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III.Supp. Supplemental Cases and Materials
  • 1 III.Supp.B. Supplemental Cases and Materials for III.B.

    • 1.1 Shen v. Leo A. Daly Co.--"The Confined-to-Taiwan Case"

      Should we recognize false imprisonment in situations where the boundaries of plaintiff’s ‘confinement’ extend far beyond a single room (for example, if they extend to the boundaries of an entire country)?

      Notes: Defendant refused to pay taxes assessed by the Taiwanese government. As the designated “responsible person” for the defendant’s Taiwanese business, plaintiff was directly liable for the taxes. Plaintiff asked the defendant to pay the taxes owed; defendant refused. The country of Taiwan forbade the plaintiff from leaving the country until the tax controversy was resolved. The plaintiff sued the defendant for false imprisonment, among other theories of liability.
      1
      222 F.3d 472 (2000)
      2
      Carl SHEN, Appellant/Cross-Appellee,
      v.
      LEO A. DALY COMPANY, a Nebraska Corporation, Appellee/Cross-Appellant.
      3
      Nos. 99-3174, 99-3333.
      4

      United States Court of Appeals, Eighth Circuit.

      5
      Submitted April 12, 2000.
      6
      Filed August 2, 2000.
      7
      Rehearing Denied September 7, 2000. 
      8

      [475] Frederick S. Cassman, argued, Omaha, NE, for appellant.

      9

      Gerald P. Laughlin, argued, Omaha, NE (Michael M. O'Brien, on the brief), for appellee.

      10

      BEFORE: BEAM, ROSS, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

      11
      BEAM, Circuit Judge.
      12

      Carl Shen is a former employee of Leo A. Daly Company's (Daly) Republic of China (Taiwan) office. Daly refused to pay taxes assessed by the Taiwanese government. As a result, Taiwan restricted Shen's travel, forbidding him from leaving the country. Shen then sued Daly on multiple theories of liability for damages and injunctive relief. Shen prevailed in part in the district court. Both he and Daly appeal the judgment. We affirm in part and reverse in part.

      13
      I. BACKGROUND
      14

      Shen is a United States citizen who retains dual Taiwanese citizenship. In 1989, Shen moved to Taiwan to become managing director of Daly's operation there.

      15

      To conduct business in Taiwan, Daly was required to designate a "responsible person," or legal representative in the country, and Shen was so designated. In November 1992, Daly, decided to withdraw from Taiwan because of business setbacks. As a result, Shen was terminated but chose to remain in Taiwan. Daly, however, failed to remove Shen as its responsible person.

      16

      In December 1993; Shen received a notice from the Taiwan Tax Authority that it wanted to audit Daly's 1992 Taiwan tax returns. Shen, in turn, notified Daly's accounting firm in Taiwan and informed them he was concerned he could be held responsible for any deficiency because his "chop," the Taiwanese equivalent of a signature, was affixed to the returns. Daly [476] responded that it was "inconceivable" any tax could be owed because Daly had suffered large losses in Taiwan. In January 1994, Shen asked Daly to indemnify him should the Taiwan Tax Authority impose the tax liability on him directly.

      17

      Following this request and until mid-October 1995, Shen, through a series of letters to Daly personnel and to Mr. Leo A. Daly III himself, implored Daly to resolve the tax dispute and remove him as the responsible person. In May 1994, the Taiwan Tax Authority assessed a tax liability of approximately $80,000 against Daly for 1991 and 1992. Daly did not appeal the assessment, and it became final in June 1995. In October 1995, the Taiwan Ministry of Finance and the Bureau of Entry and Exit informed Shen he was forbidden from leaving the country until resolution of the Daly tax issue.

      18

      Daly's attempt to extricate Shen through diplomatic channels failed. Shen then brought suit for a declaratory judgment in Taiwan to remove himself as Daly's responsible person. Although the court recognized Shen was no longer an employee of Daly, it denied relief because Daly had not replaced him as the responsible person. The Ministry of Finance also denied an appeal by Shen.

