BUS 311 Ashford University Limited Liability Company Discussion Paper


Visit the Choose Your Business Structure (Links to an external site.) section of the U.S. Small Business Administration’s website.
If you were to start your own business, which business entity structure would you choose? Justify why your chosen structure is the best organizational form.
Explain the following business structures: sole proprietorship, partnership, LLC, and a corporation. In your analysis address the following for each business structure:

Steps to form
Personal liability for owners
Advantages and disadvantages

Chapter 1
Sources of the Law and the Court System
Learning Objectives
After studying this chapter, you will be able to:
1. Distinguish between common law and civil law.
2. Describe the structure and function of both state and federal courts.
3. Define jurisdiction and its implication.
Law, distilled to its essence, can be described as rules of conduct decreed and enforced by government for the benefit of its citizens. Laws are by no
means the only type of rules that regulate conduct. A restaurant may require patrons to wear ties and jackets when dining in its premises, a college
professor may demand that students refrain from talking in class, and a religious institution may command that its members abstain from using certain
types of contraceptives. In all three cases, a penalty may be imposed for failure to observe the rules: the restaurant may deny entrance to anyone not
wearing the proper attire, the professor may expel a student who talks during class, and the church may ostracize any member who challenges the
prohibition on contraceptive technology. Nevertheless, these rules do not rise to the level of laws simply because they are not enacted and enforced by
the state.
Note also that while law in a sense is derived from a society’s sense of morality, or what people think is right and wrong, law is distinctly different from
either morals or ethics. Nonetheless, it is worthwhile to consider the ethical implications of the law.
In this chapter, we will trace the law to its various sources, as well as explore an overview of the federal and state court systems in order to gain a better
understanding of our system of justice.
1.1 Sources of the Law
It is a common misconception to think of the law as a set of rules written down in old, dusty books that show little change over time. Such a vision of the
law makes it seem stagnant and inflexible. The reality, however, is quite different. Law in the United States is vibrant, adaptable, and ever changing (albeit
slowly). The U.S. Constitution ( is the starting point for our law. Statutes passed by legislative
bodies such as the U.S. Congress and the various states’ legislatures are an important part of the law, as are decisions handed down by federal and state
judges, and the regulations and administrative decisions of state and federal agencies. All of these taken together make up what we commonly refer to as
the law. We will examine each of these important sources separately in order to gain a better understanding of how they help to shape our law. We will
begin with the two basic legal systems in the world: civil law and common law. The civil law system emphasizes lawmakers setting down rules in written
codes, whereas common law derives from judges making decisions in actual lawsuits.
The Civil Law Tradition
Civil law is the dominant legal system, favored by most non-English-speaking countries in Europe, Asia, Africa, and Latin America. The civil law system is
based on a tradition that dates back to the Code of Hammurabi (2100 BCE), which reduces the law to statutes, or written codes. For example, there is a
section that provides for the liability of a builder when a house collapses. A contractor in ancient times could thus reference the code and know the risks
of shoddy work in advance!
This tradition continued with Roman law, which traces its recorded origin to the
Twelve Tables (450 BCE)—bronze tablets setting down the law which were
attached to the orator’s platform in the Roman Forum so that all citizens could
read and know the law. Finally, the tradition reached its zenith around 533 CE
when the Byzantine emperor Justinian I undertook the task of recording and
integrating 1000 years of existing law into a single code—the Corpus Juris Civilis
(literally the body of the civil law), more commonly referred to as the Justinian
Code. That nearly 1500-year-old code forms the most important pillar of the civil
law system.
The tradition of putting the law into a code that the general public can read and
understand continues today in most countries using a civil law system. Civil law
requires that law be written and made accessible to the people so that they may
know their rights and obligations as citizens. There is relatively little leeway given
to judges in interpreting civil law, and little room for debate as to the meaning and
application of the law in any given circumstance. Civil law jurisdictions generally
Modern law has roots in ancient Rome.
make it simpler for citizens to know the law and to predict its outcome. As a
Top Photo Group/Thinkstock
result, there tends to be less litigation and less need for attorneys in civil law
societies, and many routine tasks are handled by paralegals. Societal opinions,
changing values, or the cumulative wisdom of judicial interpretation of the law gleaned from legal precedent have a lesser role in civil law systems than
they do under a common law system. Therefore, the law tends to be relatively inflexible and changes only when and if legislative bodies see fit to change
The Common Law Tradition
The common law system emphasizes the making of rules through court decisions, and traces its roots to England. After the Norman Conquest of 1066,
King William I began the attempts to consolidate what were at times conflicting laws throughout the country into a unified common law that would apply
throughout the realm. By the 13th century, magistrates traveled throughout the countryside, hearing cases as they went from town to town in regular
circuits. Since the magistrates had no great body of written law to rely upon, they in essence created the law as they decided cases, by applying basic
principles of fairness drawn from the customs, traditions, and ethics of the time. Ultimately, these decisions were written down and used as precedents or
guidelines, to be referred to and followed when similar cases arose in the future. Before the United States of America came into existence, this land
consisted largely of English colonies, which adopted the common law tradition. The exception is Louisiana, which still adheres to much of the civil law
system developed as a French colony.
Under the doctrine of stare decisis (“let the decision stand”), courts today still follow precedent closely and decide cases in a way that is consistent with
the way that similar cases were decided in the past. The role of lawyers in a common law system largely involves arguing how existing precedent should
be applied to a particular set of facts.
Example 1.1. In an 1834 case titled Joel v. Morison, the court found that an employer could be liable under some circumstances where his
servant, driving the master’s horse and cart, had collided with a pedestrian. The key issue was whether the servant was on the master’s
business or on a small detour, in which case the master was liable, as opposed to the servant’s going off on a frolic of his own, whereupon
the master would not be liable. The same rules the court used in Joel are still being used today. If a United Parcel Service truck hits someone,
the attorney for UPS will argue the driver was on a frolic, and the lawyer for the injured person will claim he was still on UPS business.
The characteristic distinguishing common law from civil law is that common law is primarily derived from judges deciding actual cases. That is not to say
that only judges make law. Today, there are large bodies of statutes in common law (not unlike those of civil law jurisdictions) that seek to codify
important areas of the law. Unlike civil law jurisdictions, however, statutes do not form the foundation of the law in most areas, but largely serve to alter
or clarify the common law. For example, the basic rules governing contracts (enforceable agreements) have evolved from the common law, but today
many contracts are subject to a statutory body of law, the Uniform Commercial Code (UCC) ( . The UCC is a
summary of traditional common law rules governing commercial transactions, which has been all or partially enacted into statutory law by the state
legislatures. UCC rules are in many places identical to those from the common law.
Even in areas where the law has been largely modified by statute, the courts still retain the power of interpreting, modifying, and generally fine-tuning the
law through legal decisions. In order to know what a given statute means, one must always look to see how it has been interpreted and applied by the
Example 1.2. A number of federal statutes apply only in situations involving “interstate commerce.” A commonsense definition of interstate
commerce might be “commercial transactions that cross state lines.” But the courts interpret the phrase far more broadly, so that a business
exclusively within one state can still be regulated by federal statutes because of its potential effects on interstate commerce. Thus a barbeque
restaurant in Alabama that refuses to promote African Americans to management positions can be sued for racial discrimination (a federal
law), even if the plaintiff (the person suing) is also from Alabama (thus not crossing state boundaries). The discrimination can potentially
affect the interstate job market, since African Americans from other states might be less likely to seek jobs in Alabama.
Also unlike civil law, it can be difficult for the average layperson to know with any
certainty what the common law is with regard to any specific situation. In many instances,
even experienced attorneys can only venture an educated guess on how a court is likely
to apply the law to a given set of facts. And even the best judicial minds often disagree,
based at least in part on their judicial philosophy and political ideology. Many decisions of
the U.S. Supreme Court are not unanimous and are sometimes decided by narrow five-tofour margins, with judges interpreting the law very differently based in great part on their
judicial philosophy.
Beyond the Book: Significance of Brown v. the
Board of Education
Significance of Brown Black/White & Brown: Brown v. The Board of Edu…
v. the Board of
From Title:
Example 1.3. A majority of the Supreme Court has found that commercial speech
(such as advertising) merits First Amendment protection, but not to the same
degree as other types of speech. Nowhere in the First Amendment is this
distinction drawn. Thus when Puerto Rico passed a law allowing casino gambling
but forbidding advertising of gambling establishments, the Court said the First
Amendment was not necessarily violated. Four judges dissented, partly because
they thought it made no sense to allow the activity (gambling) but not speech
about the activity. Supreme Court justices still disagree about whether commercial
speech should be treated differently. Justice Clarence Thomas stated in a 1996 case,
Liquormart, Inc. v. Rhode Island, “I do not see a philosophical or historical basis for
asserting that ‘commercial’ speech is of ‘lower value’ than ‘noncommercial speech.'”
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This uncertainty and susceptibility of the common law to varying interpretations, which
may depend on judges’ personal philosophies and opinions, is perhaps its major
The landmark case of Brown v. The Board of Education
illustrates how the common law evolves and changes over
The Brown case marked a major change in the law.
