Transcript The Scope of Preventive Injunctions – Possible Options in

Forster v. Boss – Reparative injunctions & related issues
• Facts: Forsters (Ps) purchased lakefront property from Bosses (Ds).
• Ds represented that Ps would be able to obtain a boat dock permit (but failed
to reveal that Ds already had one which precluded Ps from getting it)
• Ds promised to remove existing swim dock but did not.
• Ps sued Ds for fraud re boat dock & breach of contract re swim dock &
obtained injunction ordering D’s to remove the swim dock
• During litigation UE also agreed to give Ps a boat dock permit if court found
Ps entitled to it (which it did) – think of it as if UE was a party to an injunction
ordering UE to turn over permit since UE was a party D in lower court (or similar to D’s
ordered to transfer their permit).
• Ps were awarded damages in the amount of:
• $2,500 for breach of contract re swim dock
• $12,250 for fraud re boat dock
• $10,000 punitive damages for fraud
Forster – The reparative injunction
• Contrast the injunction in Forster w/ Al Murbati or Nicholson –
• Latter two injunctions were sought before harm occurred – transfer to country
that tortures or use of property as half-way house
• In Forster, the harm has already occurred – the fraud was
perpetrated and the contract breached at the moment the
contract was signed and the property delivered to Forster.
• No injunction can prevent Bosses from having a conflicting boat permit of
failing to remove the swim dock before the property passes into Forster’s
hands. So any injunction Forster gets must UNDO the harm.
• Reparative
Injunctions seek to restore or repair a right
previously violated.
Election of remedies & reparative injunctions
• Why didn’t the court uphold the award of the reparative injunction and
the breach of contract/damages award?
• What kind of damages would have been consistent with the injunction?
• Punitive Damages
• These were awarded when Ps received fraud damages.
Court allows P to
keep punitive damages even if they elect to keep the reparative injunction
rather than compensatory damages.
• Is it consistent to award punitive damages along with an equitable remedy
like a reparative injunction?
Undoing the harm & practicality
• Each kind of injunction faces its own hurdles
• Preventive injunctions always face ripeness inquiries. Reparative injunctions often
have practicality issues re undoing the harm
• Forster was reasonably easy as far as reparative injunctions go:
• Require UE to grant permit (but had to be added as party) or D’s to transfer theirs
• Require Bosses to remove dock
• Other injunctions are more complex:
• Bell v. Southwell – local J of P election declared invalid because it was tainted by
racial discrimination (14th amendment violations)
• How do we undo this harm?
• Rerun the election (even if it is two years into 4 year cycle)?
• What if local statutes only allow appointment of interim JofP if election invalid?
• What do we do about all official acts of JofP that was in office during period
before election declared invalid?
The scope of reparative injunctions – Winston v. 3M
• What injunction does Mincom seek?
• What does Winston think is appropriate?
• Court standard: Injunction should place Mincom in the position it would
have occupied if the breach of confidence had not occurred before
Mincom’s recorders were on the market.
Possible implementation:
A)
B)
C)
Length of time it took P to develop the recorders
Length of time it took D to develop the recorders
Length of time it would take a skilled competitor working with a finished
product but no inside information to develop recorders
Winston – why doesn’t the court award profits too?
1. Future Profits
2. Past Profits
Bailey v. Proctor – The investment scheme (the
Aldred Trust)
Investment
Debenture
Holders
Stock
Holders
$6 million
$150,00
Potential
Loss
Potential
Gain
$6 million
6%
interest
$150,000
anything
over 6%
ICA of 1940 required more equitable distribution of risk and ownership
in mutual funds but grandfathered in existing trusts, such as the Aldred Trust.
The Reparative Injunction in Bailey
•
What position would the debenture holders have been absent fraud
and insolvency at the Trust?
•
What action comes closest to putting the debenture holders in that
position?
•
What action regarding the Trust did the 1st Circuit take in Bailey?
•
What standard for measuring the scope of relief did the 1st Circuit use
– (compare Winston)?
•
Was the court wrong to issue such a broad order?
The Scope of Reparative Injunctions – A Continuum
Bailey ----------------------------------------------------------------------------- Mincom
freewheeling discretion
Trend in courts:
narrow rightful position
Most courts are trending toward less
equitable discretion than Bailey’s
freewheeling concept.
But don’t forget prophylactic injunctions.
Does Bailey involve a prophylactic injunction?