesa & McKay buy home in FL debtor Mesa places his interest of home as exempt
property under homestead laws in FL
o Then Mesa took out loan on home for home improvements but used $$ to finance new business
then McKay (who worked for Travelers insurance) fraudulently use Travelers checks & wrote
checks to mother & construction contractors
o Mesa testified that got on stand said didnt know about McKays fraud
CRT: Finds debtor Mesa knew about fraud
o Travelers gets equitable lien rather than constructive trust 4 improvements made 2 house
w/unjust enrichment since those were traced to home improvements rather than for mortgage
on home
o BUT didnt buy house w/wrongfully acquired funds so no constructive trust
o = get equitable lien 4 value of improvements
DISGORGEMENT vs. CONSTRUCTIVE TRUSTS
Disgorgement must show P earned profits from fraud = causation profits derived from fraud BUT
DOESNT NEED TO SHOW WHAT HAPPENED 2 $$
Constructive Trust must trace property from herself to fraudster to property wants to claim
F.
EQUITABLE SUBROGATION = SUBSITUTION
Subrogee
Subrogor 1st Debtor (debtor owes subrogor 4 $ debt)

2 subrogee pays off subrogor 4 amt of debtors debt then steps in as party
owed for debt $$ (rights to debt)
nd
SUBROGATION
1. Subrogee made payment to protect his/her own interest
2. Subrogee not a volunteer
3. Subrogee was not primarily L for debt
4. Subrogee paid off entire debt
5. Subrogation would not work any injustice to rights of the junior lien holder
Mort v. US
IRS filed notice for tax lien of $33,083 w/county to collect for Myers unpaid income taxes Property put
in a trust Belmont made a loan 2 trust (which was secured deed) & $$ used to pay the original loan
the remainder was used to pay slightly more than $2,000 of tax lien
Belmont purchased property w/o knowledge of lien, title company did not uncover as well. Then Belmont
sold property to Mort Mort learned about IRS lean few months later. IRS seized land .
CRTS: claim dismissed Morts should sue title company 1st 4 malpractice (since Morts are equitable
subrogation since took over title)
o MORTS (subrogee) Belmont (subrogor) Myers (debtor)
o Then Morts (subrogor) Myers (debtor)
48
So have superior claim to debt of Myers than IRS Belmont/Myers transaction predated IRS lien so Morts step in for Belmont and priority over Myer debt
EQUITABLE SUBROGATION person who pays off incumbents lien gets same priority position as
previous holder
NOT VOLUNTEER want to get something out of stepping in for debtor
National Bank & Trust Co. v. Weyerhaeuser Co.
State of Illinois used bank 2 manage its investments. Someone mishandled states $$, offering it to
Weyerhaeuser in exchange for companys shares. Mistake cost $70K. Either bank or Weyeraeuser made
mistake
Bank paid debt for state IL then stepped in and sued Weyerhaeuser claiming had right as banks
subrogator to sue Weyerhaeuser for breach of K Crt upheld allowing bank to sue (as if state of IL)
G. DEFENSES & RIGHTS OF THIRD PARTIES

Newton v. Porter Bonafide Purchaser of Value
FACTS: thieves stole $13K bonds cashed them 1 thief Warner invested $2K in bond & mortgage
which he assigned to his wife
Thieves can convey title or items that are like cash bonds BUT IF BFPV give CASH person who
had property stolen cant get cash traced BFPV NEW OWNER OF CASH CANT TRACE CASH
However, lawyers in this case given cash by thieves for legal services can get cash/bonds from
lawyers since Court doesnt believe BFPV.
EXCEPTION lawyers in this case CONSTRUCTIVE KNOWLEDGE = reasonably shouldve known
what was going on
Banque Worms -- Payment for Value
FACTS: Bank mistakenly wired $1,974,267.94 on behalf of Spedley into account of Banque Worms
Spedley initially asked Bank to wire $$ into account Banque Worms then asked Bank to stop payment
and re-route $$ to Natewest bank. Bank mistakenly disregarded 2nd Spedley request and transferred to
Banque Worms account. THEN Bank (that afternoon) wired another $1,974,267.94 to Natwest. [so paid
double since paid funds to both banks from Spedleys account]
RULES: Two Rules
o MISTAKEN FACT DOCTRINE = $$ paid under mistake of fact may be recovered unless
receiving party of payment can show caused detrimental reliance/changed position to their own
detriment +
o DISCHARGE OF VALUE RULE= only have to show you received $$$, 3rd party who receives
$$ as result of mistake of 1 or both parties to original payment of debt transaction in good faith in
ordinary course of business
If other person gets $$ cuz of debt you owe you have to suffer consequences cant
recover payment
CRT: Bank must pay for wrongful transfers since were asked not to transfer so must pay for $$ transferred
when asked not to
THIS CASE DIFFERENT THAN BLUE CROSS CASE BLUE CROSS NOT DEBTOR
H.
ANCILLARY REMEDIES CONTEMPT
Ancillary Remedies = Ds often dont perform so dont pay damages awards, dont comply w/injunction
so ancillary remedies force Ds into compliance
CONTEMPT
49