On the positive side, common law is not as inflexible as civil law; judges have a
How would you describe this change?
considerable amount of power to change, adapt, and mold the law to fit particular cases
What changes in society do you think led to the
in order to insure that justice is done and that the law reflects society’s changing social
Supreme Court’s decision in the Brown case?
values. For example, consider the changing views of racial discrimination that caused the
Supreme Court over time to switch from endorsing “separate but equal” segregation in
the 1896 case Plessy v. Ferguson ( , which allowed states to mandate separate
schools for African American children, to finding such policies unconstitutional in the 1954 case Brown v. the Board of Education
( .
Constitutional Law
A constitution establishes a state or nation’s form of government and sets out its most fundamental legal principles. The United States has a federal
Constitution as well as constitutions for each of the 50 states. In addition, local municipalities may have their own versions, known as charters. Article VI,
Section 2 of the U.S. Constitution (see Appendix A) specifically states that the U.S. Constitution “shall be the supreme Law of the Land.” If a conflict arises
between the U.S. Constitution and any other law, including a state constitution or city charter, the federal Constitution rules and the conflicting law is
deemed unconstitutional, which means it has no force or effect.
Constitutions are of necessity rather broad documents stating the basic principles a government must follow. The interpretation of the constitution is left
to the courts and the final say on the meaning of the U.S. Constitution is reserved to the U.S. Supreme Court. Once the highest court in the land has
interpreted the Constitution, all other courts are bound by its interpretation.
Example 1.4. The state of Texas enacts a statute that makes it a crime to
destroy an American flag. Jennifer attends a protest against United States
involvement in Afghanistan, where she burns an American flag, while
shouting, “War sucks!” Jennifer is arrested, charged, and convicted under
the Texas law. She appeals, stating that this law violates her First
Amendment right to free speech.
Jennifer would win her case, and her conviction would not stand. The Supreme
Court found in a 1989 case, Texas v. Johnson
( , that flag
burning is symbolic speech and protected by the First Amendment. Thus the Texas
law is unconstitutional.
Suppose the Supreme Court finds a federal law unconstitutional. What can
Congress do if it disagrees with the U.S. Supreme Court’s interpretation of the
Constitution? Only one thing: amend the Constitution. Under Article V, Congress
The First Amendment protects flag burning as a form of political speech. In
1967, demonstrators gathered in Sheep Meadow of Central Park and
burned an American flag in opposition to the war in Vietnam.
has the right to amend the Constitution by a two-thirds vote by the House of
Representatives and the Senate. If three-quarters of the states’ legislatures then
approve the amendment, or if a constitutional convention in three-quarters of the
1967/Daily News, L.P. (New York) / New York Daily News via Getty Images
states approves it, the amendment becomes law and the Constitution is changed to
include the new amendment. However, the right of each state to equal
representation in the Senate may not be amended. It should be noted that it is relatively rare that the amendment procedure is successful; in the past 200
or so years, there have only been 27 amendments.
In the Media: Eminem’s Lyrics—Free Speech or Defamation?
Marshall Mathers, better known as the rapper Eminem, is one of the best-selling hip
hop artists of all time. He has sold over 85 million albums, all with the parental
advisory warning stamped on the front. Drawing inspiration from his own, evidently difficult
upbringing, Eminem has rapped about his mother, his ex-wife, a former schoolmate, and even his
fans, in his notoriously abrasive style. As a result, he has been involved in numerous lawsuits for
Classmate DeAngelo Bailey sued Eminem in 2002, alleging that he was the subject for the song
“Brain Damage” from Eminem’s 1999 debut album, The Slim Shady LP. “Brain Damage” is about a
childhood bully who is physically violent with little Marshall, and it includes the following lines: “I
was harassed daily by this fat kid named DeAngelo Bailey. [. . .] [E]very day he’d shove me in the
lockers. One day he came in the bathroom [. . .] and beat me into submission.” Although Bailey
was working in sanitation when he filed the million-dollar suit, Bailey claimed that Eminem’s
lyrical disparagement cost him a career in music. In 2003, the lawsuit was dismissed in a 14-page
ruling, but not without Michigan trial judge Deborah A. Servitto finding her own lyrical voice. In
footnote 11 of the order of dismissal, Judge Servitto wrote the following gem: “To convey the
Court’s opinion to the fans of rap, the Court’s research staff has helped the Court put the
decision into a universally understandable format:
Mr. Bailey complains that his rep is trash.
So he’s seeking compensation in the form of cash.
Bailey thinks he’s entitled to some monetary gain
Because Eminem used his name in vain.
Eminem says Bailey used to throw him around
Beat him up in the john, shoved his face in the ground.
Eminem contends that his rap is protected
By the rights guaranteed by the first amendment.
Eminem maintains that his story is true
And that Bailey beat him black and blue.
In the alternative he states that his story is phony
And a reasonable person would think it’s baloney.
In 2009, Eminem received the “Best Hip Hop Video”
award at the MTV Video Music Awards. The rapper is
known for his strong lyrical style.
Jason DeCrow/Associated Press
The Court must always balance the rights
Of a defendant and one placed in a false light.
If the plaintiff presents no question of fact
To dismiss is the only acceptable act.”
The First Amendment’s protection of the freedom of speech includes certain speech or communication that might seem to be hurtful, particularly
when what is being expressed are opinions or, in this case, opinions as lyrics to a copyrighted song. Of course, asserting as fact something that is
objectively false would not be protected by the Constitution and would be defamation.
Source: ()
Statutory Law
Another important source of law in the United States is statutes enacted by federal, state,
and local legislatures, which are elected lawmaking bodies. In general, the federal
government can legislate in any area for which it has been granted the power to regulate
by the U.S. Constitution. Article I, Section 8 enumerates the powers of Congress, which
include the power to levy taxes, borrow money, regulate international and interstate
commerce, award patents and copyrights, declare war, and so forth. While recognizing that
Beyond the Book: U.S. Supreme Court and
U.S. Supreme Court The First Amendment
and Speech
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some regulation must be done on a nationwide basis (imagine the chaos that would ensue
from each state establishing its own currency, for example!) the framers of the
Constitution intended to limit federal power, believing that most regulation is better done
by government units that are closer to the people they govern. Under the Tenth
Amendment, matters not granted to the federal government for regulation are left to the
states. Nowhere in the Constitution is it stated that the federal government has the power
to, for example, pass social legislation for the common good.
Where, then, does Congress get the authority to legislate in these areas? From Article I,
Section 8, Clause 2 (the commerce clause), which gives Congress the power to regulate
“commerce with foreign nations, and among the several States, and with the Indian tribes.”
In a long series of decisions concerning the commerce clause, the Supreme Court has
interpreted the clause in the broadest possible sense, in effect giving Congress the power
to regulate any activity that either directly or indirectly may affect or burden interstate
commerce. Consequently, the 1964 (
and 1991 ( Civil Right Acts
enacted by Congress, for example, owe their existence to the commerce clause; the reason
Congress has the power to pass these acts is that discrimination based on sex, race, color,
religion, or national origin can burden interstate commerce. In passing the legislation,
Congress was merely exercising its right to regulate commerce. Without such a broad
interpretation of the constitution, Congress would lack the power to pass any social
legislation that did not come under any of the areas specifically reserved to it in the
Administrative Law
Administrative agencies are a kind of hybrid part of government, which in some
instances act in a legislative manner by making Adminstrative Laws, or rules, and in
others take on judicial functions by holding hearings and issuing decisions. Agencies also
have investigatory and enforcement powers when their rules are alleged to be violated.
These agencies exist on federal, state, and local levels, but the focus here will be on
federal agencies.
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All Ri ht R
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This video looks at the historical roots of the First
Amendment protections of freedom of speech and traces
the development of the case law into modern times.
In 2012, a video made by a U.S. citizen portraying the
prophet Muhammad in highly offensive ways was
released on YouTube. The video triggered waves of
violent protest in many Muslim countries and
hundreds of people were injured and killed. People in
these countries could not understand how the U.S.
government could permit such a video, and demanded
that the maker of the movie be punished.
How would you explain the concept of free speech to
people who are completely unfamiliar with such a
principle as the basis for government? How would you
describe the link between free speech and
There are many instances in which the executive or legislative branches lack the technical expertise or even the time to regulate and control an area over
which they have jurisdiction. Consider the plight of Congress, entrusted with regulating civil aviation in the United States. What do senators know about
how often commercial planes should be inspected, how airline personnel should be trained, or what safety features airplanes need to adopt? Only aviation
experts can make such determinations. Congress, recognizing its limitations, created the Federal Aviation Administration (the FAA) to act on its behalf and
empowered the agency to create regulations affecting commercial flight and enforce these regulations through the administrative process.
Some federal agencies, such as the Internal Revenue Service (IRS) and Food and Drug Administration (FDA), are considered to be part of the executive
branch of government, and thus are more subject to direction from the president. Others are independent, such as the Environmental Protection Agency
(EPA) and Federal Communications Commission (FCC). Congress creates administrative agencies through legislation when it sees the need for special
regulation in a particular area. Thus the Interstate Commerce Commission was established in the heyday of the railroads, when rules were needed to
govern this early version of mass transit, and the Equal Employment Opportunity Commission was born out of the 1960s civil rights movement.