      19

      In 1997, Shen sued Daly in the United States District Court for the District of Nebraska. He requested a preliminary injunction to force Daly to pay the taxes. The district court entered such an injunction on December 31, 1997. We assume Daly then paid the taxes because Taiwan lifted the travel restriction. The district court held a bench trial in February 1999 on the issue of a permanent injunction and damages. The district court found a violation of the implied covenant of good faith and fair dealing and granted a permanent injunction. Shen was also awarded attorney's fees and $4760 in damages on his contractual claims. Shen, however, did not prevail on his claims for false imprisonment or intentional infliction of emotional distress. Both sides now appeal and we affirm in part and reverse in part.

      20
      II. DISCUSSION
      21

      This suit was brought under the court's diversity jurisdiction and therefore Nebraska law controls on all the issues presented in this appeal.

      22
      A. Res Judicata
      23

      Daly contends Shen's suit for a declaratory judgment in Taiwan should have preclusive effect in this suit and thus should bar all of Shen's claims for relief. To give the judgment of a foreign country preclusive effect, it must be recognized as a legitimate judgment. See Hilton v. Guyot, 159 U.S. 113, 163, 16 S.Ct. 139, 40 L.Ed. 95 (1895). Nebraska, however, has very little case law on this issue. After reviewing the relevant case law from other jurisdictions, we are persuaded Nebraska would follow the principles laid out by the Supreme Court in Hilton.

      24

      A judgment should be enforced and not retried if the foreign forum: (1) provided a full and fair trial of the issues in a court of competent jurisdiction; (2) ensured the impartial administration of justice; and (3) ensured the trial was without prejudice or fraud. See id. The foreign court must also have proper jurisdiction over the parties and the judgment must not violate public policy. See id.; Weber v. Weber, 200 Neb. 659, 265 N.W.2d 436, 440 (1978). The burden of proof in establishing that the foreign judgment should be recognized and given preclusive effect is on the party asserting it should be recognized. See Bridgeway Corp. v. Citibank, 45 F.Supp.2d 276, 286 (S.D.N.Y. 1999).

      25

      Thus, Daly, the party arguing that the Taiwan judgment should be given preclusive effect, must establish each of these factors. Daly has merely asserted the Taiwanese judgment should be given effect, it has not provided the district court or this court with any authority that guides toward [477] the recognition of foreign judgments. Additionally, Daly did not produce any evidence to support its res judicata defense. Accordingly, it did not provide enough information for us to determine if the Taiwan tribunals are impartial or if Taiwan procedures are compatible with due process. Therefore, we find Daly did not meet its burden of proof, and the Taiwanese court's judgment will not be accorded preclusive effect.

      26
      B. Injunctive Relief
      27

      Daly next asserts the district court erred in granting preliminary and permanent injunctive relief. We review the district court's decision to grant injunctive relief for an abuse of discretion and we will affirm unless the district court "clearly erred in its characterization of the facts, made a mistake of law, or abused its discretion in considering the equities." Brotherhood of Maintenance of Way Employees, Lodge 16 v. Burlington. N.R.R. Co., 802 F.2d 1016, 1020 (8th Cir.1986); see also United States v. Grand Lab., Inc., 174 F.3d 960, 965 (8th Cir.1999).

      28

      The district court held that Daly breached the implied covenant of good faith and fair dealing based on the agency relationship between Daly and Shen. We agree. Under Nebraska law, whether a person is an agent is a question of fact. See McCurry v. School Dist. of Valley, 242 Neb. 504, 496 N.W.2d 433, 439 (1993). The existence of an agency relationship does not depend on the terminology the parties use to characterize their relationship, but depends on the facts underlying the relationship. See Franksen v. Crossroads Joint Venture, 245 Neb. 863, 515 N.W.2d 794, 801 (1994); McCurry, 496 N.W.2d at 439. An agency relationship can be implied from words, conduct or circumstances that evidence an intent to create one. See McCurry, 496 N.W.2d at 439. For example, under agency principles, an agent can be given apparent or ostensible authority to act if the "alleged principal affirmatively, intentionally, or by lack of ordinary care causes third persons to act upon the apparent authority." See Franksen, 515 N.W.2d at 801. That is what happened in this case.

