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 swim 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 D’s profits to
P too?
1. Future Profits
2. Past Profits
More on tailoring re reparative injunctions: 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?
Structural Injunctions
•
Defined – complex injunctions sought/issued in litigation
against government defendants in lawsuits where Ps seek
major institutional change for systemic violations of the law. Ps
attempt to bring these institutions in line with constitutional or
statutory requirements.
• Characteristics
•
Involve issues of public/constitutional law
•
Complex
•
Public’s interest is a significant factor in decision to
grant/deny injunctions
Scope of Structural Injunctions
Swann v. Charlotte-Mecklenburg Bd. of Ed., 402 U.S. 1 (1971):
• "[The Court’s] task is to correct . . . the condition that offends the
Constitution. Judicial powers may be exercised on the basis of a
constitutional violation. The nature of the constitutional violation
determines the scope of the remedy.”
• Milliken I uses similar language – “The controlling principle … is that the
scope of the remedy is determined by the nature and extent of the
constitutional violation.”
• Raises 2 questions:
1) To what is P constitutionally entitled?
2) What remedy puts P in their rightful position?
Answers to both leave a great deal to courts’ interpretations