The administrative process requires that those who are subject to agency regulation be given the
opportunity to be heard before any new regulation is passed; the process tries to ensure that
agencies do not act in a vacuum, but rather remain responsive to the needs and concerns of those
they regulate. If, for example, the Federal Aviation Administration were to propose a new rule
affecting the airline industry (e.g., prohibiting flight personnel from drinking any alcoholic beverage
48 hours prior to a flight), it would have to go through public hearings giving all interested
individuals the right to testify before it and make their point of view known before the new rule
could be adopted. Agencies also exercise quasi-judicial powers through hearings and administrative
decisions. Persons accused of violating agency rules are brought before the agency for a hearing
resembling a trial. Such hearings are held before administrative law judges who are employees of the
agency empowered to decide administrative hearings, although their rulings can also be challenged
in court.
The FAA, a federal administrative agency, regulates all
aspects of U.S. air travel, including safety protocol, flight
standards, and pilot certificates.
1.2 The Courts
As we’ve seen, laws are interpreted and implemented by the courts. There are, in effect, 52 court systems (which are sometimes referred to as
jurisdictions), in the United States: the federal courts, state court systems for each of the 50 states, and a court system for Washington D.C. Even though
there are some differences between court systems, they are structured in a similar manner.
State Court Systems
State court systems generally conform to the following model, albeit with occasional minor variations (see Figure 1.1):
1. Lower courts of limited jurisdiction
2. Trial courts of general, original jurisdiction
3. Intermediate appeals courts
4. The state’s highest appellate court (generally, the state’s supreme court)
Figure 1.1: The state court system
The highest state court system is usually known as the state supreme court, followed by the intermediate
appellate courts. Beneath these are the lower state courts, which include trial courts, family court, traffic
court, surrogate court, and small claims court (in which appeal is not always available).
Lower State Courts
Most states have several lower courts of limited jurisdiction, which function to hear particular types of cases and to help reduce the workload of the
general trial courts, which often have crowded calendars. Such courts include small claims courts (which hear civil cases involving small dollar amounts
that vary from state to state but are generally in the $1,500 to $15,000 range), justice of the peace courts (where minor criminal offenses are
adjudicated), traffic court, surrogate court (where matters relating to trusts and estates are heard), and family court (where child custody, divorce,
separation, and a variety of other matters pertaining to families are adjudicated).
State Trial Courts of General Jurisdiction
Unless a case involves a type of subject matter that means it will go to a limited jurisdiction court, the trial court of general jurisdiction is where most
cases will begin. Nearly all cases affecting business will be litigated in these courts. As the name implies, trial courts, or courts of original general
jurisdiction, try almost any type of criminal or civil case. Trial courts of general jurisdiction can award an unlimited amount of money damages in civil
cases and can also hear a type of civil action known as an equity case, where the person suing seeks something other than money damages. They have
the widest trial jurisdiction available. Typical cases heard by trial courts include crimes, breach of contract actions, and torts.
Intermediate State Appeals Courts
Intermediate appeals courts have jurisdiction to hear appeals from most trial and some
limited jurisdiction courts, as well as some rulings of administrative agencies. These courts
provide parties who believe that a legal error was made by the original trial judge with
the opportunity to have their trial court record reviewed. Appellate courts only review
questions of law and do not review findings of fact. Accordingly, no new witness testimony
or evidence is presented in the appeals court. A court of appeals will only consider the
testimony and evidence presented at the trial court. Thus, for example, a losing party
could successfully appeal on the grounds that the trial judge improperly instructed the
jury on a point of law, or failed to sustain a valid objection by the losing litigator (both
questions of law), but an appeal based on a contention that a witness lied at the trial (a
question of fact) would not be valid.
Beyond the Book: “The Court Systems Song”
Click here ( to watch a music lesson
explaining the nature of the court system.
How does the video explain the difference between
trial and appellate courts?
What does the singer mean when he says, “But don’t
forget the courts of limited jurisdiction, where state
law grants them power to proclaim”? In the video,
what examples are given of courts which in many
states would fall into this category?
State Supreme Court
The state’s highest court—usually named the State Supreme Court—has the final say on all appeals from trial and intermediate appeals courts. Whether a
state’s highest court hears a case on appeal is usually at its own discretion. If the court does hear a case on appeal from an intermediate appellate court,
its decision is final and can only be overturned by the U.S. Supreme Court if a federal question such as a violation of the U.S. Constitution is involved. State
supreme courts operate much like intermediate appellate courts. They only review questions of law and not findings of fact. They do not hear witness
testimony or consider evidence that was not previously admitted at the trial court.
The Federal Court System
The federal court system contains courts of limited jurisdiction, trial courts called U.S. District Courts, intermediate appeals courts known as the U.S. Courts
of Appeals, and the U.S. Supreme Court (see Figure 1.2).
Figure 1.2: The federal court system
The highest state court system is usually known as the state supreme court, followed by the intermediate
appellate courts. Beneath these are the lower state courts, which include trial courts, family court, traffic
court, surrogate court, and small claims court (in which appeal is not always available).
Federal Courts of Limited Jurisdiction
The federal court system also contains a number of courts of limited original jurisdiction that try only specific types of cases. These include the U.S. Tax
Court, Bankruptcy Court, Court of Claims (tries cases in which the U.S. government is a party), Court of International Trade (tries civil cases involving
trade tariffs and related trade issues), and the Territorial Courts. A special Court of Military Appeals also exists to hear appeals from military tribunals.
U.S. District Courts
The U.S. District Courts are the federal trial courts that hear both criminal and civil cases. Currently, there are 89 districts in the 50 states, in addition to
district courts in Puerto Rico, the Virgin Islands, the District of Columbia, Guam, and the Northern Mariana Islands for a total of 94 judicial districts. The
number and location of judicial districts can be changed by Congress at will and varies as changes in population and the load of district court calendars
U.S. Circuit Courts of Appeals
The U.S. Circuit Courts of Appeals are intermediate appellate courts that hear appeals from specialized federal court and federal district court decisions,
and from many federal agency decisions. Just as in the state appellate courts, the U.S. Circuit Courts of Appeals decide questions of law, not fact. The U.S.
Courts of Appeals review the testimony and evidence admitted in the U.S. District Courts. No new testimony or evidence is admitted. There are 11 judicial
circuits, or geographic areas, each encompassing more than one state, plus the District of Columbia and the Federal Circuit (see Table 1.1) for a total of
13 circuits. Decisions of the Circuit Courts may be appealed to the U.S. Supreme Court, but generally the Supreme Court has the discretion to grant review
or refuse it. Each year thousands of petitions for review, from both federal and state high courts, are made to the Supreme Court, but since the Court
typically takes less than a hundred cases per term, the odds are that a federal appeals court decision will be the final word.
Table 1.1: The federal court system
Circuit Name
District of Columbia
District of Columbia
Maine, Massachusetts, New Hampshire, Puerto Rico, Rhode Island
Connecticut, New York, Vermont
Delaware, New Jersey, Pennsylvania, Virgin Islands
Maryland, North Carolina, South Carolina, Virginia, West Virginia
Louisiana, Mississippi, Texas
Kentucky, Michigan, Ohio, Tennessee
Illinois, Indiana, Wisconsin
Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, South Dakota
Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Oregon, Washington
Colorado, Kansas, New Mexico, Oklahoma, Utah, Wyoming
Alabama, Florida, Georgia
Federal Circuit
All federal judicial districts [includes the U.S. Court of Federal Claims, the U.S. Court of International Trade, and the
U.S. Court of Appeals for Veterans’ Claims]
The Supreme Court of the United States
Although the Constitution grants the Supreme Court both appellate jurisdiction
and original (trial) jurisdiction in certain types of cases (for example, those
involving foreign ambassadors or ones in which a state is a party), as a practical
matter the Supreme Court functions as a court of appeals.
Litigants who are unhappy with the results from either the state’s highest court
(in certain types of cases) or a Circuit Court of Appeals may petition the Supreme
Court for a writ of certiorari. These petitions essentially seek to convince the
justices that the case is of such import that they should grant review. Generally,
the Supreme Court is only interested in cases involving important constitutional
issues or possibly a conflicting interpretation of federal law among the Circuit
Courts of Appeals. The petitions circulate among the nine justices; if at least four
vote to take the case, the Court will issue a writ of certiorari, which means that
the Supreme Court will decide the case. If the Court refuses to issue a writ of
The Supreme Court, the highest court in the U.S., operates from this
certiorari, the lower court’s decision is left standing. A refusal by the U.S. Supreme
building in Washington, D.C.
Court to issue a writ of certiorari is not necessarily an indication that it supports
the lower court’s position; it merely means that at the time that the case was appealed, fewer than four justices wanted to hear it.
Jurisdiction: The Power to Decide a Case
Before any court, state or federal, may validly accept and decide a case, that court must have jurisdiction over that case. The word “jurisdiction” is
sometimes used to refer to a court system: for example, we might say that California and New York are different jurisdictions, meaning they make their
own laws and a California court is not bound by a New York law. But jurisdiction is used here to refer to any given court’s power to decide a given case.
In other words, if a court does not have proper jurisdiction over the case, it will be overturned on appeal.
Furthermore, to decide a case the court generally needs two types of jurisdiction: subject matter and personal. With regard to subject matter
jurisdiction, this means that you cannot get a divorce in bankruptcy court, because a bankruptcy court would lack jurisdiction. Personal jurisdiction
requirements are designed to ensure that there is a basic fairness, or due process, in the way in which the law is used by or against a person. Suppose
Heather is an Illinois resident whose car collides with one driven by Aaron, and this takes place in Illinois. It would seem unfair to Heather to allow Aaron
to sue her in Alaska, a place where she has never even been!