      29

      After Daly terminated Shen in December 1992, Daly did not remove Shen as its responsible person. When Shen entreated Daly to remove him as its responsible person in January 1994, Daly still did not act. In June 1994, Daly tried to have one of the employees of its accounting firm in Taiwan replace Shen and informed Shen that the employee had become Daly's new responsible person. The employee, however, decided not to take the appointment, and Daly failed to inform Shen of this fact for seven months. By the time Shen learned there was no replacement for him, the threat of a travel restriction was looming, and Daly was unable to find anyone willing to take the appointment. The result of Daly's initial inaction and subsequent inability to replace Shen as responsible person was that Shen remained Daly's agent regarding actions taken by Taiwan. Therefore, we find no error in the district court's factual finding of an agency relationship.

      30

      A principal and an agent are in a fiduciary relationship. See Andrews v. Schram, 252 Neb. 298, 562 N.W.2d 50, 54 (1997). Because of the fiduciary relationship, the principal owes the agent a duty of good faith and fair dealing in the incidents of their relationship. See Lawrence Warehouse Co. v. Twohig, 224 F.2d 493, 497 (8th Cir.1955). Moreover, "`[c]orrelative with the duties of the agent to serve loyally and obediently are the principal's duties of compensation, indemnity, and protection.'" See Western Smelting & Ref. Co. v. First Nat'l Bank of Omaha, 150 Neb. 477, 35 N.W.2d 116, 121 (1948) (quoting Restatement of Agency Intro. note, vol. 2, p. 999). Daly breached its duty as a fiduciary in the following ways: (1) Daly did not pay the tax when it was assessed; (2) it chose not to appeal the assessment through proper channels; and (3) Daly did not find [478] a replacement for Shen as responsible person.

      31

      We recognize Daly believes the taxes were unfairly assessed and amounted to little more than extortion. However, its dispute with Taiwan over the "`principle of the thing' took place over the body of its innocent former employee and agent" and, thus, the district court did not abuse its discretion in granting the injunction based on Daly's breach of fiduciary duty. Shen v. Leo A. Daly Co., No. 8:97CV441, Slip Op. at 14 (D.Neb. May 28, 1999).

      32
      C. False Imprisonment
      33

      Shen contends the district court erred when it granted Daly's motion for judgment as a matter of law on the false imprisonment claim. We review the decision to grant judgment as a matter of law de novo, viewing the evidence in the light most favorable to Shen. See DiCarlo v. Keller Ladders, Inc., 211 F.3d 465, 467 (8th Cir.2000). False imprisonment is "the unlawful restraint against his will of an individual's personal liberty." See Herbrick v. Samardick & Co., 169 Neb. 833, 101 N.W.2d 488, 491 (1960). Shen's liberty was restrained in this case—he was not allowed to leave Taiwan. And, as Shen correctly points out, the term false imprisonment is broader than just confinement within a jail or prison. Shen's confinement, however, was to a whole country. He was free to move about Taiwan, and was not restrained in any way in his daily activities. Although it is difficult to define exactly how close the level of restraint must be, in this case the country of Taiwan is clearly too great an area within which to be falsely imprisoned. Therefore, the district court correctly granted judgment as a matter of law.

      34
      D. Intentional Infliction of Emotional Distress
      35

      Shen also asserts the district court improperly dismissed his claim for intentional infliction of emotional distress. We review legal conclusions de novo, and factual findings for clear error. See Simmons v. Cook, 154 F.3d 805, 807 (8th Cir. 1998). To establish a claim for intentional infliction of emotional distress, Shen must prove:

      36
      (1) that there has been intentional or reckless conduct, (2) that the conduct was so outrageous in character and so extreme in degree as to go beyond all possible bounds of decency and is to be regarded as atrocious and utterly intolerable in a civilized community, and (3) that the conduct caused emotional distress so severe that no reasonable person should be expected to endure it.
      37

      Iwanski v. Gomes, 259 Neb. 632, 611 N.W.2d 607, 611 (2000).

