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This document discusses the significance of constitutional issues in business cases, particularly intellectual property and interstate commerce. It details the Articles of Confederation, highlighting weaknesses and the push for a stronger national government. The document also touches on the Commerce Clause, its historical context (Gibbons v. Ogden), plenary powers, and modern court cases.
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Significance to business: more than most people think! Constitutional issues are raised regularly in business cases, particularly in *intellectual property* cases, where *states have enacted certain regulations (including protectionist ones)* that affect business operations, issues of *interstate co...
Significance to business: more than most people think! Constitutional issues are raised regularly in business cases, particularly in *intellectual property* cases, where *states have enacted certain regulations (including protectionist ones)* that affect business operations, issues of *interstate commerce* including federal laws and regulations. Constitutional Law: it's not just for Political Science anymore **Toward a Federal Form of Government** First governing document: Articles of Confederation, 1781-89. Starting in 1783, however, recession & then depression hit, as American consumers used easy credit to purchase lots of British goods. Manufacturers were usually limited to sales in their own states; localistic economy. **Richard henry lee** brings up the idea of united states to the continental congress after winning the war against british. *Weaknesses* *of AoC:* *\* Congress was the only branch of national government* *\* Congress had no power to enforce its laws* *\* Congress couldn't regulate interstate or even international commerce* *\* Passing a law required 9 of 13 states; amendments required unanimity* *\* **National government couldn't tax, only borrow money*** *\* No US courts to resolve disputes; no executive to execute laws\ \ * States clung to confederal power base; it was a hard sell to get them to think of any other power-sharing structure! (states were more powerful within their state boundaries) **nullification-** opposite of preemption \* Business interests, in particular, were instrumental in the push to strengthen the national government. (*surprising*? Why were the businesses demanding reform?) **1st try Annapolis Convention(**going towards federal form of govt) (Sept 1786)- 5 states, not much action, agreed on an amending convention in Philadelphia the following year **2nd try Philadelphia Convention (independence hall)** (May-Sept 1787)- *hey*, we came to amend the AoC and **left with a Constitution! (also known as constitutional convention)** businesses needed stability in law. *(June 21, 1788- NH is the 9^th^ state to ratify; takes effect March 4, 1789).* **Ratification & Structure of the Constitution** ** Original structure**: 7 Articles (6 functional), as follows: - - - - - - Important principles from Article IV: ***privileges & immunities(**everyone enjoys their privledegs in every state**), full faith & credit(**every state accept other states laws**), republican government Supremacy Clause**(every state has guraneed representation in congress**)** (Art VI, cl. 2): This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, **shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby,** any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.* ** Amendments:** - - Post-Civil War, Congress also began writing enforcement clauses into Amendments to stop the argument (mostly from ex-Confederate states that it did not have the ability under implied powers to enforce those Amendments against the states, e.g. Civil Rights Act, Voting Rights Act Comes from the **Commerce Clause**, Art. I, s. 8, cl. 3: Congress shall have the power "to regulate Commerce with 1. **foreign Nations**, *and 2. **among the several States(**inter not intra state)*, and with the 3. **Indian Tribes**." **What is "commerce?"** -- answered largely by [*[Gibbons v. Ogden]* [(1824)]](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=641de660-de40-4773-8200-b1f800e8dacd)(one gets route license from state and one from congress ny to nj); it's not just a physical exchange of things of value, but includes transportation of goods, supply chains... basically, anything that facilitates the transaction, in an oversimplified nutshell. Congress' power over interstate commerce is plenary. *See Table 7.1 in the textbook* (pp. 185-86) for a timeline of post-*Gibbons* cases and events which defined this authority over commerce. Also see *Gibbons* case review in the Lecture Library. - **Plenary powers**- powers granted to a body in absolute terms, with no review of, or limitations upon, the exercise of those powers. As our national economy comes together and grows into meaningful economies of scale, what if intrastate commerce has a ***substantial effect*** on interstate commerce? What if a Texas law, for example, adversely affects the economy of neighboring Louisiana\... *and the nation?