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May 24, 2020

Many (of our) clients are confused as to the different legal standards with respect to recklessness, gross negligence, and (simple) negligence particularly with respect to the limitation of liability, the cap on liability, and the exclusions from the cap clauses in their contracts. Normally gross negligence is excluded from the cap on liability and (simple) negligence is not. However, several clients have recently been asked by their enterprise customers in their master services agreements to also exclude negligence from the cap. If (simple) negligence is excluded from the cap, potential liability is much higher. We below explain the differences in the terms.

NEGLIGENCE

  • The “reasonable person” standard requires people to conduct themselves as a reasonably careful person would under like circumstances. Ordinary negligence occurs when someone does something that a reasonably careful person would not do under similar circumstances, or fails to do something a reasonably careful person would do.
  • The reasonable person standard is used to compare a defendant’s actions to those of a person of ordinary intelligence who uses average care, skill, and judgment. The court will decide whether the injury would be foreseeable to a reasonable person.[1]
  • Negligence law requires reasonable measures to protect oneself and others from harm. The law imposes a duty of reasonable care.  Those harmed by one who breaches this duty may recover damages.
  • This ordinary negligence standard applies to many claims, even in disastrous injury accident cases and defective product cases.

GROSS NEGLIGENCE[2]

  • Gross negligence requires conduct substantially higher in magnitude than ordinary negligence. It is very great negligence, or the absence of slight diligence, or the want of even scant care.  It amounts to indifference so far as other persons are concerned.
  • Courts have described gross negligence as a heedless and palpable violation of legal duty to the rights of others. The type of culpability which characterizes all negligence is in gross negligence magnified to a high degree as compared with that present in ordinary negligence.
  • Gross negligence requires a greater lack of care than is implied by the term ordinary negligence. The standard for ordinary negligence is “a failure to use the care which an ordinarily prudent man would use under the circumstances.”[3]
  • Thus, to constitute gross negligence, “the act or omission must be of an aggravated character as distinguished from the failure to exercise ordinary care.”[4]
  • Some courts have reasoned that gross negligence remains an “inadvertent act,” holding that gross negligence is merely a conduct that is different in degree from ordinary negligence (i.e., a very great negligence).[5]
  • Gross negligence has been defined in California and other jurisdictions as either a want of even scant care or an extreme departure from the ordinary standard of conduct.[6]

RECKLESSNESS (Intent Requirement)

  • Reckless conduct takes place a shade below actual intent. Proof of reckless conduct involves a high degree of likelihood that substantial harm will result to another.
  • Recklessness differs from negligence – which consists mainly of carelessness or incompetence – in that recklessness requires the conscious choice to take a particular course of action. Also, recklessness requires a further degree of risk on the part of the actor than does negligence.
  • It’s important to note that reckless misconduct differs from intentional wrongdoing on one point. Under recklessness, the actor intends to commit the act but does not actually intend to cause harm to others. Instead, he may wish that the harm does not happen, but he has a strong reason to believe that it might.
  • Some reckless behaviors are defined by law and considered to be criminal.[7]
  • Recklessness is a state of mind that is determined both subjectively and objectively. There are two types of reckless behavior. The first looks at what the actor knew or is believed to have been thinking when the act occurred (subjective test). The second considers what a reasonable person would have thought in the defendant’s position (objective test). In both situations, the issue turns on conscious awareness, or whether the person knew (or should have known) his actions may cause harm to another.
  • Generally, an actor’s conduct is reckless if:
  • The actor intends to commit the act in question knowing it may create a risk of harm
  • The risk itself is an unreasonable one
  • The risk is substantially greater than negligent conduct
  • The actor knows, or has reason to believe, others are present and in harm’s way.

Gross Negligence and Recklessness are blatant acts of negligence. If you want to put them on a spectrum/scale, gross negligence would be somewhere between negligence and recklessness. Although punitive damages are not available for gross negligence for now, they may be available for reckless behavior. The determination of an actor’s level of negligence on the negligence spectrum is done by the jury.

 

If you have any questions about this Memo, please email Christopher L. Rasmussen, Managing Partner Commercial, Trademark and Privacy at chris@inventuslaw.com or Anil Advani, Managing Partner at anil@inventuslaw.com.

 


Disclaimer: The information on this page is being provided for information purposes only and is drafted entirely on the basis of public resources. Information contained on or made available herein is not intended to and does not constitute legal advice, recommendations, mediation or counseling under any circumstance. This information and your use thereof do not create an attorney-client relationship. You should not act or rely on any information provided herein without seeking the advice of a competent attorney licensed to practice in your jurisdiction for your particular business.

[1] Ortega v. Kmart Corp. 26 Cal. 4th 1200, 114 Cal. Rptr. 2d 470, 36 P.3d 11 (2001)

[2] Please note, some rare jurisdictions (like New York) require intent as an element for gross negligence.

[3] Jones v. Chi. HMO Ltd., 730 N.E.2d 1119, 1130

[4] Weld v. Postal Tel. Cable Co., 103 N.E. 957, 961

[5] PAGE KEETON ET. AL., PROSSER & KEETON ON TORTS § 34, at 211, 212 (5th ed. 1984)

[6] City of Santa Barbara v. Superior Court, 161 P.3d 1095, 1099 Cal. 2007

[7] Donnelly v. S. Pac. Co., 118 P.2d 465, 468–69 (Cal. 1941)

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