Federal Courts and Subject Matter Jurisdiction
There are two types of federal subject matter jurisdiction: federal question jurisdiction and diversity jurisdiction. A federal court needs one of these to
take a case. Federal questions involve claims arising under the federal Constitution, a federal statute, or a federal treaty. For example, if Better Bank sues
Bigger Bank for anticompetitive practices under the Sherman Act, an antitrust law, this would be a federal question case because a federal law is involved.
On the other hand, if Better sues Bigger for breach of contract, it would be state subject matter because the law of contracts is state law.
Some federal subject matter is exclusive to the federal courts, meaning these cases can only be brought in federal courts. For example, if Microcorp sues
Macrocorp for patent infringement, Micro would have to file its case in federal court. Other examples of exclusive federal jurisdiction include bankruptcy,
copyright, the bulk of securities law claims, admiralty and maritime claims, cases in which the United States is a party, and cases involving foreign
ambassadors or consuls. However, most federal laws fall into the concurrent jurisdiction category, meaning the case can be brought in federal or state
The other type of federal subject matter jurisdiction is known as diversity of citizenship. Diversity jurisdiction means that the plaintiff (the person suing)
and the defendant (the one being sued) are from different states. There is also a requirement that the claim be over $75,000. Since these cases typically
involve state law claims such as breach of contract or personal injury, it may seem odd to find them in federal court. The rationale is that an out-of-state
party might face local prejudice in state courts (where judges are often elected, and may lose their jobs if they make an unpopular decision) and so they
are given the choice to go to federal court (where judges are appointed for life or until they retire or are impeached for misconduct).
Example 1.5. Beta Inc., a company that is incorporated in and has its headquarters in Wisconsin, wants to sue Jared, a software developer
who lives in Minnesota, for breach of contract, claiming damages of $100,000. Although this claim arises out of state law, the case could be
brought in either a state or federal court, since diversity jurisdiction is present.
Personal Jurisdiction
Whether the case is brought in federal or state court, there must also be jurisdiction over the parties involved, known as personal jurisdiction or in
personam jurisdiction. Furthermore, the court must have personal jurisdiction over both the parties involved in the lawsuit. Since the plaintiff has chosen
the court in which he or she files the case, the plaintiff submits voluntarily to the court and gives it the right to decide his or her fate. But what of the
defendant, who certainly didn’t choose to be sued? Basic fairness, or due process (required by the U.S. Constitution in both the 5th and 14th
Amendments), demands that at a minimum the defendant be given notice of the lawsuit, and that he or she has at least “minimum contacts” with the
state in which the court is located (otherwise known as the forum).
The notice requirement is generally met by service of process, a procedure in which an agent of the plaintiff delivers the legal papers that commence the
lawsuit to the defendant. These papers tell the defendant the basis for the lawsuit (such as negligence or breach of contract) and direct him or her how to
proceed (such as filing an answer with the court or appearing in person).
If the defendant is a resident of the forum state (meaning the state in which the court is physically located), she may be served at her legal address, which
can often be done by mail. But if the defendant is a nonresident, there must be minimum contacts with the forum, in order to serve the defendant out of
state (known as long-arm jurisdiction, because the long arm of the law is reaching out to get the defendant back into the legal system). Minimum contacts
may consist of doing business in the forum state, causing an injury there, or owning real estate there.
Example 1.6. Berry Gordy, founder of Motown records and resident of California, sued the Daily News, which is located in New York, for libel
(a tort, involving publishing a false statement) in California. The newspaper contended California lacked personal jurisdiction, pointing out
that 99 percent of its business is in New York, and it does not solicit business in California. But because the News did have 13 subscribers in
California, and had deliberately targeted a California resident, the defendant had minimum contacts with California and could be sued in that
A court that has subject matter jurisdiction and personal jurisdiction may still refuse to hear a case on the grounds that the action should be brought in
the state with closer ties to the litigants or the subject matter of the action. For example, suppose Jason, a resident of California, is flying from Los Angeles
to Bakersfield, California, aboard a charter plane operated by a California company, which then blows up in Nevada airspace. California will be the most
likely venue to hear a case brought by Jason’s family against the charter company.
1.3 Chapter Summary
The basic foundation of U.S. law is the Constitution, but much of our legal tradition is also grounded in the common law tradition, where rules evolve
through case precedent, and the concept of having written statutes has come from the civil law tradition. The law is generally enforced through the
mechanism of the courts, which are organized in a manner that takes into account both geographical boundaries and subject matter restrictions. For any
court to render a valid decision in a case, it must have both personal and subject matter jurisdiction.
The Constitution sets forth restrictions on the federal government’s lawmaking ability, and also guarantees certain individual liberties, such as freedom of
expression, to individuals. However, both the Constitution and the statutory law made by legislatures often must be fleshed out by the courts. Thus the law
is not a static concept, but rather an evolving system of rules that will change over time.
Focus on Ethics
While the First Amendment right to free speech includes the right to commercial
speech, the limits on government restrictions are not always easy to predict. For example, courts
have ruled that the government can compel speech to protect consumers from confusion and
deception. The FDA is authorized by statute to regulate tobacco, and the agency required
cigarette manufacturers to place graphic images showing smokers with tracheotomies and
cancerous lesions on packages. A group of manufacturers challenged the law on the basis that it
violated their First Amendment rights, as the right to free speech often includes the right to not
speak. The judge agreed with the defendants, and found the FDA requirement unconstitutional.
Questions for Discussion
1. How do you think the government should balance the need to protect public health with the
right to free speech?
2. Tobacco companies have for years used advertising to convey a message to consumers that
smoking is manly (the Marlboro cowboy ads), sophisticated (product placement in Hollywood
movies), cool, and fun. They have targeted children with cartoon ads such as Camel’s Joe Camel
series. Is this ethical? Do the companies have a valid point that people, after all, decide for
themselves whether to start smoking?
3. What are the pros and cons of requiring gruesome pictures on cigarette packages? Do they
convey a message that verbal warnings do not? Are they just sensational fear-mongering?
4. Is there a valid reason to treat tobacco companies differently from other manufacturers whose
products can damage health, such as alcoholic beverage manufacturers and the makers of junk
Does requiring such graphic pictures of smokers on
cigarette labels violate the First Amendment?
2011 Getty Images
Case Study: Snyder v. Phelps
131 S. Ct. 1207, 179 L. Ed. 2d 172 (2011) ( )
Facts: Mathew Snyder, a Marine, was killed in Iraq. A group from the Westboro Baptist Church
picketed outside the funeral, holding signs that read “God Hates the USA,” “Fag Troops,” “America
is doomed,” “Pope in hell,” and “Thank God for dead soldiers.” The pastor of the church was Fred
Phelps, who believed that God hates homosexuality and is punishing America for tolerating it. In
addition, the church’s website, www.godhatesfags.org, made statements that Snyder’s father,
Albert, “taught Matthew to defy his creator,” “raised him for the devil,” and “taught him that God
was a liar.” The picketers were on a public sidewalk and followed police directions. Albert Snyder
sued, alleging among other things that the defendants had committed the torts (civil wrongs, to
be discussed in Chapter Two) and caused him emotional distress. The trial ended in a $5 million
judgment for the plaintiff. The case eventually wound up in the Supreme Court.
Issue: Does the First Amendment right to free speech protect Westboro’s activities?
Discussion: The Court noted that the speech in question was of “public concern,” since it involved
political/social issues, and thus was entitled to the highest degree of protection under the First
Amendment. Whether the statements were inappropriate or controversial was irrelevant, and the
fact that the church used the funeral of a marine as an occasion to convey its message, in part to
gain publicity, did not matter.
The Westboro website’s comments were also protected, with a majority of the Court apparently
agreeing with the reasoning of the Fourth Circuit Court of Appeals, which found a reasonable
In 2007, Pastor Fred Phelps of Westboro Baptist
Church demonstrated with family members outside
the federal courthouse in Baltimore, Maryland, where
a jury deliberated over a suit brought against him by
Albert Snyder. Members of the church held signs at
the funeral of Snyder’s son, a soldier killed in Iraq, in
person would not take the statements literally, but rather would view it as “rhetorical hyperbole,”
Jed Kirschbaum/Associated Press
not actual facts about the soldier and his father. Justice Breyer filed a concurring decision
(meaning that he agreed with the majority’s result, but not necessarily with its reasoning), emphasizing that the picketing was within the First
Amendment but not including comments on the website. Justice Alito filed a dissent (meaning that he disagreed with the holding), stating that there
could be open and vigorous debate on public issues without the need to protect vicious comments of the type involved in this case.
Holding: Westboro’s demonstration and website were protected under the First Amendment.
Questions for Discussion
1. The First Amendment restricts government controls on speech. Since Snyder was suing a private individual (Phelps and the church), how was the
government involved?
2. Why did the majority of the Court decide this was protected speech?
3. Do you think it is hard to draw the line between speech that the First Amendment should protect and speech that can be regulated? Explain.
4. Do you agree with the majority, the concurrence, or the dissent? Why?
5. Suppose a case arises where a website is devoted to negative remarks about a particular company. Employees and customers are invited to leave
their opinions on a public bulletin board. Would this type of website be treated the same as the one involved in the Snyder case?