* **Expansion of Federal Commerce Power For A Growing Nation: Key Cases** *see also* [[U.S. v. Lopez](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=8fa93833-842f-4bfd-9dbb-b1f800e8d846)] (1995), the first time the Court struck down an interstate commerce law in 60 years under the theory of "New Judicial Federalism" **[[Shreveport Rate Case]](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=a8d49e68-f62e-4924-a00e-b1f800e8d4ee) (1914)- close and substantial relation test**. [Hughes:] "*Interstate trade was not left to be destroyed or impeded by the rivalries of local government. \| The purpose was to make impossible the recurrence of the evils which had overwhelmed the Confederation."* **[[Wickard v. Filburn (1942)]](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=d71ce59b-4cf0-4c5f-8e18-b1f800e8d9b0)- Aggregation doctrine-** "That an activity is of local character may help in a doubtful case to determine whether Congress intended to reach it\.... But\... it may still, whatever its nature, be reached by Congress if it exerts a **substantial economic effect on interstate commerce** and this irrespective of whether such effect is what might at some earlier time have been defined as \"direct\" or \"indirect." **The "Dormant Commerce Clause"** (or, the powerful clause that's not actually a clause at all) **Dormant Commerce Clause (Black's):** the constitutional principle that the Commerce Clause *prevents state regulation of interstate commercial activity* where*Congress has not acted* under its interstate commerce powers to regulate that activity. **[The key question in a DCC case:]** Is a *state or local government* using its police (coercive) power in such a way as to punish, discriminate, or otherwise "un-level" the commercial playing field against out-of-state parties *just because* they are not from that state? **Justification:** Remember Hughes from the Shreveport Rate Cases? ***"... the evils which overwhelmed the Confederation?"*** **Justice Kennedy**, citing/paraphrasing Madison in *Federalist*\#22: "The central rationale for the **rule against discrimination(**synonym to DCC) is to prohibit state or municipal laws whose object is ***local economic protectionism***, laws that would excite those jealousies and retaliatory measures the Constitution was designed to prevent." *C&A Carbone, Inc. v. Town of Clarkstown, N.Y*., 511 U.S. 383 (1994) **Common Elements:** 1\. State has used its regulatory (police) power to discriminate against certain articles in interstate commerce to an "appreciable extent" 2\. the discrimination is based primarily or exclusively on the origin (state) of the articles 3\. the discrimination favors in-state interests ***to the detriment or exclusion*** of out-of-state articles 4\. Congress has ***not acted*** either to sanction or to prohibit the discrimination using its commerce powers **Note** that this does not prevent states from placing **burdens on the public that are *equally-borne*** between in-state and out-of-state interests; a tax on muffins applicable to all sold in the state regardless of where they're produced would be constitutional. A tax on non-NC muffins sold in NC, however, would *not* be! NC cannot require WA apples in sealed containers to be labeled "USDA grade" only when originally labeled "Washington grade" which was considered a superior quality of apple. The state is forcing "downgrading" of superior apples (burden *not equally borne*) *to protect in-state growers*. [Hunt v. Washington State Apple Growers Commission], 432 US 333 (1977). **DCC -- Examples** (see p. 107) - - **Exceptions to the Dormant Commerce Clause** ***[Exceptions:]*** \(1) as above, Congress has *authorized* the discrimination by law *(it's not dormant!)* \(2) **"balancing test"**- how do we make sense of discrimination "**to an appreciable extent?**" Is the interference *incidental* or *purposeful*? **If incidental,** a *legitimate state interest* must be demonstrated & *impact on IC must be reasonably slight*. **If purposeful**, state must show a ***compelling interest*** and demonstrate *no other reasonable way* of advancing that interest. *See* [[Maine v. Taylor]](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=75c66df1-d2ea-4f47-a1f2-b1f800e8dc52) 477 U.S. 131 (1986) (state of maine won dcc case) in the Lecture Library- Maine's intentional discrimination against out-of-state baitfish was upheld as protecting a compelling state interest. \(3) "**market participant"**- does the state action merely *put the state in fair competition on the open market for goods or services* (i.e. doesn't use regulatory or other coercive powers; merely selling things)? If so, it may as any owner/operator prefer some customers (in-state residents) over others. *See* [[Reeves v. Stake]](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=d474b57d-5c7a-44df-be5f-b1f800e8d469) 447 U.S. 429 (1980) in the Lecture Library- SD owned and operated a cement plant!(SD won against reeves) **The Takings Clause (Fifth Amdt.)** ***"....** nor shall private property be taken for **public use**, without **just compensation**.