1.
2.
Civil Contempt notice and opportunity to be heard is all thats required

a. Compensatory civil contempt = if D fails to pay judge orders D to pay Ps injuries incurred
from Ds noncompliance (damages = amt fine 4 noncompliance)
b. Coercive civil contempt = D disobeys court crt punishes by giving fine or jail to force
compliance however D must be allowed to get out of if want can be fine schedule
1. Party must have ability to purge
2. D disobeys court injury to court/state
Criminal Contempt notice, opportunity 2B heard, jury, beyond a reasonable doubt, need formal
indictment
a. Ds disobedience treated as a crime [via statute] criminal sanction in form of fine or criminal
penalty noncompliance is crime under state/fed law)
i. Could be fine or incarceration but disobedience treated as crime to state
ii. No ability to purge
iii. DIRECT CONTEMPT = dont necessarily need to have right to procedural crim
procedure if violation happened in court
International Union , United Mine Workers v. Bagwel indirect crim contempt (applied narrowly)
Court entered injunction against union, prohibiting from obstructing the right of people to come and go.
Union continued to ignore injunction sometimes using violent means. Crt levied $64M in fines for
contempt, $12M which went to company. Eventually company & union settled, fines vacated. VA crt
refused to vacate its portion of fines.
ISSUE: Were fines coercive contempt?
CRT: How to determine which is which
o Turns on character and purpose of the sanction involved
o Contempt sanction is considered civil if remedial & 4 the benefit of the complainant
o Contempt sanction if its punitive, to vindictive the authority of the court
FIRST inability to purge
o Although fine schedule was imposed not coercive civil contempt since so no ability to purge
cant avoid fine through further compliance
EX/If court just had hearing & had proceeding that had all criminal procedure that would
be due then could be okay to have criminal
SECOND indirect so need either jury (if criminal) or judge (if civil) to determine facts
o Direct Contempt violation happens in court if judge delays in punishing until completion of
trial due process requires Ds right to notice & hearing are respected
o Indirect Contempt happens outside court if have indirect judge needs to determine facts so if
criminal then need jury to determine facts
Discrete, readily ascertainable acts, such as turning over a key or payment of judgment
Fines not coercive since Ds had no ability to purge once fines were imposed
NOTES:
1st injunction is issued and D found in contempt of injunction then sent to jail since not for acts in
future, not future punishment but instantaneous, every second in jail is second decided not to comply,
second decides to comply out of jail
School teachers Middletown NJ teachers strike 3 judges summoned teachers in
alphabetical order & gave them choice of returning to work or going to jail more than 200
were sent to jail some as long as 4 days
US v. Yonkers Board of Education coercive contempt