Case Study: Citizens United v. Federal Election Commission
558 U.S. 50 (2010) ( )
Facts: A nonprofit corporation, Citizens United, produced a documentary called Hillary, which was critical of then Senator Hillary Clinton, who was a
candidate for the Democratic Party’s presidential nomination in 2008. The film violated the Bipartisan Campaign Reform Act of 2002 (BCRA), Section
203, which bans “big money” from unfairly influencing federal elections. Citizens United, concerned about possible civil and criminal penalties for
violating the BCRA, filed a suit against the Federal Election Commission (FEC) asking the court for an injunction to prohibit the FEC to apply Section
203 to the film. Citizens United argued that Hillary was protected political speech and could not be regulated by the FEC. The U.S. District Court for
the District of Columbia denied the injunction and ruled that Section 203 was constitutional because of prior decisions of the U.S. Supreme Court on
similar issues. In essence, the District Court reasoned that since Hillary was a form of express advocacy intended to inform voters that Senator
Clinton was not qualified for the office of president, it was a campaign speech, and Section 203 was applied correctly. Citizens United appealed and
the case eventually went to the Supreme Court.
Issues: Is an advocacy documentary created by a corporation protected as political speech under the First Amendment? Is Section 203 of the BCRA
Discussion: The Court held that the prohibition on such corporate independent expenditures, backed by criminal sanctions, is an “outright ban on
speech,” in violation of the First Amendment’s guarantee of the freedom of speech. As part of its decision, the majority said that as a vital part of
democracy, “political speech must prevail against laws that would suppress it.” Since corporations have been recognized by the Court as “persons,”
they have the First Amendment rights. The Court ruled that the government “may not suppress political speech on the basis of the speaker’s
corporate identity.” The very basis of the First Amendment is to prevent the government from disfavoring certain viewpoints and speakers. The Court
rejected the federal government’s argument that corporations should be treated differently under the First Amendment because they are not “natural
persons” (although media corporations were exempted from Section 203 of the BCRA). The Court also rejected the government’s argument that the
ban on corporate speech is necessary to prevent corruption. Furthermore, the Court overruled some of its prior decisions that allowed limitations
on political speech. The Court concluded that Section 203 was unconstitutional and could not be applied to Hillary.
Holding: The district court’s judgment was reversed as to the constitutionality of the restrictions on corporate independent expenditures.
Questions for Discussion
1. What was the purpose of the Bipartisan Campaign Reform Act (BCRA) of 2002?
2. Why did Citizens United file a lawsuit against the Federal Election Commission? What did Citizens ask the district court to do?
3. What was the decision of the U.S. District Court for the District of Columbia?
4. What was the reasoning of the Supreme Court with respect to the constitutionality of Section 203 of the BCRA? Why is this decision considered
5. Do you agree that corporations, being “persons,” should enjoy the same constitutional protection as “natural persons” (at least as it concerns the
freedom of speech clause of the First Amendment)?
Critical Thinking Questions
1. Describe the differences between the common law and civil law systems. Which do you think is preferable? Explain.
2. Is the only law that which is written in statutes or court decisions? In Nazi Germany, those written laws made it legal for the government to commit
genocide against certain groups such as Jews, homosexuals, and gypsies. After World War II ended, Nazis were prosecuted for those same acts, under the
theory that they had violated “natural law.” Should there be such a thing as natural law? Are there some acts which should be considered illegal,
regardless of what a statute says, or is this equating law and morality?
Hypothetical Case Problems
Case 1. Javier is traveling from his home in New York to Dallas, Texas. While driving through Oklahoma, his brakes fail and he is injured in the ensuing
crash. Javier wants to sue the maker of his car, Energy-Auto Inc. Energy’s headquarters is in New York. It does not have any dealerships in Oklahoma or
do any advertising in Oklahoma.
A. In which state or states can the plaintiff sue the defendant?
B. Assume that the plaintiff will sue the defendant for $100,000 in damages. Can the suit be brought in federal court? Explain.
C. If Javier only had relatively minor damage, and was suing for $9,000, could he sue in federal court?
D. In a similar situation, a defendant argued that the auto manufacturer could still be held liable in Oklahoma, because it was foreseeable that the
defective car could end up there and cause injury. The court disagreed, and found Oklahoma did not have jurisdiction. Why did the court think it
inadvisable to base jurisdiction on foreseeability? If it had ruled otherwise, where would makers of products potentially have to stand trial? What
would this do to their costs?
Case 2. Amanda is extremely annoyed with her next-door neighbor Nicole, whose perfume is so strong it lingers in the hallway of their apartment
building. Amanda sues Nicole, and the trial court dismisses the case, saying that there is no legal basis for the claim. Amanda wants to appeal.
A. Would this case present a question of law or fact?
B. Which court would likely handle the appeal? What would be the likely outcome?
C. Suppose Amanda loses her appeal at the state supreme court level, and now petitions the U.S. Supreme Court to hear her case. Do you think the
Supreme Court will grant her a writ of certiorari? Why or why not?
Key Terms
Click on each key term to see the definition.
administrative agency
A government entity that is part of the executive branch, which makes rules governing a specific type of activity and has the power to hold judicial type
administrative law
The rules made by administrative agencies, which regulate in specialized areas.
civil law
(1) Law designed to protect individual rights and allow individuals to sue for redress of wrongs, as opposed to criminal laws, which protect society in
general; (2) a legal system that puts the most emphasis on statutory rules rather than judicial decisions.
commerce clause
From Article I, Section 8 of the U.S. Constitution, giving the federal government the right to regulate interstate commerce. Broadly interpreted by the
courts, it expanded the power of the federal government.
common law
Law made by the decisions of judges in individual cases.
To force or mandate.
concurrent jurisdiction
Cases which can be brought in either federal or state court.
The supreme law of the land. Unless otherwise noted, the constitution is used generally to refer to the basic governing document of the federal
government, but states and other governmental units can also have constitutions.
court of limited jurisdiction
A court that hears only cases involving a specific type of situation, or claims arising under a certain law; for example, small claims court, tax court.
diversity jurisdiction
A type of federal court subject matter jurisdiction applying to cases involving state law, which may be brought in federal court if the amount in
controversy is over $75,000 and no plaintiff is from the same state as any defendant.
due process
The concept of basic fairness in how the law is applied, that no person should be denied life, liberty, or property without due process of the law. Found in
both the 5th and 14th Amendments to the U.S. Constitution.
exclusive jurisdiction
Cases that can only be brought in federal court.
federal question jurisdiction
A type of federal court subject matter jurisdiction applying to cases involving federal law.
The state where the court is located.
(1) A legal system; (2) the power of a court to validly decide a case.
A set of rules capable of being enforced by government.
An elected body of representatives that is empowered to enact statutory law. In the United States, Congress is the federal legislature, but legislatures also
exist in every state, and on the local level in the form of bodies such as city councils.
minimum contacts
The degree of connection that a nonresident defendant must have with the forum state, consisting of owning real estate, doing business, or causing injury
in the forum.
personal jurisdiction
The right of the court to decide the fate of the parties before it.
precedent/doctrine of precedent/stare decisis
stare decisis The decision in a previous case sets a rule to guide the decisions of future cases.
service of process
Procedure by which a defendant is given notice of a civil proceeding against him, consisting of delivery of a summons and complaint.
Codified law; law that is passed by legislatures and set out in written codes, accessible to the public.
subject matter jurisdiction
The right of the court to decide the type of law presented by a case before the court.
Uniform Commercial Code
A statutory law for certain types of commercial transactions, including sales of goods, which has been adopted by all 50 states. Many of its rules are
similar to the common law, but it contains important differences.
Legally proper or most convenient place where a particular case should be handled.
writ of certiorari
Document granted by the U.S. Supreme Court, indicating it will hear a case.
Chapter 2
Learning Objectives
After studying this chapter, you will be able to:
1. Describe the difference between intentional torts, negligence, and strict liability torts.
2. Describe the difference between torts and crimes.
3. Know the definitions of specific torts.
4. Analyze a situation in terms of which specific torts may have been committed.
The law of torts concerns itself with private wrongs or injuries, other than a breach of contract, for which a court will award damages. In fact, the word
“tort” dates back to Middle English and means “injury or wrong.” A tort is committed when a person fails to observe a duty of care by either intentionally
or carelessly causing injury. The harm to the other person could be physical, emotional, or to his or her property. There are many different torts covering
a variety of wrongful acts that individuals commit upon one another.
Example 2.1. Sarah thinks Michael, who sits next to her in Business Law, is copying her exam answers. Sarah is so enraged she punches
Michael in the face, breaking his nose.
Upset about the exam incident, while driving home Sarah runs a red light and hits Ben, a pedestrian attempting to cross the intersection.
When she gets home, Sarah takes her pet boa constrictor snake out of his cage. The snake promptly goes next door and eats the neighbor’s
What a day Sarah is having! As we will learn in more detail later, she has managed to commit three different types of torts. When she hit Michael, she
committed the intentional tort of battery. When she ran over Ben, she committed negligence. The fact that she has a wild animal as a pet and he escaped
and caused damage to the neighbor’s property (the dog) makes her potentially liable for a strict liability tort.