**"*** ***[Eminent domain-]*** the right and power of governments (in the US, at virtually all levels) to take title to real property from the current owner(s) upon demand and payment of the **fair market value (FMV)** for the land. No single, reliable database which tracks these things, but expert estimates suggest that anything between 5-10K "takings" per year occur in the US. Process: (1) government IDs land needed and purpose for taking \(2) owner contacted, offered FMV \(3) if refused, parties may negotiate \(4) if *still* refused, government issues a **notice of condemnation**, takes title to the land, remits FMV (usually the original offer) to a court or other neutral entity until any legal matters are settled. There can also be ***constructive takings***, in which government regulates the use of land so much that courts consider it to have been "taken" w/o passage of title to the government. A federal dam floods farmer's land and causes extensive erosion- compensable even w/o condemnation? ***Yes***. [U.S. v. Dickenson],(dickenson won since there was no notice of condemnation) 331 U.S. 745 (1947) **[Common "battle scenarios" in the 1990s/2000s:]** The most famous modern case that set off a wave of state eminent domain reform: [***[Kelo v. City of New London]***](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=12466677-d9e3-4c11-afaf-b1fe00cf483e),(kelo and her neighborhood were condemned to build new pharma plant for pfizer and city of NL won) 545 U.S. 469 (2005). Case review in Lecture Library *(also Case 1.1, pp. 7-8, in textbook)* **- Merriam, KS (1999)--** Town condemns and takes a Toyota dealership, sells to owner of BMW dealership **- Denver, CO (2012)**- 29 historic Victorian houses are determined to be a "blight," condemned and destroyed, sold to land developer who put modern multiunit housing on the site **- Longmont CO (2013)**- Dillard's dept. store shuttered after being taken for development of new mall **Relevance to Business:** every business has regulatory rules to meet, including tax registration, health & safety standards, employment/wage rules for workers, zoning, transportation of products, advertising/marketing, internet content/presence; certain business sectors are even more heavily regulated, e.g. construction, petrochemical, energy, heavy industry, food & drug, banking/finance. A majority of ways that a business can get into legal trouble with its base operations is not a criminal case or even necessarily a civil lawsuit; it\'s breaking rules established by an administrative agency (not a law passed by a legislature), which can result in fines, forfeiture of assets, forced reorganization, etc. Some administrative offenses may result in a criminal case against the offender (even a company) or in some cases, its responsible corporate officers under the RCO (or Park) doctrine. See textbook pp. 157-58 (Chapter 6- Criminal Law). Note: [[Loper Bright Enterprises v. Raimondo]](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=752a1675-1d7d-492c-a70c-b1fe00cf2453) (Sup. Ct. 22-451, Dec. June 28, 2024) is a very new Supreme Court opinion that holds the potential for significant and rapid changes to occur in federal administrative process. Please note that content we are covering this semester, as such, is still largely concrete for the foreseeable future but there may be content you learn today that winds up changing in some ways next week! Keep an eye on news headlines. **Administrative Law: An Overview** **Administrative law** is the body of legally enforceable rules & regulations, by civil or criminal corrective action, developed and made effective by administrative agencies at both the federal & the state levels in the U.S. While it is important to remember that both levels of government have their own administrative systems, we will focus exclusively on federal bureaucracy in this segment of the course. **Administrative agencies** (sometimes called \"bureaucracies\"), in turn, are entities of government charged by the legislature with implementing, administering and (often) adjudicating violations of certain statutes or parts thereof which **fall within their jurisdiction or expertise**. Example: NASA, not the Department of Agriculture, needs rocket scientists. The FBI, not NASA, investigates and prosecutes federal criminal offenses. **Types in the US federal system (Executive Branch):** - **Cabinet Agencies**- highest-level, broad policy range, **Secretaries** report directly to President (**Agriculture, Defense, State, Education, Treasury, Justice, Homeland Security**) - **Executive Agencies-** function within a cabinet department, report to Secretary **(FDA**-DHHS, **USPTO**- Commerce, **FBI**- Justice) - **Independent Agencies**- as the name implies! Independent agencies senior officers are protected from the civil processes. ![](media/image10.png)![](media/image3.png) **Authorization and Powers Of Administrative Agencies** Congress makes public policy; administrative agencies carry out those policy goals as determined by Congress. In some key acts, Congress will either create a new agency to wield new powers or assign them to an existing agency through the passage of **enabling legislation** (or \"enabling acts\" - see FCC example, p. 207). **That legislation will also define the scope and purpose of the agency\'s authority.