(1) could judge go too far in enforcing contempt?
(2) how far can noncompliance go?
Crt held that city had built all its public housing in black neighborhood and did
so for purpose of maintaining residential segregation
50

o
o
o
o
o
ORDER: city must designate sites for 200 units of public housing in
white neighborhoods
City negotiated w/court for 1 year then consented to building 200 units
political pressure after that and asked court to revoke decree to
consent court would not
Judge ordered city to enact ordinance that paralleled consent decree and
ordered $500/day fine imposed on every council member would failed
to vote for the consent decree based ordinance(fines totaled $26.8
billion in 4 wks)
City council voted against 4/3 and court found 4 to be in civil contempt
SC refused to reverse fines went back to trial court had to pay
fines as incurred. City eventually got support from citizens to comply
as workers began to be layed off in order to pay fines incurred by
noncompliance
Anyanwu v. Anyanwu
Nigerians who lived in US for 20 years had 2 children dual citizenship in Nigeria
W claimed domestic violence H filed for divorce in Nigeria went back to Nigeria H refused to let kids go
to US W goes 2 USA wants to get kids
W gets court order to bring back children, H didnt want to comply
Court threw H in jail for contempt until complied and brought back kids. 4 years later
H claims duress since cant produce kids, since in jail
BURDEN OF PROOF ON PERSON IN JAIL 2 PROVE ONGOING CONFINEMENT NO LONGER
SERVE ANY COERCIVE PURPOSE
Perpetual Coercion = substantial likelihood confinement will result in compliance
Will further confinement coerce compliance?
o (1) more than just being in jail a long time
o (2) out of job/out of liberty
Sometimes courts require showing an attempt to comply or reasons why wont
comply
FEDERAL WITNESS noncompliance of federal witness fed court cases 18 month max in confinement (if
refuse to testify)
Chadwick v. Janecka divorce case, had $$ in offshore accounts, refusing to give $2.5M to W. Was ordered in
contempt until gave $ back to W sat in jail 14 years then court decided sitting in jail has no coercive effect
Griffin v. County School Board -- Anticipatory Contempt
Griffin was D in Brown v. Board 9 years prince Edwards county closed public school & gave tuition grants to
private schools
Crt ordered county to re-open public schools & stop issuing grants for private school. Court failed to order
not to issue checks for next years grants so county worked around clock and sent out all grants for next
year
COURT FINDS COUNTY IN CONTEMPT even though no injunction ordered under 18 U.S.C.
401(3) federal contempt statute remaining subject matter of litigation is disobedience 2 court
Why? Anticipatory Contempt removing the subject matter of the litigation (which would probably
be enjoined) before court makes order is disobedient to courts lawful writ, process, rule, order,
decree or command
o Ballsy of court couldve just ordered restitution
Kliener v. First National Bank
Judge was under advisement to determine if communications between bank & class action Ps should be forbidden.
During that time bank talked to Ps and Banks lawyer said judge probably wouldnt like it.
Judge voided opt out agreements, assessed costs & attorneys fees to the Bank, and fined & disqualified the
lawyers
51
Walker v. City of Birmingham -COLLATERAL BAR RULE (this doesnt apply to civil contempt)
Collateral Bar Rule = Injunction is deemed to be valid even if later found 2B invalid cannot collaterally
attack the injunction
Cant disobey and then go to courts to challenge allege unlawful UNLESS injunction is invalid on its face
devoid of law its face OR court lacks jurisdiction
Once clear injunction is unconstitutional Walker injunction cannot be attacked in a prosecution for
criminal contempt. The criminal offense is complete when D defies court order. It doesnt matter whether
court right or wrong offense is not undone if the injunction is later reversed
Planned Parenthood Golden Gate v. Garibaldi (Cal. Ct. App. 2003)
Courts created buffer zone an injunction was entered against Operation Rescue of CA (ORC) & Robert Cochran.
Court created buffer zone amt feet must stay away from clinic
Lower court specifically named Ds & all persons acting in concert w/Ds & all other persons w/actual
notice
Appeals Court: strikes down all person w/actual notice since wants to avoid enjoying all people
NEED NOTICE = cant just enjoin everyone must show acting together look for evidence who is acting in
concert w/D actual notice provision is not enough
V. REMEDIAL DEFENSES
Remedial defenses shifts to whether remedy available at all shifts to party in defense of remedy most
defenses are available laches limited to equity
UNSCIONSABLE = courts of equity wont enforce unfair deals outside of sale of goods only available in equity
if sale of goods in legal damages or equity
Muhammad v. County Bank
Lower court finds adhesion K since prohibited class action claims in arbitration & class-action claims in