Note that some acts may be both torts and crimes, including Sarah’s punching her classmate. Another
of these situations occurred when former pro football player O. J. Simpson was suspected of killing
his ex-wife and her friend and was prosecuted for the crime of homicide. If he had been convicted,
he would have spent a lot of time in prison. The purpose of criminal law is to protect society in
general (which it does by punishing wrongdoers). O. J. was in fact found not guilty, probably because
convicting someone of a crime requires a high standard of proof. The prosecution must prove the
defendant committed the crime beyond a reasonable doubt, which they were unable to do. Members
of the jury said afterward that they thought O. J. probably had done it, but that was not enough to
However, a civil case for the tort of wrongful death was then brought by the families and estates of
the deceased. The purpose of civil law is to compensate victims of wrongdoing, usually by ordering
the wrongdoers to pay them monetary damages. The burden of proof in civil cases is much lower
than in criminal cases: generally, the plaintiff must show it’s more likely than not that the defendant
committed the tort (known as the preponderance of evidence standard). The jury in the civil case
was fairly easily convinced, and O.J. was found liable.
It should be noted that tort law is generally a matter of state law, and thus it can differ from
jurisdiction to jurisdiction. The rules we shall examine in this chapter are fairly typical and follow
closely in the common law tradition, but students should remember that in any given situation, it is
always possible that a particular state’s rule may be different.
O. J. Simpson in the courtroom during the murder trial.
Douglas C. Pizac/Associated Press
2.1 Types of Torts
Torts can be classified into three general categories:
1. Intentional torts
2. Negligence torts
3. Strict liability torts
Intentional torts, as the name implies, are torts that arise out of an intentional act. Intentional in this case means voluntary, not that there was a motive
to cause harm. If Jack shoves Rafe, intending only to make him move out of the way but in fact knocking him down and causing him to break an ankle,
Jack has committed the intentional tort of battery. It makes no difference that Jack didn’t want to hurt Rafe.
On the other hand, if Jack was standing next to Rafe and Jack, who is an epileptic, suffered a seizure and his arm convulsively flew out and smacked Rafe,
who was injured, there is no intentional tort because Jack’s action was not voluntary.
Negligence torts are situations in which a duty of care is breached unintentionally, directly causing foreseeable harm. An example would be if Bigger Bank
neglects to clear their entrance after an ice storm, and Lebron slips on an icy patch and falls and breaks his leg. Bigger Bank did not mean for Lebron to
suffer harm, but they have failed to meet their duty to keep their premises reasonably safe.
In The Media: The Flying Pedestrian: Is Getting Hit by a Train a Form of Negligence?
On a rainy Saturday morning on September 13, 2008, 18-year-old
Hiroyuki Joho was rushing to catch a train at the Edgebrook
Metra Train Station in Chicago. His mother had just dropped him off at the
station; he was using a black umbrella as he rushed across a designated
crosswalk over the train tracks. At the same time, an Amtrak train was traveling
at 73 miles an hour through the Metra Train Station. Even though upon seeing
Mr. Joho on the tracks directly in front of the train, the Amtrak conductor blew
his horn and flashed his headlight, it was to no avail. A second or two later, an
unsuspecting bystander, 58-year-old Gayane Zokhrabov, was struck from behind
by a large part of Mr. Joho’s torso, as she waited to catch another train. The
impact knocked her to the ground, fracturing her leg and wrist and injuring her
Ms. Zokhrabov filed a tort lawsuit in Illinois state court against the estate of Mr.
The Amtrak conductor was unable to stop the train in time after Mr. Joho
Joho, alleging that his negligence in crossing in front of a moving train resulted
stepped onto the tracks.
in her injuries. The case was dismissed as the trial court agreed with the
Jacquelyn Martin/Associated Press
estate’s argument that, even if Joho was negligent, he owed no duty of care to
Zokhrabov because it was not reasonably foreseeable that upon being hit by a train, his body would hit a woman 100 feet away. Ms. Zokhrabov
appealed this decision and the Illinois Appellate Court reversed the trial court in its 2011 decision. Noting the open and obvious danger associated
with crossing active train tracks, the court stated that it is a “well-established principle of tort law that the particular manner or method by which a
plaintiff is injured is irrelevant to a determination of the [defendant’s] liability for negligence.”
Acknowledging what it called a lack of “flying pedestrian” cases, the court concluded that “the reasonable likelihood of injury occurring was great
given the relative force of the approaching Amtrak train, that the magnitude of the burden imposed by guarding against the harm was insignificant,
since Joho needed only to pause, look down the tracks, and then time his crossing accordingly, and that the consequences of placing the burden on
Joho would have been minimal.” Therefore, Joho owed Zokhrabov a duty of care. The court was careful to state that it was not ruling that Zokhrabov
had proven the remaining three elements of negligence: breach of the duty of care; proximate causation; and damages.
The duty of care is the first element to a negligence case. A duty of care is the standard of caution or watchfulness or prudence one owes another
person, in light of the specific circumstances at the time. But just because a duty of care is owed and breached does not automatically mean that the
tort of negligence has been committed.
Sources: (
Strict liability in tort arises when someone suffers an injury not from anyone’s willful or negligent act, but rather by engaging in some intrinsically
dangerous activity or, under certain circumstances, through the manufacturing of an unsafe product. As an example, if Sasha, an explosives expert, rigs a
car to blow up for a movie stunt and, despite following all safety protocols and using great care, a piece of the car flies hundreds of feet in the air and
strikes Carlos, a worker on the set, Sasha will be strictly liable for the injury. Working with explosives is an ultrahazardous activity (an inherently
dangerous activity that cannot be made completely safe), and anyone who engages in such an activity is strictly liable for the harm it causes regardless of
2.2 Intentional Torts Against a Person
The tort of battery consists of the defendant’s doing an intentional act that causes the plaintiff’s person to be touched in a harmful or offensive manner,
without a legal justification. Let’s break that down, step by step, using Sarah’s punching Michael to illustrate the definition:
1. Sarah would be the defendant, and Michael the plaintiff.
2. Sarah did voluntarily touch Michael’s person. Note that the “person” includes not only Michael’s body but also things immediately attached to him. If Sarah
did not touch Michael’s skin but she yanked out the nose ring he was wearing, it would still be a battery.
3. Being punched in the face or having your ring yanked out would be harmful, because it would hurt! Note that injury is not necessary, and the touching
does not even have to be painful if it would be sufficiently offensive to a reasonable person. If Sarah had instead spit in Michael’s face, splattering his
cheek and eye with phlegm, it would probably be a battery.
4. Sarah did not have a legal justification for touching Michael. He did not consent, and she did not act in self-defense, defense of property, or defense of
another person. Sarah may have been provoked by Michael’s looking at her test, but that is not a legal excuse.
The tort of assault consists of intentionally causing someone to reasonably expect that he or she is about to be the victim of a battery. The difference between
battery and assault is that in battery, a harmful or offensive touching must take place, where in assault there is no need for an actual touching, only the
fear that one is about to be touched without one’s consent. If Linda points a gun at Irving and causes him to fear that he is about to be shot, she is liable
for assault—even if she never intended him any harm. It is enough that she purposely pointed the gun at him and that he was justifiably expecting he was
about to be touched in a harmful way. If she goes on to shoot him and the bullet “touches” him, she will also be liable for battery. In the second case,
Irving could sue Linda both for assault and battery, since they are separate torts, and could recover damages for each.
Note that the same legal justifications—namely consent, self-defense, defending another, or defending property—that applied to battery will also negate
liability for assault. If Josh chooses to play football, he is basically giving implied consent to a lot of what would be assault and battery if it happened
outside a football game. However, he is only consenting to the normal conduct that goes on in a football game. If the safety pulls out a gun and shoots at
Josh, there is a tort. Likewise, a person can only use a reasonable degree of force in defending himself or another or property. If an 8-year-old threatens
to hit you with a stick, and you respond by breaking the child’s arm and leg, you are committing a tort.
False Imprisonment
False imprisonment is committed when the defendant does an intentional act that confines the plaintiff against his or her will (in other words, takes away
the plaintiff’s freedom of movement). The confinement can be carried out by physical means such as bodily restraint, or by using barriers such as a
locked door. It can also be accomplished by psychological means through threats of physical force or the false assertion of legal authority.
Example 2.2. Jessica is having Nathan, the hunk who sits in front of her in Business Law, over to her place for a study date. Jessica doesn’t
want her obnoxious roommate Heather around, so Jessica ties her up, gags her, and pops her into a closet for the evening.
Jessica would also be committing false imprisonment if she told Heather, “Stay in your room all night or I’ll beat you to a pulp,” and Heather was
frightened into restricting her movements to her bedroom.
Note that false imprisonment only applies if the restraining action is unjustified. Most states have passed laws that provide retail stores with a conditional
privilege to detain a suspected shoplifter. Often referred to as the “shopkeeper’s privilege,” these laws generally provide that a retail store can detain a
suspected shoplifter so long as the detention is reasonable under the circumstances. The store must have a reasonable basis to believe that the person is
attempting to steal merchandise, the nature of the detention must be reasonable, and the duration of the detention must be for a reasonable amount of
time. For example, if Sam, a security guard at the Buy-More store, has reason to believe Jason is shoplifting, and Sam restrains Jason by holding him by
the arm until the police arrive, this may not be false imprisonment as long as Sam is acting reasonably. But if Sam chains Jason in a storeroom for three
days until he confesses, this would be unlawful confinement, regardless of whether Jason is a shoplifter or not.
That said, many merchants are so skittish about the possibility of lawsuits that they instruct employees not to touch the customers, even when they may
be shoplifting.
