In almost every negligence case, one decides if the plaintiff was partly responsible for the harm she alleges the defendant caused her. State legislatures write and rewrite complicated laws governing these determinations, known in the courts as “comparative fault.” Put another way, each state legislature sets up rules that decide who gets assigned blame for what in a case.
Armed with sizeable war chests and credible experts, both the plaintiff and defense bars attempt to make the rules work to their advantage. Naturally, no one wants to take the blame, and if you can blame the victim, at least for a little bit, that’s a small victory for the defense, at least.
In theory, assigning liability in fraud cases is supposed to be more simple. It isn’t always.
Take, for example, Ampat/Midwest, Inc v. Illinois Tool Works, Inc. Ampat, a large window and curtainwall contractor, alleged that Illinois Tool Works knowingly provided them with defective fasteners. They further alleged that they knowingly provided replacement fasteners that were also defective.
Throughout these interactions, Illinois Tool Works was alleged to have misrepresented the scope and gravity of the problem. They also allegedly promised Ampat a thorough inspection of the replacement shipment. Though 26 of the 30 cases flunked those inspections, Illinois Tool Works was alleged to have shipped them out anyway. Ampat bore the burden of surging project costs as a result.
Illinois Tool Works tried to argue that Ampat had contributed to the problem by not examining the fasteners themselves. In fairness, Ampat did pay for an expert to evaluate the first defective batch when problems became apparent. The court rejected this argument.
The court found that Ampat’s interactions with Illinois Tool Works gave Ampat no reason to inspect the replacement fasteners. In the meantime, Illinois Tool Works provided materials that they knew were defective. They also mislead Ampat through omissions and misrepresentations in their communications.
While fraud cases may not always be as clear as we’d like, the court’s opinion here was:
There is no defense of contributory negligence to an intentional tort, including fraud.
Simply put: deliberate fraud is bad, scammers should be punished, and blaming the victim is not a valid defense. 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 acquiring damages or a favorable verdict in the courts.
That might sound straightforward, but fraud cases don’t always play out that way.
As a great lawyer once explained (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 the law gets applied in the heat of the courtroom and by the jury). This is especially true in fraud cases.
Defendants long ago figured out that contributory negligence 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 we ask a jury of 12 laypeople to decide whether the defendant defrauded the plaintiff, they’re going to want to hear about the plaintiff’s role in the situation. Did they do their research? Did they talk to other purchasers or experts?
These types of questions are natural. How a plaintiff answers them can impact perceptions of culpability and a jury’s willingness to rule against the defendant, even if it means coloring outside the lines of legal precedent.
The notion of victim blaming often evokes disdain outside of the courtroom. But in front of a judge and jury, it can take on a different flavor. In some cases, blaming the victim can be a successful legal tactic.
Consider this example: A small business is in the market for new machinery for its factory floor. They need a standard piece of customizable equipment. 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.
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 specifications.
This is a slam-dunk case, right? Not so fast. The machine manufacturer says 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.
During 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 and failed to take them. In short, the manufacturer insisted d that it should not be liable for fraud because the purchasing business made mistakes.
Arguing contributory negligence in a case like this might just win the day.
Each fraud case is different. Some plaintiffs will have been more diligent than others. Some will be more sympathetic.
And sometimes a jury is instructed to assign a percentage of fault to the plaintiff, generally understood as “comparative fault.” But even when the jury does not receive this instruction, a skilled defense attorney 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.
But whatever the “paper law” or judge says, a fraud plaintiff’s conduct will not be excused from adversarial scrutiny at trial. The defense will not shy away from blaming the victim. So before you run to court with a “bulletproof” claim of malfeasance, make sure you (or your client) are prepared to defend against being blamed for it, regardless of whether that’s true.
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This is an updated version of an article originally published in November 2020. ©2023. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.
Adam is Of Counsel with ROETZEL, Chicago, and focuses his practice on commercial and business litigation, representing a wide variety of clients ranging from individuals to small business owners to large corporations. He has a particular focus on investment disputes and business fraud claims and has represented investors and investment companies as plaintiffs and defendants…
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