LAW AND ECONOMICS
ECONOMICS 4450/6450
CASES
DAVID B. MUSTARD

1. Bob is considering filing a complaint for breach of contract against Fred that requests $10,000 in damages. Bob estimates that there is a 10% chance that he and Fred can reach an out-of-court settlement for $7,500. If the case goes to trial, Bob must pay $2,500 in legal fees and court costs, and he has a 75% chance to win. There is no possibility for appeal. Draw Bob's decision tree. Calculate Bob's expected outcome of filing the complaint.

2. Pierson v. Post (Supreme Court of NY 1805) excerpt
    "... Post, being in possession of certain dogs and hounds under his command, did, 'upon a certain wild and uninhabited, unpossessed and waste land, called the beach, find and start one of those noxious beasts called a fox,' and whilst there hunting, chasing and pursuing the same with his dogs and hounds, and when in view thereof, Pierson, well knowing the fox was so hunted and pursued, did in the sign of Post, to prevent his catching the same, kill and carry it off."

3. Hammonds v. Central Kentucky Natural Gas Co. (Court of Appeal of Kentucky, 1934) summary
    CKNGC leased tracts of land above large deposits of natural gas. The leased tracts were separated from one another by land owned by Hammond (who owned 54 acres). The geological dome of natural gas from which the company drew its supply lay partially under the leased land and partially under unleased land. When CKNGC extracted natural gas and oil from the dome, Hammonds sued the company because the natural gas that was under her land was wrongfully removed.

4. A county ordinance requires houses to be set back five feet from the property line. Joe buys some heavily wooded land in an undeveloped area and builds on it. Ten years later Fred buys the adjoining lot has his land surveyed and discovers that Joe's house extends two feet over the property line onto Fred's property. Joe offers to compensate Fred for the respass, but Fred rejects the offer and sues to have Joe relocate the house in conformity with the ordinance.

5. The Plaintiff manufactures and sells recreational boats nationally, and has used the mark, Slickcraft, since 1965 and federally registered this mark in 1969. The Defendant also manufactures recreational boats and has used the mark, Sleekcraft, since 1968. When the Defendant adopted the Sleekcraft mark it was unaware of Plaintiff’s mark. Plaintiff’s boats are for general family recreation, and its advertisements focus on family fun, pleasure cruises and sunbathing. The Defendant’s boats are high performance boats intended for racing enthusiasts and high speed recreation, and its advertisements project an alluring, flashier, racing image. In 1970 Plaintiff notified Defendant of potential trademark infringement, and as a result, Defendant added a distinguishing identifying phrase, “Boats by Nescher,” on plaques affixed to the boat and in much off its advertising. The Sleekcraft mark still appears alone on some stationery, signs, trucks and advertisements. Slickcraft boats are advertised in magazines of general circulation. The Sleekcraft boats are advertised almost exclusively in publications for racing enthusiasts. Plaintiff brought this cause of action in 1971.
 a. Identify and describe Plaintiff’s potential cause of action.
 b. What are the elements?
 c.
Provide an argument if you were the counselor for the plaintiff. 
 d.
Provide an argument if you were the counselor for the defendant. 
 e. Identify and describe any potential defenses that Defendant might assert.

 
d. Evaluate whether this cause of action would be meritorious.
 e. What penalties do you believe should be imposed?

6. Harry Potter v. Hari Puttar
    The movie "Hari Puttar-A Comedy of Terrors" opened in India in Sep. 2008.
    Time Warner Inc.'s Warner Bros. unit claimed that the name was too close to the Harry Potter series. They believe that the proposed title and marketing confused customers to benefit from the Harry Potter brand.
    The producers, Mirchi Movies, said the movie bore no resemblance to Harry Potter. Hari is a common name in India. The movie is the story of an Indian boy and his cousin forgotten at home in Britain where his family has recently moved, in a plot similar to "Home Alone". 10-year-old Hari Puttar must guard his scientist father's top-security computer chip from bumbling burglars while his parents are away.
    A court in New Delhi reviewed the case.

