Wednesday, July 25, 2007

Serhan and the Trouble With Unjust Enrichment

Having asked for uncorrupted intuitions on the interesting Serhan v. Johnson & Johnson case, I ought to give my own views. Unfortunately, they are a bit unformed (which I suppose is why I find the case interesting -- I'm usually pretty opinionated).

It isn't quite right to say that the absence of harm should always and everywhere foreclose any recovery. It's mostly right, but not totally right.

The most general principle is that plaintiffs should lose. Losses should fall where they may. That's because legal process is expensive, emotionally harmful, and it sometimes just makes things worse. At a first cut at anything, somebody who wants a court to give them someone else's money should have a hard time of it.

But of course if we are to avoid a Hobbesian nightmare world, there have to be exceptions. All of those exceptions come out of one-sided transactions. D and P interacted and either P was harmed or D benefited.

The easiest case is the one Aristotle considers in Book 5 of the Nicomachean Ethics where the harm to P is exactly equal to the benefit to D. Equivalently, we could just consider the situation where what P is seeking is the lesser of the two quantities. It would still seem by our first principle that plaintiffs should usually lose that P ought to show some reason why he should get min (benefit to D, harm to P). Which, if you'll permit the digression, is why the test set out in Pettkus v. Becker is wrong. In words repeated ad nauseum subsequently, the SCC says that once P shows that min (benefit to D, harm to P)>0, then it's D's job to explain why the court shouldn't intervene. Crazy stuff, but I agree that min (benefit to D, harm to P) should be the easiest thing to get.

Let's suppose that harm>benefit, and P wants compensation for harm. That's tort law, and it's a bit harder than just getting the return of money paid by mistake. You usually have to show that D did something wrong, or at least stupid. And that's how it should be because now we have an overall loss we need to stick somebody with.

But what if (benefit)>(harm), and P wants something equal in value to the benefit? That should be even harder to get, because generally (benefit)>(harm) is a good thing we want to encourage. If P gets (harm) and D gets (benefit)-(harm), then we've made Mr. Pareto happy, and when he's happy, everybody's happy. So why screw around with that?

Oddly, the cranky old English law did occasionally screw around with that. If the reason (benefit) exists in the first place is that D used P's property (whether as a result of trespass, detinue, conversion or some breach of trust), then P ought to get the full benefit. That's because the right to property includes the right to its fruits. Even when the use of the property was completely innocent, D may find that P gets everything.

I'm not sure that the facts of Serhan can reasonably be fit into that particular framework. Maybe there's something analogous between using somebody's chronic condition as a way to make money and using their chattel. But maybe not. It's a bit of a stretch, and by our first principle that plaintiffs should usually lose, we shouldn't be allowing stretches for plaintiffs.

The other situation where equity would do funny things is where there's fraud. We discourage negligence as much as we want to when we make it pay for the harm it does. If someone benefits from their negligence only because it still is profitable after the harm has been accoutned for, then there's nothing wrong with that. Fraud's different. It's not cool to benefit from it, even in those circumstances where nobody got hurt.

So I give the Div. Ct a pass, at least on the basis of the stage of the litigation. I suspect that the government would have been the better plaintiff though (whether literally through the civil justice system or through some public law mechanism), and its apparent decision not to act which makes me sympathize a smidgen with the dissent.

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