      38

      The harms Shen suffered because of Daly's refusal to pay the tax included "missed family occasions, estrangement from his wife, lost business opportunities, shame, depression, insomnia, anxiety, and a variety of health problems for which, he testified, he sought medical attention." Shen, Slip-op. at 15. Although Shen undoubtedly did suffer stress and anxiety in this situation, his suffering does not rise to the level required by Nebraska law. Additionally, Daly's conduct, though unquestionably unfair, did not exceed "all possible bounds of decency." Therefore, we find no error in the district court's dismissal of this claim.

      39
      E. Set-off
      40

      Daly contends it is entitled to setoff $6700 that Shen owes it against the $4670 Shen recovered on contract claims. The district court denied the set-off because it had not been pled and it was not included in the pre-trial order. We review the district court's decision for an abuse of discretion. See Corsica Livestock Sales, Inc. v. Sumitomo Bank, 726. F.2d 374, 377 (8th Cir.1983).

      41

      The pleading rules in the federal courts are very liberal and Federal Rule of Civil Procedure 15 contemplates [479] that courts should allow pleadings to be amended if it is necessary to further justice and will not prejudice the parties. See id. Furthermore, Rule 15(b) provides that "[w]hen issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings." Consent may be implied if evidence to support the claim was introduced at trial without objection. See St. Joe Minerals Corp. v. Occupational Safety and Health Review Comm'n, 647 F.2d 840, 844 (8th Cir.1981).

      42

      Although Shen did not expressly consent to try the set-off issue, the issue was tried by implied consent in this case. On cross-examination, Shen, without objection, testified he received the refund from withholding taxes from the Taiwanese government. He testified that it was Daly's money and amounted to $6700. Additionally, Shen acknowledged he owes Daly the money. The fact that the money is owed is not disputed. Therefore, we find the court abused its discretion and Daly is entitled to the set-off.

      43
      F. Attorney's Fees
      44

      Daly asserts the district court erred in awarding Shen attorney's fees for the action in Taiwan and for this action. Under Nebraska law, attorney's fees are only proper if they are permitted by statute or by uniform practice. See Quinn v. Godfather's Inv., Inc., 217 Neb. 441, 348 N.W.2d 893, 894 (1984). Furthermore, "[a]s a general rule of practice in [Nebraska], attorneys' fees are allowed to the successful party in litigation only where such allowance is provided by statute." Id. at 895. There is no Nebraska statute authorizing attorney's fees for a breach of fiduciary duty. Therefore, the district erred in awarding attorney's fees for this action.

      45

      However, the bar on attorney's fees only applies in the very case being litigated. See Zimmerman v. FirsTier Bank, N.A., 255 Neb. 410, 585 N.W.2d 445, 454 (1998). It would not apply to the award of attorney's fees for the action in Taiwan because that award, in essence, is compensatory. Nebraska courts have held that attorney's fees are recoverable as compensatory damages when a person, damaged by a tort, was required to bring a suit against a third person to protect his interests. See Tetherow v. Wolfe, 223 Neb. 631, 392 N.W.2d 374, 379 (1986). A person who commits a breach of fiduciary duty is guilty of tortious conduct. See Restatement (Second) of Torts § 874 cmt. b (1979). Daly's breach of the covenant of good faith and fair dealing is a breach of fiduciary duty. And, although Shen sued Daly in the action in Taiwan, he was required to bring his suit to protect his interest and have the travel restriction lifted. Therefore, the attorney's fees awarded for the suit in Taiwan were proper as an element of damages for breach of fiduciary duty.

      46
      G. Damages
      47

      Shen contends the district court should have awarded him compensatory damages for the breach of the covenant of good faith and fair dealing. We review the district court's damage award for an abuse of discretion. See Johnson v. Cowell Steel Structures, Inc., 991 F.2d 474, 476 (8th Cir.1993). Under Nebraska law, "[t]he amount of damages to be awarded is a determination solely for the fact finder, and its action in this respect will not be disturbed on appeal if it is supported by evidence and bears a reasonable relationship to the elements of the damages proved." Seeber v. Howlette, 255 Neb. 561, 586 N.W.2d 445, 449 (1998). We find the record supports the district court's award of attorney's fees for the action in Taiwan as damages for the breach of the covenant of good faith. Thus, we find no abuse of discretion by the district court.