** congress created **federal communication commission** to regulate radio **If Congress passes the law, shouldn\'t Congress carry it out?** This argument was made in [[J.W. Hampton, Jr. & Co. v. U.S]](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=87e682eb-105a-423e-8445-b1fe00cf5960).,(jw shipping getting taxed on barium oxide from europe) 276 U.S. 394 (1928) on grounds of what is referred to as the **nondelegation doctrine**: Congress can\'t \"re-delegate\" tariff power to executive. **Chief Justice Taft** wrote the opinion in favor of US; Congress had completed its legislative function in passing the law that then turned \"ministerial functions\" over to Dept. of Commerce. It always retains the power to amend, rescind the law or limit/alter powers of executive to enforce. Intelligible principle test- as long as congress gives a new agency an intelligible principle by which to exercise its power in new law the court should defer to congress's will. Congress cannot simply turn general legislative powers over to administrative agencies, but must provide them with an intelligible principle by which to enforce the law (in the Act itself). **The administrative procedure act (APA) of 1946** APA was intended by Congress to provide a reasonably uniform set of rules for federal administrative agencies, by which they must conduct their business. **APA automatically applies** to an agency unless it has been specifically exempted by Congress (which isn\'t often). Note (pp. 208-09) from the Attorney General\'s Guide to the APA that the Act is supposed to produce \"fair administrative procedure\" by doing **four specific things:** 1. require agencies to keep the public informed re: procedure, organization & rules 2. develop methods of allowing public participation in the rulemaking process 3. production of uniform standards for agency rulemakings and adjudications 4. defines the scope of judicial review over agency decisions See also the types of actions taken by agencies under their **rulemaking, enforcement & adjudication** powers (under \"**Functions**\"), p. 210 of the textbook. **Rulemaking** Divided into informal and formal processes; an agency\'s enabling statute or subsequent legislation will determine which type they have to use for what types of rules they\'re trying to issue. Most of the time, this will be informal rulemaking (centralized website= [[www.regulations.gov]](http://www.regulations.gov)) **Informal rulemaking**, aka **notice and comment** rulemaking: 1. 2. 3. 4. **Formal rulemaking** is required when Congress\' enabling legislation requires an agency to make rules \"on the record.\" Takes place in a forum that looks & operates very much like a court, with 1 or more **Administrative Law Judges** (ALJs) (Article 1 judges) presiding, & proceeds in four steps: 1. 2. 3. 4. **Enforcement & Adjudication** Types of enforcement powers typically granted to **regulatory** agencies: **investigation, inspection, search warrants** (but 4th Amendment protections attach), **subpoena** types of subpoena- (**ad testificandum**= compel testimony; **duces tecu**m= produce documents). **Adjudications of violations**, like rulemakings, **come in both formal and informal varieties:** **Formal adjudication:** very much like a regular court proceeding, preside over by an ALJ- but there is no jury. The ALJ will prepare f**indings of fact and conclusions of law** as they apply to the stated facts; he/she then imposes a **penalty or remedy** as provided by law (if appropriate). **Informal adjudications**: no specific procedure required by APA; agencies are free to create their own processes (usually before an agency \"hearings officer\") as long as basic due process rules are followed (notice, fair hearing, opportunity to present defence) **Appeals from administrative adjudications** must go to the agency head or the agency\'s governing body, if appropriate (example- EPA permit appeals go to 4-AL\] Environmental Appeals Board (EAB), or may go into approved ADR). **Exhaustion doctrine:** a party has **no ability to appeal agency decision to the judiciary** until and unless all available administrative remedies have been tried first. **Courts will not typically disturb the decision** from an agency adjudication unless the decision is **arbitrary and capricious**(not considering facts and ill intent), or violates other rules of law. **Chevron doctrine**: federal judges can\'t interfere into administrative adjudication and rulemaking unless really good reason. mentioned in the textbook, but overturned by **Loper Bright Enterprises v. Raimondo** (2024). This is a very new and very sweeping opinion and may radically reshape the administrative powers of government, but we don\'t know yet how this will pan out in daily business operations, and in whose favor/disfavor. **Reforming the Bureaucracy: Public Accountability Acts** Note the list and explanation of key acts in textbook, section 8.6 (pp. 221-23); these are attempts by Congress (starting in late 60s) to provide some additional political and public accountability in the administrative process, starting