Understanding Tort Liability in a Business Setting

Part I – Torts – Skills Assignment – Understanding Tort Liability in a Business Setting

Background Facts

You are the owner of a same-day delivery business, which has enjoyed immense recent success. You believe that the biggest underlying reasons for your company’s success are your promises to accept any cargo and your guarantee of “the speediest possible delivery.” Your company has grown to employ approximately 100 people (mostly drivers), and you own a large fleet of approximately 75 delivery vehicles of various sizes and capabilities. You self-insure these vehicles, i.e. you pay out of pocket for any damages caused by the drivers of your company vehicles. The assignment has three parts, you must answer all of the questions in each part.

Assignment
I. Reasonable Person – Length: 2-3 Paragraphs

• Fact Pattern
  • You provide minimal training for your drivers.
  • You require all applicants to have an active driver’s license, and you feel as though they therefore know how to drive, which is their only real job requirement.
  • Regarding the care with which they should drive their vehicles, you tell them: “Drive as you believe a reasonable person who wanted to get from point A to point B as quickly as possible would drive.”
• Question
  • Discuss how this approach aligns with the reasonableness standard discussed in Module 1.

II. The Elements of a Negligence Lawsuit – Length: 2 Pages

• Fact Pattern and Background
  • Tort liability (via respondeat superior) is a major expense and concern for your business.
  • The most common tort cause of action faced by your business is negligence. The most common allegations of negligence for your business arise from automobile accidents.
  • Recently, your business has faced three lawsuits based on the following three incidents:

1. On November 4, Driver #064 ran a red light and crashed into a minivan, slightly injuring two occupants.
2. On November 29, Driver #088 was sprinting up the stairs of a high-rise office building attempting to deliver a package on time, when he slipped and fell into an elderly gentleman who was walking down the stairs the other direction, breaking the man’s hip. The man asked his neighbor to feed his cat while he was in the hospital, but when he visited the man’s home the cat escaped, never to be seen again.
3. On December 4, Driver #001 was driving exactly the speed limit when her brakes failed. (Your company checks the brakes on all vehicles monthly; the average company with vehicle fleets checks its brakes every 3 months.) In order to avoid colliding with other vehicles, she drove into a field, allowing her to slow down gradually but partially destroying a corn crop.

• Two-Part Question
  • For each of the three incidents described above:
    • Identify the relevant fact(s) for each of the five essential elements of negligence set forth below, and
    • Predict the result (liability or no liability) for each incident, remembering that for a negligence cause of action to succeed, the plaintiff must prove all five elements are satisfied. If you believe no facts were provided for one or more elements, please say so.
  • Five essential elements of negligence
    • Duty
      • Note: It may be helpful for you to know that an otherwise unstated “duty” element often exists in the background of automobile accident incidents; for example, every motorist owes every other motorist a duty of care.
    • Breach
    • Causation
    • Proximate causation
    • Damages

III. Using The Hand Formula to Evaluate Duty – Length: 2 Pages

• The Hand Formula – Background
  • Learned Hand’s cost benefit analysis states that a decision maker breaches a duty of care when he fails to take precautions that would cost less than the probability of loss multiplied by the magnitude of harm if the loss occurs.
• Two Proposed Precautions to Analyze Using the Hand Formula
  • First Fact Pattern
    • Potential Liability Problem Being Addressed
      • Your drivers report to your company’s “home base” to begin their shift, and then leave from the site in a company-owned vehicle to make deliveries.
      • Several accidents (some of them involving significant damage and injuries) have now occurred as your drivers pull out of your parking lot into traffic.
    • Proposed Precaution
    • You believe this is due to very bad visibility exiting the lot into the street, which could likely be solved by the placement of two convex mirrors costing approximately $100 each.
  • Second Fact Pattern
    • Potential Liability Problem Being Addressed
      • Accidents due to speeding
    • Proposed Precaution
      • A salesman approached you about installing computerized speed limiters on the engine of each company vehicle, limiting the maximum speed of the vehicle.
      • The proposed maximum speed would be 70 mph.
      • Each of these devices costs approximately $500, plus maintenance.
      • In the last two years, the fastest speed of a company vehicle involved in an accident was 54 mph.
• Two Questions
  • Question 1: For each of the two proposed precautions set forth above:
    • Please explain whether or not the Hand Formula suggests that you should take the proposed precaution.
      • Try to make predictions based on the given information.
      • However, if you believe more information is necessary to perform the cost benefit calculation, please state what additional information you would like to have.
  • Question 2: For each of the two potential liability problems set forth above, provide at least one outside-the-box, creative solution/precautions and explain how the Hand Formula would apply to your proposed