      48
      III. CONCLUSION
      49

      Accordingly, we affirm the judgment of the district court with respect to injunctive [480] relief and damages. We reverse the judgment of the district court on the issue of set-off and reverse in part on the issue of attorney's fees. This action is remanded to the District Court for an entry of judgment in accordance with this opinion.

  • 2 III.Supp.C. Supplemental Cases and Materials for III.C.

    • 2.1 Coblyn v. Kennedy's Inc.--"The 'Stolen' Ascot Case"

      Should store owners be allowed to detain suspected shoplifters? If so, to what extent should they be allowed to stop and interrogate customers?

      Notes: As plaintiff was about to leave the defendant’s store, defendant’s employee stopped him under the mistaken belief that the plaintiff had stolen a scarf. The employee grabbed plaintiff’s arm and insisted he return to the back of the store. Plaintiff complied, but suffered a heart attack due to the embarrassment and stress of the situation.
      1
      268 N.E.2d 860
      2
      359 Mass. 319, 47 A.L.R.3d 991
      3
      Marius S. COBLYN
      v.
      KENNEDY'S, INC. et al. 

      Supreme Judicial Court of Massachusetts, Suffolk.

      4
      Argued March 4, 1971.
      Decided April 15, 1971.
      5

      Thomas R. Morse, Jr., Boston, for defendants.

      6

      Sumner Z. Kaplan, Boston (Julian Soshnick, Boston, with him) for plaintiff.

      7

      Before TAURO, C.J., and SPALDING, SPIEGEL, REARDON and BRAUCHER, JJ.

      8
      [359 Mass. 320] SPIEGEL, Justice.
      9

      This is an action of tort for false imprisonment.[1] At the close of the evidence the defendants filed a motion for directed verdicts which was denied. The jury returned verdicts for the plaintiff in the sum of $12,500. The case is here on the defendants' exceptions to the denial of their motion and to the refusal of the trial judge to give certain requested instructions to the jury.

      10

      We state the pertinent evidence most favorable to the plaintiff. On March 5, 1965, the plaintiff went to Kennedy's, Inc. [268 N.E.2d 861] (Kennedy's), a store in Boston. He was seventy years of age and about five feet four inches in height. He was wearing a woolen shirt, which was 'open at the neck,' a topcoat and a hat. '(A)round his neck' he wore an ascot which he had 'purchased * * * previously at Filenes.' He proceeded to the second floor of Kennedy's to purchase a sport coat. He removed his hat, topcoat and ascot, putting the ascot in his pocket. After purchasing a sport coat and leaving it for alterations, he put on his hat and coat and walked downstairs. Just prior to exiting through the outside door of the store, he stopped, took the ascot out of his pocket, put it around his neck, and knotted it. The knot was visible 'above the lapels of his shirt.' The only stop that the plaintiff made on the first floor was immediately in front of the exit in order to put on his ascot.

      11

      Just as the plaintiff stepped out of the door, the defendant Goss, an employee, 'loomed up' in front of him with his hand up and said: 'Stop. Where did you get that scarf?' The plaintiff responded, '(W)hy?' Goss firmly grasped the plaintiff's arm and said: '(Y)ou better go back and see the manager.' Another employee was standing next to him. Eight or ten other people were standing around and were staring at the plaintiff. The plaintiff then said, 'Yes, I'll go back in the store' and proceeded to do so. As he and Goss went upstairs to the second floor, [359 Mass. 321] the plaintiff paused twice because of chest and back pains. After reaching the second floor, the salesman from whom he had purchased the cost recognized him and asked what the trouble was. The plaintiff then asked: '(W)hy 'these two gentlemen stop me? " The salesman confirmed that the plaintiff had purchased a sport coat and that the ascot belonged to him.

