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: 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? Future Profits Past Profits

Bailey v. Proctor – The investment scheme (the Aldred Trust) Potential Loss Gain Debenture Holders $6 million 6% interest Stock $150,00 $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 narrow rightful position Trend in courts: 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?