with the **Freedom of Information Act (1966)**- note also that there are exceptions to some of these laws, most importantly with FOIA and the Privacy Act (1974). **Last but not least: two important more recent reforms oriented toward small business:** **Regulatory Flexibility Act (RFA), 1980:** requires federal agencies to consider impact of new regulations on small businesses, specifically by (1) soliciting feedback from them, (2) requesting guidance from Small Business Administration (SBA) on the proposed rule, and (3) producing and publishing (in the Federal Register) an initial regulatory flexibility analysis (IRFA) detailing impact on and assessment of small business under the rule. **Small Business Regulatory Enforcement Fairness Act (SBREFA), 1996:** a separate act that amended RFA in several ways considered advantageous to small business interests, including **giving federal courts jurisdiction to monitor agency compliance** with RFA, **creation of small business advocacy review panels** within EPA and OSHA, and **requiring panels to consult with SB interests on regulatory impact** (help SB comply with regulations) prior to publication of the proposed rule(s) in the Federal Register. **Latin word**- Tortum- means twist Overview & Relevance to Business: \- The first of our \"big three\" civil law subjects (property, contracts) \- Distinguish intentional torts from torts of negligence; understand elements of specific torts \- ID & understand, in particular, those torts that are more typical and more of a risk management issue in a business setting. **Tort law is a central concern of all businesses, and with minor variations depending on the business sector, may be generally more critical on a daily basis than even property or contracts** **-** Understand the elements of a basic negligence action, & standards for judging D behavior \- Understand important special doctrines applicable to negligence actions, as well as defenses \- Learn about strict liability & its application in tort law, particularly to **product liability** actions **Nature of Torts; Public Policy Purposes** **Tort** (Black\'s Law Dictionary): **A non-contractual civil wrong(**no contract involved) **Purpose of tort law** (Upcounsel.com): The main purpose of tort law is to provide a way to **hold those who cause harm responsible.** Think of torts as the Swiss Army Knife of compensable injury; much more flexible to new claims than many other areas of law owing to the value that **an injured party shouldn\'t be without a remedy.** **What kind of harm? What does that include?** Two types: **intentional torts** and **torts of negligence.** - **Intentional torts** require a showing of **intent to cause the act which produces the harm** (in some cases even if the harm itself was not intentional). - **Torts of negligence** hold parties responsible for harm their **unintentional acts** cause to others. **Intentional Torts** The torts most like crimes, in the sense that they require an **intent to commit them** (many can also be punished as crimes in a separate prosecution) Some torts may also be **crimes**- but the charges may be different. NC gen Stat. often uses assault to mean "causation of bodily harm". Yet in torts that's **battery-assault** is merely creating the apprehension of immediate harm. **Common intentional torts:** ![](media/image8.png) **Chattel**- means property **The Flexible Landscape Of Business Torts:** **Interference w/contract & Interference w/prospective economic advantage** **Elements: Interference w/Contractual Relationship** - The existence of a valid **contract** between the plaintiff and a third party - The defendant has knowledge of the contract - The defendant intentionally and unjustifiably induces the third party to breach the contract - Breach occurs as a result of the defendant\'s conduct, incurring damages to plaintiff [[See Lumley v. Gye]](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=da711be7-59ad-45dd-8012-b20700af1333&query=Search%20in%20folder%20%22MIE%20305%20Lecture%20Library%22...),(gye gets singer wagner to breach contract with lumley to come to his theatre and after that gye lost) 118 ER 749 (1853) in the Lecture Library **Elements: Interference w Prospective Economic Advantage** - An **economic relationship** (no contract required) between the plaintiff and some third party, with the **probability of future economic benefit** to the plaintiff - The defendant\'s knowledge of the relationship - Intentional acts on the part of the defendant designed to disrupt the relationship - Actual disruption of the relationship, incurring damages to plaintiff \"The chief practical distinction between interference with contract and interference with prospective economic advantage is that a **broader range of privilege to interfere is recognized when** the relationship or economic advantage interfered with is **only prospective**.