court since other party involved has no ability to negotiate its terms
Arbitration clause had class arbitration waiver crt found unconscionable but said clause is severable
from rest of agreement so rest of K okay
Interest rate really high BUT since had to pay back in 6 months
Rule: Arbitration agreements covered by the Federal Arbitration Act shall be valid, irrevocable, and
enforceable save upon grounds as exist at law or in equity for the revocation of any K.
o Generally applicable K defenses, such as fraud, duress, or unconscionability, may be applied to
invalidate arbitration agreements.
Holding: Not inherently unconscionable on its face -- As a matter of generally applicable K law, it was
unconscionable for Ds to deprive P of mechanism of class-wide action, whether in arbitration or court
litigation.
o Spirit of Bargaining Power = bank & person so uneven bargaining power
o Economic Duress = compelled economically since payday loan
o Public Policy = under public policy class arbitration is unconscionable since amount $ involved
charged at very high interest rate but time to pay back quick so get little $$ per person = no one
would go to court 4 little amount
SUBSTANTIVE K TEST
Courts look at take -it-or-leave-it nature or the standardized form of document &:
(1) subject matter of the contract,
(2) parties' relative bargaining positions,
(3) degree of economic compulsion motivating the "adhering party," and
(4) public interests affected by the contract.
52
This factor requires the determination of whether the effect of the class-arbitration bar prevents P from
pursuing her statutory consumer protection rights & 2 shield Ds from compliance w/law.
Adhesive Ks there will always be procedural so must analyze that THEN go 2 second substantive 4 part test
Unconscionability = usually have both procedural & substantive
Procedural = had K made could u negotiate? Was K overall unfair/unenforceable?
Substantive = adhesion subject matter unfair substantively bargaining power, public interests
Pinter v. Dahl UNCLEAN HANDS OPPOSITE FROM EQUAL FAULT
Securities Act requires registration of securities Pinter was oil & gas producer who agreed to acquires leases to
drill wells on leases on behalf of Dahl & other investors & to operate wells Dahl invested $310K of his own
$$ & then got 11 other friends to invest $7.5K each. Wells turned out to be worthless. Dahl & other investors sued
Pinter seeking rescission on ground investment hadnt been registered w/SEC.
Registration of SEC depended on whether the securities had been sold as part of public or private offering
ISSUE: whether the in pari delicto defenses applies
UNCLEAN HANDS DOCTRINE: Ps participated in some of same sorts of wrongdoing as D
SC Not Pari Delicto need to see if can raise in securities law since securities case law can deter
Ds but if Ps will also be deterred from brining suit & would harm to public THEN apply 2 factors
below
CAN RAISE PARI DELICTO WHEN:
o (1) if Ps actively participated P bears at least = responsibility for violations (if yes then check
#2 factor)
o (2) preclusion of suit would not significantly interfere w/effective enforcement of the securities
laws & protection of investigating public
Wrongful conduct must be directed at D not 3rd party to be barred from unclean hands
Beelman v. Beelman = P & H fraudulently transferred their house to his brother 2 save from a tax lien. After H
died IRS went away P asked house back. Brother-in-law refused court imposed constructive trusts. P wasnt
barred against unclean hands cuz fraud was against IRS not brother-in-law
Illegal Ks Crts wont enforce Ks no unclean hands just wont enforce at all
Co-Conspirators court will not serve referee between co-conspirators
Geddes v. MillCreek County Club Inc.
FACTS: Ps sue for golf-balls coming on their property which off 5th whole
Facts: A golf course was planning to adjoin Ps' property. The designer changed the plan so that, instead of the
plaintiffs' house facing other houses, it would face a fairway. Ps agreed to this plan, designer altered his plan.
Issue: Whether estoppel is an available defense
Rule: Where a person by his or her statements and conduct leads a party to do something that the party would not
have done but for such statements and conduct, that person will not be allowed to deny his or her words or acts to
the damage of the other party. To establish equitable estoppel, the party claiming estoppel must demonstrate
that:
(1) the other person misrepresented or concealed material facts;
(2) the other person knew at the time be or she made the representations that they were untrue;
(3) the party claiming estoppel did not know that the representations were untrue when they were
made and when they were acted upon;
(4) the other person intended or reasonably expected that the party claiming estoppel would act upon
the representations;
(5) the party claiming estoppel reasonably relied upon the representations in good faith to his or her
detriment; and
53