7. Palsgraff v. Long Island Railroad Co. (1928)
    The Plaintiff was waiting for a train on a train platform when a train stopped at the station. Two men caught the train as it was pulling away from the station. The first man got on OK, but the second was unsteady and was pulled up onto the train by a RR security guard. As the man was pulled up, he dropped an unmarked package (wrapped in brown paper).
Nothing about the appearance of the packages indicated its contents. The package contained fireworks, which discharged. The explosion knocked down some scales at the other end of the platform many feet away, and the scales struck and injured the plaintiff.

8. Jim Jr. currently earns $36,000 per year and faces a probability of 0.5 that his boss, Michael, will fire him. If he is fired, Jim Jr. will remain unemployed for a year, earnings nothing (assume no unemployment benefits).
    a. If Jim Jr. prefers earning $18,000 with a guarantee of employment to his current uncertain situation, what can we say about his preferences toward risk?
   b. Suppose Jim Jr. would be indifferent between the uncertain situation and a pay cut of $20,000 per year (from his current $36,000) in exchange for a guarantee of not being fired
. What is his risk premium?
    c. How do the two compensation packages influence Jim's performance? Why? 

9. Vaccines
  Wakefield, Andrew, et al. 1998. "Ileal-lymphoic-nodular hyperplasia, non-specific colitis, and pervasive developmental disorder in children." 1998. The Lancet. Vol. 351: 637-641.
   2004: The Lancet offers partial retraction. Says the article offered "interesting ideas". Publicly revealed that Wakefield had been paid to conduct his study on children who were clients of a lawyer who was filing a lawsuit. 
    Britain's childhood vaccination rates plummeted from about 92% in the mid 1990s to 80% in 2004 (<70% in some areas). In 1998, England and Wales had 56 cases of measles. By 2008 that number increased to 1,370, including some deaths. 
    Jan. 2010: The General Medical Council, Britain's medical regulator, ruled that Dr. Wakefield had acted "dishonestly and irresponsibly." The panel confimed years of allegations that he had been untruthful about his patients and funding and had shown a "callous disregard" for the children. The GMC is considering whether to strip Wakefiled of his medical license.
    Feb. 2, 2010. The Lancet fully retracts the original article. 
    Summary of the entire process.

    . 


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Hill v. Polecat Motors Inc.
Jury Selection     Tue. 10 April        Class
Trial            Wed. 11 April 10:30-11:30  Hatton-Lovejoy Courtroom, Law School
                    Thur. 12 April 10:30-11:30  Hatton-Lovejoy Courtroom, Law School

Jury Instructions
    There is no dispute that Debra Hill purchased the Polecat vehicle new, and that she was driving it at the time of the collision and injuries which she sustained.  She alleges the following defects in the car:
        a. Its fuel tank was located so as to be unnecessarily vulnerable to damage and leakage in the event of a rear-end collision;
        b. Its fuel tank was designed and constructed of materials, and configured so as to be vulnerable to damage and leakage in  the event of a rear-end collision;
        c. Its fuel tank did not have a protective rubber or plastic bladder. 

    To prevail in this case, the plaintiff must show the defendant negligent in the manufacture of the automobile in one of the respects referred to in a, b, or c, and that such failure was the proximate cause of plaintiff's injuries.  A finding against the defendant on one or more of the foregoing specifications is sufficient to sustain the first part of the foregoing requirement. 

Defective Product
    A product is in a defective condition unreasonably dangerous to the user when it has a propensity for causing physical harm beyond that which would be contemplated by the ordinary user or consumer.  A product is not defective or unreasonably dangerous merely because it is possible to be injured while using it.  One engaged in the business of selling or distributing products that sells or distributes a defective product is subject to liability for harm to persons or property caused by the defect.  Plaintiff also claims that defendant breached its duty to purchasers of the Polecat vehicle by failing to warn buyers of the fire danger inherent in the car.  A product may be defective because of a defect in manufacture, a defect in design, or failing to adequately warn the consumer of a hazard involved in the foreseeable use of the product.  The defendant can be held liable for a failure to warn if the defendant knew or had reason to know the product was likely to be unreasonably dangerous in its intended use, the danger was not open and obvious, the defendant failed to exercise reasonable care to inform consumers of the unreasonably dangerous conditions and that failure was the legal cause of plaintiff's injury.