      12

      The salesman became alarmed by the plaintiff's appearance and the store nurse was called. She brought the plaintiff into the nurse's room and gave him a soda mint tablet. As a direct result of the emotional upset caused by the incident, the plaintiff was hospitalized and treated for a 'myocardial infarct.'

      13

      Initially, the defendants contend that as a matter of law the plaintiff was not falsely imprisoned. They argue that no unlawful restraint was imposed by either force or threat upon the plaintiff's freedom of movement. Wax v. McGrath, 255 Mass. 340, 342, 151 N.E. 317. However, '(t)he law is well settled that '(a)ny genuine restraint is sufficient to constitute an imprisonment * * *' and '(a)ny demonstration of physical power which, to all appearances, can be avoided only by submission, operates as effectually to constitute an imprisonment, if submitted to, as if any amount of force had been exercised.' 'If a man is restrained of his personal liberty by fear of a personal difficulty, that amounts to a false imprisonment' within the legal meaning of such term.' Jacques v. Childs Dining Hall Co., 244 Mass. 438, 438--439, 138 N.E. 843.

      14

      We think it is clear that there was sufficient evidence of unlawful restraint to submit this question to the jury. Just as the plaintiff had stepped out of the door of the store, the defendant Goss stopped him, firmly grasped his arm and told him that he had 'better go back and see the manager.' There was another employee at his side. The plaintiff was an elderly man and there were other people standing around staring at him. Considering the plaintiff's age and his heart condition, it is hardly to be expected that with one employee in front of him firmly grasping [359 Mass. 322] his arm and another at his side the plaintiff could do other than comply with Goss's 'request' that he go back and see the manager. The physical restraint imposed upon the plaintiff when Goss grasped the plaintiff's arm readily distinguishes this case from Sweeney v. F. W. Woolworth Co., 247 Mass. 277, 142 N.E. 50, relied upon by the defendants.

      15

      In addition, as this court observed in the Jacques case, supra, at p. 441, 138 N.E. at p. 844, the 'honesty and veracity (of the [268 N.E.2d 862] plaintiff) had been openly * * * challenged. If she had gone out before * * * (exonerating herself), her departure well might have been interpreted by the lookers on as an admission of guilt, or of circumstances from which guilt might be inferred. The situation was in the control of the defendant. The restraint or duress imposed by the mode of investigation * * * the jury could say was for the accomplishment of the defendant's purpose, even if no threats of public exposure or of arrest were made, and no physical restraint of * * * (the plaintiff) was attempted.' For cases in other jurisdictions, where the evidence tended to support the tort of false imprisonment, see Clark v. Kroger Co., 382 F.2d 562, 563 (7th Cir.); Patrick v. Esso Standard Oil Co., D.C.N.J., 156 F.Supp. 336, 340; Daniel v. Phillips Petroleum Co., 229 Mo.App. 150, 155, 73 .s.W.2d 355; Lukas v. J. C. Penney Co., 233 Or. 345, 354, 378 P.2d 717.

      16

      The defendants next contend that the detention of the plaintiff was sanctioned by G.L. c. 231, § 94B, inserted by St.1958, c. 337. This statute provides as follows: 'In an action for false arrest or false imprisonment brought by any person by reason of having been detained for questioning on or in the immediate vicinity of the premises of a merchant, if such person was detained in a reasonable manner and for not more than a reasonable length of time by a person authorized to make arrests or by the merchant or his agent or servant authorized for such purpose and if there were reasonable grounds to believe that the person so detained was committing or attempting to commit larceny of goods for sale on such premises, it shall be a defence to such action. If such goods had not been purchased and [359 Mass. 323] were concealed on or amongst the belongings of a person so detained it shall be presumed that there were reasonable grounds for such belief.'

      17

      The defendants argue in accordance with the conditions imposed in the statute that the plaintiff was detained in a reasonable manner for a reasonable length of time and that Goss had reasonable grounds for believing that the plaintiff was attempting to commit larceny of goods held for sale.