Intentional Infliction of Emotional Distress
The tort of intentional infliction of emotional distress arises when one person intentionally, through extreme and outrageous conduct, causes another to
suffer extreme emotional distress. The word “intentional” means more than simply voluntary in this context; it means that the defendant intended to cause
the distress, or at least acted recklessly with regard to the plaintiff’s emotional well-being. For example, in a situation where an uncle drugged and raped
his 13-year-old niece, who suffered a nervous breakdown afterward, there is probably intentional infliction. But in a famous case involving a lawsuit
against former President Bill Clinton, where a woman named Paula Jones alleged that Clinton had made suggestive remarks, put his hand on her thigh,
attempted to kiss her, and exposed himself, the court said that even if the incidents had occurred, they were not outrageous enough to constitute
intentional infliction of emotional distress and dismissed the claim as a matter of law.
Even when truly outrageous conduct is involved, a problem with this tort is that mental suffering is hard to prove. Where there is no physical
manifestation of the emotional harm, damages are not likely to be awarded. In fact, some states require physical manifestation of the injury as an element
of the tort. For example, if a plaintiff can show that her hair is falling out as a result of grief suffered from the defendant’s conduct, that she has gained
50 pounds since, has had to undergo therapy for a sleep disorder, and has been prescribed Xanax for her general anxiety, she has a decent chance of
proving severe emotional distress. But if she is merely upset, humiliated, and occasionally bursts into tears when she recalls the incident, she has likely not
proven this element of the tort.
Invasion of Privacy
Another important tort concerns a person’s fundamental right to privacy and offers protection against unreasonable interference with this right. The tort
of invasion of privacy is commonly narrowed down into four separate categories:
1. Appropriation of a person’s name or likeness for commercial use;
2. Intrusion into a person’s seclusion;
3. Placing a person in a false light by facts told to others; and
4. Public disclosure of private facts about an individual.
Under the first type of situation, one person attempts to profit by using another’s name or likeness for commercial purposes. The most obvious example is
using a person’s name in connection with a product without the person’s permission. If an advertisement for a brand of soft drink shows actor Julia
Roberts drinking a can, and Ms. Roberts has not consented to her picture being used, this is likely a tort. On the other hand, if a newspaper shows a
glamorous picture of Julia at the Academy Awards as part of a story on the Oscars, this is not a tort, because it is part of a news story and not considered
“commercial use,” even though the newspaper is trying to sell issues.
The second type of situation, intrusion into a person’s seclusion, essentially entails intruding into another’s privacy when a reasonable expectation of
privacy exists. A classic example is that of a peeping Tom. But what if the target of the defendant’s interest is in a public place? If a paparazzi
photographer relentlessly follows Paris Hilton around town, taking her picture constantly without her consent, it might still be invasion of privacy. This is a
matter of degree, but if, for example, the photographer is constantly walking in front of her down the sidewalk snapping pictures, interrupts her meals
with friends in restaurants by looming over her at the table still snapping away, and zooms up in a speedboat to photograph her when she is swimming in
the ocean, the photographer might be liable.
The third type of situation that gives rise to the tort is placing someone in a false light. For example, the National Enquirer once ran a story titled “Clint
Eastwood at 63” and used the words “Exclusive Interview” in proximity to the title, as well as enclosing various statements in quotes. Although the paper
may not have explicitly stated that Clint had given them an interview, it did its best to give that impression. Eastwood successfully argued that he was
damaged by this, since in fact he would never have granted an interview to a sensationalist tabloid.
Finally, the publication of private facts about someone that a reasonable person would find objectionable can also lead to liability. If Phil tells others that
Cassandra is a bed wetter, a fact that Cassandra had not made public, he could be liable to her. Being a bed wetter is something that a reasonable person
would consider objectionable if Cassandra is 30 years old, but not if she is 3. If Cassandra is 30, she can sue Phil for invasion of privacy, even if the
statement made by Phil is true, as long as it was not public knowledge and Cassandra confided the information to Phil under circumstances in which she
had a reasonable expectation that Phil would keep the information confidential (e.g., if Phil is a close friend or family member). In essence, the law holds
that there are some matters that we have the right to keep to ourselves and some that, under appropriate circumstances, those in whom we entrust
confidential matters have a responsibility not to reveal.
Publishing a false statement about someone that tends to harm the person’s
reputation gives rise to the tort of defamation. If the statement is spoken it is
slander, and if it is written it is libel. Oral statements broadcast over a mass
medium such as a radio, television, or podcast are considered libel rather than
Publication means simply that a third person, someone other than the plaintiff or
the defendant, saw or heard the statement. For example, if Latoya and David are
standing together and no one else is around, and Latoya says, “David cheated on
his Business Law exam,” there is no defamation because there is no publication.
But if Latoya says the same thing in front of Emily, or if Latoya writes it on the
wall of a public restroom, there has been publication. Assuming David did not in
fact cheat on his exam, he likely has a defamation claim.
Note that the statement in question must be factual in nature; opinions do not
count as defamation. If Delon states publicly that the chef at Chez Paris is the
worst cook ever, this is unlikely to be actionable as it is Delon’s opinion. Also,
satire is not usually defamation.
Beyond the Book: “Do You Like to Insult
Click here ( to watch an Australian lawyer
give a quick explanation of how to insult people without
being liable.
In 2011, Google lost a defamation case in Italy in regard to the search
engine’s autocomplete suggestions feature. When typing the anonymous
plaintiff’s name in the search engine, Google suggested search possibilities
including the words “con man” and “fraud.” The company was ordered to
purge libelous autocorrect suggestions by the Court of Milan.
If the false
Newscast/Associated Press
statement is made
about a person who is a public figure, such as a celebrity or government official or
someone who has been involved in a high-profile situation, then the plaintiff needs to
show that the defamatory statement was made with malice. Malice, for purposes of
defamation, is the making of a statement either knowing it to be false or acting with
reckless disregard for its truth or falsity. For example, if a newspaper published a story
about Senator Doe that stated he had taken cocaine, and the only source the paper had
was an anonymous phone tip, this would likely constitute malice.
Why is publication an essential part of defamation?
Plaintiffs must also be sufficiently identified to have a claim. Saying that “all lawyers are
liars and thieves” is clearly a defamatory statement, yet no individual lawyer will be able
to successfully sue the person who has made the statement because it is too broad and does not sufficiently affect or identify any one member of the
defamed group. On the other hand, falsely saying that attorney Sandra Jones is a lying thief is slander since an individual is clearly specified. Likewise, the
statement that all lawyers at Adams, Benitez & Chaudhry, P.C. (a law firm in the city of Erehwon) are crooks is actionable if a small law firm is involved
because false statements involving a small group of people can be deemed to injure all of its members. The larger the group, the less likely that any one
member will be able to establish actual harm to their reputation as a result of the statement.
Keep in mind that for any defamation claim, the plaintiff must prove the statement is false. However, this is not the case for invasion of privacy. For
example, if Justin goes to a clinic for treatment of his herpes virus, and a nurse at the clinic later tells Justin’s friends that he has herpes, there would be
no defamation but there would likely be the tort of publication of private facts. The information is very personal, potentially distressful if made public, and
there is no public interest to be served by making it known.
Fraud, or intentional misrepresentation, occurs when a person makes a false statement about a material fact in order to induce another to take action
that causes him or her to suffer some loss. Note that fraud is not only a tort, but also a defense to breach of contract and a number of different crimes,
depending on the situation. The definition is fairly similar in all contexts; five elements must be met. For the tort of fraud, there must be:
1. An intentional misrepresentation by the defendant;
2. about a material fact;
3. made in order to induce the plaintiff to take a specific action;
4. where the plaintiff reasonably relied on the defendant’s misrepresentation; and
5. where the plaintiff suffered a material loss.
Let’s look at an example.
Example 2.3. Dan wants to sell his old car. He knows that Ken wants an automobile that is in good condition with less than 50,000 miles on
it. Dan tells Ken that the car is “a real dream car,” that he is willing to sell Ken the car for $2,000, and that the car has only 35,000 miles.
Ken looks at the odometer, which does read 35,000. In fact, the odometer was disconnected for a long time and the actual mileage is 90,000
miles. Ken purchases the car after a cursory inspection, relying on his friend’s statements. A week later, Ken takes the car into a mechanic
for servicing and is told that the engine has far more wear than a mere 35,000 miles could account for, and that the mileage must be at
least double that. Has Dan committed fraud?
Let’s break it down, step by step:
1. Dan intentionally misrepresented the car’s mileage. He obviously must have known about the disconnected odometer. But the statement that the car is a
dream is not a misrepresentation of fact, but rather a mere opinion, or the sort of exaggerated description that is not to be taken seriously.
2. The mileage on a used car is material, since it is something a reasonable person would consider in deciding whether to buy the car.
3. Dan intended for Ken to believe him, because Dan wanted Ken to buy the car.
4. Ken took reasonable steps to verify Dan’s statement, by checking the odometer. If Ken hadn’t bothered to do this, he might not have a good case for fraud.
The law expects a reasonable person to verify what he’s told if it’s relatively easy and cheap to do so.
5. Ken has damages, because he has been deceived into paying too much for the car.
Suppose Dan had instead stated that the car was in excellent mechanical condition, but in fact he’s been having problems with the transmission for the
past two weeks? This is also possible fraud. But if Dan says nothing about the condition of the car, and Ken never asks, the law generally says no fraud,
since there is no misrepresentation. However, if there is a fiduciary relationship, which is one involving an inherent degree of special trust (such as
attorney-client, doctor-patient, priest-parishioner, guardian-ward, trustee-beneficiary), the law recognizes that there is a special degree of trust, and thus a
failure to disclose pertinent information may be tantamount to deliberate lying. If a priest is selling a car to a member of his congregation, he is expected
to speak up and tell the buyer about the transmission troubles.