(6) party claiming estoppel would be prejudiced by his or her reliance on the representations if the
other person is permitted to deny the truth thereof.
-Although fraud is an essential element, it is sufficient that a fraudulent or unjust effect results from
allowing another person to raise a claim inconsistent with his or her former declarations.
Holding: D's estoppel claim is meritorious. Injustice would result in allowing Ps to bring these claims. Ps, by their
conduct, induced or encouraged Ds to design and build the 5th hole. For Ps to assert these claims now would be
inequitable and damage Ds.
-Estoppel Rule:
(1) An act, statement or omission that is inconsistent with a right later asserted; and
(2) other party acted in detrimental reliance.
Waiver = everything in #1 w/o detrimental reliance
Carr-Gottstein Foods Co. v. Wasika Inc. WAIVER
Safeway taking over lease w/prior grocery store safeway sought/got assurance from landlord that no violations of
lease Then landlord files suit 4 violations in lease relinquished in right
SIDENOTE: Some courts require waiver to be explicit, not implied

o Waiver = if involving constitutional rights must be explicit & knowing intentional waiver that
you are giving up your constitutional rights
o This case also couldve claimed estoppels since Safeway acted in detrimental reliance
LACHES
Party who delays bringing claim can be barred from equitable relief
o (1) unreasonable delay in bringing suit
o (2) prejudice 2 D as result of delay
2 types of prejudice:
Evidentiary prejudice: delay makes different for D 2 defend itself since
evidence available es the longer delay in bringing suit
Economic prejudice: D invested time, energy, $$, expertise P now wants 2B
enjoined
-Excuses for Delay
o -Settlement negotiations
o -Concealment of infringing conduct (wrongful conduct hidden from P)
Remember: delay must be UNREASONABLE!
Not knowing that you had a lawsuit is not an excuse.
Pro-Football Inc. v. Harjo
Lanham trademark act allows anytime can bring suit of trademark infringement. Native Americans brought suit
against redskins trademark. Redskins said prejudiced.
Lower court -- Date requirement redskins trademark disparaging to Native Americans only from date initially filed
& evidence prejudice no one who was initially disparaging, economic prejudice since football team would
not have trademark prejudiced since invested lots $$ in trademark
Pro-Football, Inc. v. Harjo (D.C. Cir. 2005)

Rule: Laches is founded on the notion that equity aids the vigilant and not those who slumber on their rights. This
defense requires proof of (1) lack of diligence by the party against whom the defense is asserted, and (2)
prejudice to the party asserting the defense.
Pro-Football, Inc. v. Harjo (D.C. Cir. 2009)
Issue: Whether laches was an available defense
Holding: A finding of prejudice requires at least some reliance on the absence of a lawsuit. Laches requires only
general evidence of prejudice, which may arise from mere proof of continued investment in the late-attacked
mark alone. The lost value of these investments was sufficient evidence of prejudice for the district court to
54

exercise its discretion to apply laches, even absent specific evidence that more productive investments would in fact
have resulted from an earlier suit.
55

STATUTE OF LIMITATIONS:
statutory period for filing suit, you have to file b4 period over
question: how to know what date is? To measure, know when it begins usually when COA
accrues, when the facts give rise to an actionable cause, then thats when clock starts doing.
o
when wrongdoing happens but injury doesnt manifest until later, some instruments help
(Disc, or continuing violations)
Most courts say to look at similar statute of limitations
Courts have created doctrines that try to make it fair for plts in situations
Continuing violations what if plt didnt bring suit, but there is continuing violations? courts say that
plt can assert the last violation
Discovery rule go to doctor and they dont diagnose a cancer. SOL for MedMal are short. May be
time barred. So court created discovery rule.
Fraudulent concealment what if they hide the fraud? SOL doesnt accrue until find out.
Klehr v. AO Smith
o
Federal Statute case. RICO has no SOL in case, so court used SOL from simiar act. (4 yr
SOL)
o
Def engaged in wire fraud by selling silo to plt, sayin silo would limit the oxygen exposure.
Didnt live up to it mold cows ate mold food.
o
The silo sold in 1974, suit not till 1993.
o
CONTINUING VIOLATIONS RULE On x date you have wrong occurred; so long as
there is violation continuing, then you have a claim.
with every new violation there is a new window for claim.
Def engaged in continuing violations (ie the mail and wire fraud)
o
SCOTUS RULE: If there was no injury in the time you filed, you cannot recover And for
all the continuing violations that occurred, you can only recover from the 4 year SOL period.
continuing violation must have continuing harm.
o
Note:
Cumulative violations: sometimes takes many violations to breed cause of action.