\" (Pacific Gas & Electric Co. v. Bear Stearns & Co.,50 Cal.3d 1118 (1990) **Sunbelt Rentals v. Head & Engquist Equipment** (2002, NC Business Court) - D engaged in a \"pyramid hiring scheme\" to gain roughly 70 of P\'s experienced senior staff; new employees would recruit more new employees while still employed at P. Held: violation of NC Unfair Trade Practices Act (and Trade Secrets Act), judgment for P = \$16.2 million. (sunbelt won) **Tort of Negligence** **[Negligence]** in tort is the **unintentional causing** of harm to **another\'s person or property** through the **breach of a duty of care** to them that a **[reasonably prudent person]** (Americanized: r**easonable person**, another **legal fiction**) would otherwise have used in carrying out the duty (ie. not living up to that standard of care or caution a reasonable person in that situation would normally be expected to do). **[Duties]** to others can arise from **special relationships** (my doctor, my lawyer, my architect) or they may exist generally (driver in the red Honda next to me on the interstate that I\'ve never seen before, everyone near me while coming down a Nelson stairwell, my neighbours whose backyard is separated from mine by a simple wooden fence). They can exist for years or minutes or even seconds./ **[Basic Elements of a Negligence Claim (memorise this stuff):]** 1. duty 2. breach of duty 3. causation (**cause-in-fact** and **proximate**)(p has to prove the d action by breach of duty caused them damages) 4. damages **Causation** **[Cause-in-fact]** is the \"**but for\" cause** of an injury: but for the defendant\'s conduct, would the injury have occurred? (note: At common law, there\'s no duty to act, and in the case of someone in peril, no duty to rescue. As such, **nonfeasance** **cannot be used(**not doing something) to support a finding of cause in fact unless a statute imposes the duty). Should someone be responsible for all injuries suffered from their act, however? What\'s the danger of taking this \"domino theory\" approach to personal action? This problem invited the development of a second theory of causation, **proximate cause**, first clearly announced by (then- Judge Benjamin Cardozo of the NY Court of Appeals (highest court) in [[Palsgraf v Long Island RR Co]](https://ncsu.hosted.panopto.com/Panopto/Pages/Viewer.aspx?id=2b98542a-0145-4b89-9da7-b20700af1333&query=Search%20in%20folder%20%22MIE%20305%20Lecture%20Library%22...)., 248 N.Y. 339 (1928) (see case 9,4, p. 247) **[Proximate cause]**- sometimes called \"**legal cause**\"; even if one\'s conduct is technically the cause-in-fact of injury, the injury must be a **harm within the risk** of the behavior, i.e. it must be a **[reasonably foreseeable or direct]** (not \"likely\" or \"probable\"- merely foreseeable to a reasonable person; no \"domino theories\" when there are too many dominoes in the chain) injury of which the actor had the opportunity to be aware. Sometimes, courts refer to this as the **zone of danger** - given the negligence, what\'s the geographical area in which harm from that act could reasonable be expected to wreak its havoc? **Palsgraf & a simple proximate cause hypothetical** Ackerman is camping, and carelessly leaves his campfire burning when he leaves. The fire spreads down the forest, destroying it, and moves to a chemical plant three miles away, where it causes a storage tank to explode. Chemicals from the destroyed tank pour into a river, which kills the fish for 100 miles downstream and ruins the seasonal economy of a tourist resort 90 miles away. **Owner of the campsite property sues.** CIF? yes Proximate cause? yes **Chemical plant sues**. CIF? yesProximate cause? Yes and no(grey area) **Tourist resort sues**. CIF? Yes Proximate cause? no **What happens to a party that\'s injured by a long chain of causation by someone\'s very remote negligence?** General attitude of the court is \"that\'s why there\'s insurance.\" **Special Circumstances In Tort Liability For Businesses** Joint and Several Liability: (see right inset, from Investopedia.com) ![](media/image4.png) **Businesses: [directly liable]** for the torts of their employees or agents (but not bona fide independent contractors) when the business **negligently hires or trains, gives faulty instructions to, or fails to supervise properly** the agent in the conduct of agent\'s work. (see 9.1d- Basics of Agency, Pp. 233-235; also Explainer in LL) **[Indirect (Vicarious) Liability]**: **Respondeat superio**r- \"let the superior (or master) answer (for the wrong of the servant).\" Elements: - Was the act committed within the **time and space limits** of the employment/agency? - Was the offense **incidental to, or similar to**, the responsibilities the employee/agent is authorized to perform? - Was the employee/agent **motivated to benefit the employer/principal** by committing the act?(**course and scope of employment test**) - Was the employee or agent on a **frolic** (for own purposes) or merely a **detour** (still within the scope of a business purpose)? **Strict liability in Torts & its use in Product liability cases** Strict liability mean liability without fault. The defendant is liable for harm that his actions caused even though there may have been no misconduct at all by the D. Applies in three categories of cases: 1. An exception to the doctrine of absolute liability 2. - - - 3. - - An exception to the doctrine of absolute liability -