2.3 Intentional Torts Against Property
Trespass to Land
The tort of trespass to land requires an intentional physical act that results in an
intrusion into the land of another without the owner’s consent. Thus, walking on
another’s property, throwing garbage that lands on it, or shooting a gun over it
are all examples of trespass to land.
Not every instance of entering another’s property without consent constitutes
trespass. If one enters into another’s land by mistake or by accident, there is no
trespass, provided that the person leaves immediately as soon as she becomes
aware that she is trespassing. Furthermore, trespass is excused if it occurs under
emergency circumstances, such as entering the land of another while fleeing from
a wild animal or to render emergency assistance to someone on the land.
Where no harm is done to the land and when the trespass is of brief duration,
courts will generally award nominal damages—usually the sum of $1.00. Where
This man is committing an intentional tort against property by trespassing
on land without the landowner’s consent.
the trespass is of a continuing nature, however, substantial damages can be
awarded. The property owner can also ask a judge to issue an injunction (a court
order that prohibits specific acts) requiring the defendant to cease trespassing on
the plaintiff’s land. Ignoring an injunction can result in imprisonment for contempt
of court.
Trespass to Personal Property
Although this tort also uses the word “trespass,” it is not the same thing as the tort above. The defendant’s simply touching the plaintiff’s personal
property (such as a car, a dog, a watch, or a yacht) is not enough; he must interfere with the plaintiff’s ability to possess or enjoy his property.
Example 2.4. Ritchie moves Sierra’s bicycle, so that he can get his own bike into the rack. Since Ritchie has not harmed the bike, and Sierra
was not trying to use it at the time, there is no tort.
Running late one day, Ritchie takes Sierra’s bike without her consent and rides it to work. Sierra comes out an hour later to discover her
bike missing. Ritchie returns it at the end of the day. This would be trespass, since Ritchie has done an intentional act that interfered with
Sierra’s ability to use her bike.
The third property tort is conversion, which is similar to trespass but involves more serious interference with the plaintiff’s rights. Suppose Ritchie instead
takes the bike, intending to return it later, but the bike is stolen from the rack where Ritchie parked it at his work. This would be the tort of conversion.
Ritchie’s interference with Sierra’s possessory rights is so severe that her rights have been rendered worthless. It does Sierra no good to own a bike that
is now in the hands of an unknown thief.
Business Torts
Although any of the torts mentioned in this chapter can occur in a business context, there are also some intentional torts that are inherent to a
commercial setting. The most common is wrongful interference with a contract, in which the defendant intentionally induces another person to break a
contract. If Maria, an opera singer, has contracted to perform next season for the Metropolitan Opera and the City Opera talks her into singing for them
instead, Maria is liable to the Met for her breach of contract, and City, provided they knew of the Maria-Met arrangement, can be liable for this tort.
Some states also allow suits for interfering with contract negotiations, and some have causes of action for various predatory business practices, but these
vary considerably from state to state.
2.4 Negligence and Strict Liability
The law states that everyone has the duty to act with reasonable care to avoid creating undue risk of harm to others. For example, you have a duty to
operate your car in a reasonable manner. If you are driving too fast on a snowy day, lose control, skid across a sidewalk and wipe out a pedestrian, you
would likely be found negligent and have to pay compensation to the person you injured. It’s not relevant that you did not intend to harm the pedestrian:
negligence is not based on intentional acts, but frequently results from careless ones. (If you intended to mow down the pedestrian, you were committing
battery.) The law reasons that between you and the hapless pedestrian, you are more responsible for the harm and it makes sense that you should bear
the cost. Hopefully, negligence law encourages people to be more careful in their activities!
For the plaintiff to prove negligence against the defendant, the plaintiff must show five elements:
1. Defendant owed plaintiff a duty of care;
2. Defendant breached that duty;
3. The defendant’s breach was the actual cause of plaintiff’s damage;
4. The defendant’s breach was the proximate cause, or foreseeable result, of the plaintiff’s damage; and
5. The plaintiff does indeed have damage.
Consider a situation where Linda, who owns a grocery store, displays her fruit and vegetables in steeply angled racks. They look good, but are also apt to
roll and fall on the floor. Tom is shopping in the store and slips and falls on an errant cherry, breaking his leg. Linda owes a duty to display her wares in
reasonably prudent fashion. She has probably breached this duty, because the way the racks are angled made it likely produce would fall on the floor.
But suppose that Linda stores her fruit in flat racks, and the customer immediately in front of Tom had scattered the fruit on the floor. In that case, Linda
has not breached a duty and is not negligent. Even a reasonably careful store owner cannot ensure that there is never anything on the floor! Linda would
also breach a duty if she displays the produce in a reasonably safe manner, but does not do a reasonable job of monitoring the cleanliness of the floor. If
there had been spilled fruit on the floor for an hour before Tom’s wipeout, Linda has likely breached her duty to keep the premises clean.
Actual cause means that but for the defendant’s negligent act, the plaintiff would not have been injured. In other words, if Linda had not stacked her fruit
carelessly, Tom would not have slipped, fallen, and been hurt. Thus actual cause is present. But if a tornado had swept off the roof of Linda’s store,
hurling cherries everywhere, and now Tom slips and falls, there is no actual cause. Linda was still careless. However, “but for Linda’s display, would Tom
have been injured?” Yes, he would have slipped and fallen on the cherry anyway, since it was the tornado and not Linda’s habits that resulted in the
cherry being there.
Even after establishing actual cause, there must still be proximate cause for Linda to have
liability. This means that it must be reasonably foreseeable that the defendant’s negligent
act would cause injury to someone who is in the physical location of the plaintiff. Is it
foreseeable that Linda’s careless display would cause injury to a shopper in the produce
aisle? Yes, so there is proximate cause, and Tom’s case is looking pretty good! But
suppose that Tom falls on the cherry, causing explosives in his backpack to detonate, and
debris from the explosion is hurled across the street where it harms Sonja. Is Linda liable
for Sonja’s injury? No, because it is not foreseeable that a negligently dropped cherry
would injure someone across the street. It is important to note that we do not have to
foresee how the harm occurs! For example, if Tom’s exploding backpack injured Erin, who
was standing next to him, there could still be proximate cause. It is foreseeable that the
negligently displayed fruit could injure someone in Erin’s position—another shopper in
the produce aisle.
Beyond the Book: “Altar of Sacrifice”
“Altar of Rock ‘n Roll Murder: When Lyrics Lead to Viole…
Sacrifice” (
The final element in the plaintiff’s case is damages. If Tom slips on that cherry, falls, but is
not injured, there is no tort, since the case would lack this final element.
Defenses to Negligence

In this video, three teenage boys confess to killing a
teenage girl as a sacrifice to the devil based on the lyrics
of the metal band Slayer. The boys are sentenced to 25
years to life and the victim’s family sues Slayer and its
recording companies.
Review the elements of negligence, and consider how
the facts in the Pahler case would fit the legal
requirements. What do you think is the most difficult
element of negligence to prove in these types of
cases? Why?
There are certain circumstances under which a negligent defendant may avoid liability, or
have the extent of his liability reduced. Recognized defenses to a negligence action include
contributory negligence, comparative negligence, and assumption of risk.
At common law, a party suing under a theory of negligence could not recover damages if
he or she was at fault and that fault contributed to the injury. If Tom was the one who
had knocked the cherry on the floor, he would not be able to recover damages from
Linda, as he would have been contributorily negligent.
Problems arise under contributory negligence when parties are not equally negligent;
barring both parties from recovering any damages when one of them is much more
Similar cases have been brought in situations
involving violent video games. The Federal Trade
Commission has found that the video industry
deliberately targets children with violent content.
How would this work to the plaintiffs’ benefit? Do you
think it is relevant that the industry makes a great
deal of money selling the products in question to
negligent than another can bring about some rather unfair results. Consider the following:
Example 2.5. Dana approaches an intersection in which there is a stop sign. She
slows down, looks both ways, and continues. Mario races across the intersection at
a high rate of speed, ignoring a stop sign. Dana sees Mario coming too late to get
out of his way, and an accident occurs that completely destroys Dana’s 2009
Ferrari, worth $200,000, and Mario’s 1990 Buick, worth $200. A jury finds that
Dana was approximately 10 percent at fault in bringing about the accident and
assesses Mario’s fault at 90 percent.
In the above example, neither Dana nor Mario would be able to recover any part of their damages under contributory negligence. This seems rather hard
on Dana! A majority of states, recognizing the problem, have switched to the comparative negligence theory. Under comparative negligence, a plaintiff who
is also negligent can still get compensation for the portion of the harm suffered for which he is not responsible. So Dana would be able to recover from
Mario 90 percent of her $200,000 damages. However, many jurisdictions limit recovery under comparative negligence to cases in which a party’s
contributory negligence is not more than 50 percent.
Another possible defense is assumption of the risk, where the plaintiff perceived the hazard the defendant had created, but voluntarily chose to expose
him- or herself to the risk. The issue is not whether a reasonable person would have seen the hazard, but whether this actual plaintiff did. Thus a person
who is a baseb…
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