Forster v Boss Reparative injunctions related issues Facts

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 (14 th 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 Jof. P if election invalid? • What do we do about all official acts of Jof. P that was in office during period before election declared invalid?

The scope of reparative injunctions – Winston v. 3 M • 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 1 st Circuit take in Bailey? • What standard for measuring the scope of relief did the 1 st 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?