ex. hostile work environments where over time many violations cause an act. SOL
for this is 300 days. Federal Emp discrimination allows for recov for up to 3 years.
But must file within 300 days.
Period of embezzlement: 7th circ says thats not cumulative violation.
Pay in Equity b4, each paycheck was new SOL period. Overruled first
paycheck is when you have to file.
continuing duty: everytime def doesnt repair harm, SOL renews as long as there
is continuing injury
Continuing injuries w/o continuing violation?
not enough then.
Congress, for any statute violation, 4 years (not important)
Discov rule: Tolling doctrine

o Definition - Even though the facts have occurred, the SOL does not run unless person
discovered or should have discovered facts necessary to make out cause of action. Plt
doesnt notice bc nature of injury doesnt occur yet.
o
But what if you get conflicting reports? (next case)
if doctor says you dont have the thing, reasonably rely on the opinion of the
professional.
Penn law: if the doc says you dont have thing, reliance might be unreasonable.
Discovery Rule: Debiec v. Cabot corp.
o People lived /worked near a beryllium plant, many died, which was traced back to Chronic
Beryllium Disease.
56

o
Penn has 2 yr SOL for PI and Wrongful death that usually starts from the injury; but there is
the discovery rule exception.
to use discovery rule, plt must exercise due diligence in investigating her physical
condition; whether the the knowledge was known or, through the exercise of
diligence, knowable to plt.
plaintiff reliance on doctor assurances is reasonable as long as the plaintiff retains
confidence in docs professional abilities.
lady lived near beryllium plant; died from some lung disease that was latter beryllium
exposure. plt filed
Fraudulent concealment (TOLLING) : if a defendant fraudulently conceals the natures of the

injury, then the SOL tolls.
57

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Remedies Fall 2012 Hutchinson UF

Remedies Fall 2012 Hutchinson UF

Remedies Fall 2012 Hutchinson UF

Remedies Fall 2012 Hutchinson UF

Remedies Fall 2012 Hutchinson UF

Remedies Fall 2012 Hutchinson UF

Remedies Fall 2012 Hutchinson UF

Remedies Fall 2012 Hutchinson UF

Remedies Fall 2012 Hutchinson UF

Broad View Swann v. Charlotte-Mecklenburg Bd. of Education (1971) schools districts

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i. Structural injunction = once court agrees to enter into record

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i. damages are adequate when -- are calculable, when there

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b) Undue Hardship to D Boomer v. Atlantic Cement Co. 411

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Substantive Standards for Preliminary Relief

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TEMPORARY RESTRAINING ORDERS (TROs)

Carroll v. President of Princess Anne (1968) (456)

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Prospective vs. Retrospective relief

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How does not having damages erode enforcement of federal statutes?

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Suits Against Officers:

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b) -Public Service Commission v. Wycoff Co. 576:

Cardinal Chemical Co. v. Morton International Inc. (U.S. 1993) 579

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If RR complied with rate law, forfeits constitutional rights loss of

B. Declaratory Judgments, Injunctions, and Federalism

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-Hicks v. Miranda: 595 NEED 2 GET TO FED COURT BY WIDE MARGIN

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VI. RESTITUTION Benefit to D as the Measure of Relief

Restitution can either be a COA unjust enrichment or a remedy

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Examples of Unjust Enrichment

B. RESTITUTION FROM INNOCENT DEFENDANTS

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Somerville v. Jacobs (W. Va. 1969) 627

a) State v. A.N.W. Seed Corp. (Wash. 1991) 634

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