In almost every negligence case the jury must decide if the plaintiff was partly responsible for the harm she alleges the defendant caused her. State legislatures write and rewrite complicated laws about this idea, known in the courts as “comparative fault”- deciding who gets assigned blame for what in a case. Both the plaintiff and defense bars experts and campaign dollars in ongoing trench warfare over how apportioning fault should work. Naturally, no defendant wants to take the blame, so any credible theory that can blame the victim, even for only a little bit, is going to be tried
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For fraud cases, however, it’s supposed to be more simple. A quick caselaw search can turn up a precedent saying, for example, that “[t]here is no defense of contributory negligence to an intentional tort, including fraud.” In other words, fraud is bad, always bad and the scammers should be punished, and you don’t blame the victim. Even if a fraud victim could have done more to figure out the scam on the front end, that won’t prevent the victim from receiving a damages award on a favorable verdict in the courts.
Except that’s not always how it goes. As a great lawyer once said — OK, OK, it was Kevin Pollack in “A Few Good Men” —- there’s a difference between paper law (what the cases say) and trial law (how common law gets applied in the heat of the courtroom and in the jury room).
Defendants long ago figured out that comparative fault is not something that lives only in tort reform statutes and slip-and-falls. “Who’s to blame?” is a fundamental question in any conflict, and a litigant’s answer has emotional and explanatory power. When a jury of 12 laypersons is asked to decide whether the defendant defrauded the plaintiff, they’re going to want to hear about whether the plaintiff did his research, talked to other purchasers or experts, and so on.
“Who’s to blame?” is a fundamental question in any conflict
A fraud defendant may not be able to get a jury instruction that asks the jury to assign a percentage of fault to the plaintiff, but the defendant can find cracks and seams in other instructions to argue that the plaintiff should recover no damages due to the plaintiff’s own mistakes or inaction.
Consider this example: A small business is in the market for new machinery for its factory floor. They need a standard piece of equipment that can be customized. The company’s vice president schedules meetings with a couple of vendors, picks one, and spends six figures on a new machine.
The machine turns out to be a disaster. It can’t be customized as the business needs it to be, and ends up being useless. Even worse, the attempted customization means the machine cannot be returned or resold.
A defendant can… argue that the plaintiff should recover no damages due to the plaintiff’s own mistakes or inaction.
The small business sues for fraud. They point to the salesman’s wildly misleading representations about what the machine could do, and how it could work for their business. They have an expert testify that the salesman left out information about how hard it would be to customize the machine to the company’s specification.
This is a slam-dunk case, right? Not so fast. The machine manufacturer says that it provided the business with a list of references for the machine, which the business failed to check. The manufacturer also says that the business picked a third-party consultant to do the customization, so the manufacturer isn’t at fault.
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At closing arguments, the manufacturer argues that the small business was not justified in relying on the salesman’s representations because it had reasonable opportunities to learn more, but failed to take them. In short, the manufacturer argued that it should not be liable for fraud because the purchasing business made mistakes.
Rhetorically and narratively, this defense is indistinguishable from a comparative fault defense in a negligence case. Sure, the manufacturing company may not get a jury instruction on dividing blame, but it gets to make functionally the same argument, even if this is a fraud case.
Of course, each case is different. Some plaintiffs will have been more diligent than others. Some will be more sympathetic. Some judges will police the border between permitted and excluded defenses more strictly than others.
However, even if a comparative fault defense is excluded on paper, there are a number of ways a savvy defendant can put it back into the narrative. Whatever the “paper law” says, a fraud plaintiff’s conduct is not going to be excused from scrutiny at trial. Defendants are not shy about blaming the victim, so before a plaintiff runs to court with a slam-dunk case claiming to be the victim of fraud, he or she should first consider what a counter-narrative in which they could be blamed would look like.
Adam represents a wide variety of clients, ranging from individuals to small business owners to large corporations. He has a particular focus on business and investment disputes, and has experience litigating such disputes in numerous state and federal courts. He has also represented business clients in arbitration and mediation proceedings. Adam also represents employees in…
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