      18

      It is conceded that the detention was for a reasonable length of time. See Proulx v. Pinkerton's Natl. Detective Agency, Inc., 343 Mass. 390, 392--393, 178 N.E.2d 575. We need not decide wehther the detention was effected in a reasonable manner for we are of opinion that there were no reasonable grounds for believing that the plaintiff was committing larceny and, therefore, he should not have been detained at all. However, we observe that Goss's failure to identify himself as an employee of Kennedy's and to disclose the reasons for his inquiry and actions, coupled with the physical restraint in a public place imposed upon the plaintiff, an elderly man, who had exhibited no aggressive intention to depart, could be said to constitute an unreasonable method by which to effect detention. See Lukas v. J. C. Penney Co., 233 Or. 345, 352, 360, 378 P.2d 717.

      19

      The pivotal question before us as in most cases of this character is whether the evidence shows that there were reasonable grounds for the detention. At common law in an action for false imprisonment, the defence of probable cause, as neasured by the prudent and cautious man standard, was available to a merchant. Standish v. Narragansett S.S. Co., 111 Mass. 512, 517. Jacques v. Childs Dining Hall Co., 244 Mass. 438, 439, 138 N.E. 843. Muniz v. Mehlman, 327 Mass. 353, 358,[2] 99 N.E.2d 37. In enacting G.L. c. 231, § 94B, the Legislature inserted the words, 'reasonable grounds.' Historically, the words 'reasonable grounds' and 'probable [359 Mass. 324] cause' have been given the same meaning by the [268 N.E.2d 863] courts. In the case of United States v. Walker, 7 Cir., 246 F.2d 519, 526, it was said: "Probable cause' and 'reasonable grounds' are concepts having virtually the same meaning.' The following cases have expressly stated that the words may be used interchangeably and without distinction. Draper v. United States, 358 U.S. 307, 310, 79 S.Ct. 329, 3 L.Ed.2d 327. United States v. Vasquez, D.C.N.Y., 183 F.Supp. 190, 193. Smallwood v. Commonwealth, 305 Ky. 520, 524, 204 S.W.2d 945. McKeon v. National Cas. Co., 216 Mo.App. 507, 524, 270 S.W. 707. Adams v. State, 137 Tex.Cr. 43, 46, 128 S.W.2d 41. Stelloh v. Liban, 21 Wis.2d 119, 125, 124 N.W.2d 101. In the case of Lukas v. J. C. Penney Co., supra, at p. 361, 378 P.2d 717, the Oregon Supreme Court construed the meaning of the words 'reasonable grounds' in its 'shoplifting statute' as having the same meaning as they have in a statute authorizing arrest without a warrant and applied the probable cause standard to the facts before it.

      20

      The defendants assert that the judge improperly instructed the jury in stating that 'grounds are reasonable when there is a basis which would appear to the reasonably prudent, cautious, intelligent person.' In their brief, they argue that the 'prudent and cautious man rule' is an objective standard and requires a more rigorous and restrictive standard of conduct than is contemplated by G.L. c. 231, § 94B. The defendants' requests for instructions, in effect, state that the proper test is a subjective one, viz., whether the defendant Goss had an honest and strong suspicion that the plaintiff was committing or attempting to commit larceny.[3]

      21

      [359 Mass. 325] We do not agree. As we have attempted to show, the words 'reasonable grounds' and 'probable cause' have traditionally been accorded the same meaning. In the case of Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889, involving the question whether a police officer must have probable cause within the Fourth Amendment to 'stop-and-frisk' a suspected individual, the Supreme Court of the United States held that the 'probable cause' requirement of the Fourth Amendment applies to a 'stop-and-frisk' and that a 'stop-and-frisk' must 'be judged against an objective standard: would the facts available to the officer at the moment * * * 'warrant a man of reasonable caution in the belief' that the action taken was appropriate? * * * Anything less would invite intrusions upon constitutionally guaranteed rights based on nothing more substantial than inarticulate hunches, a result this Court has consistently refused to sanction.' Pp. 21--22, 88 S.Ct. p. 1880.

      22

      If we adopt the subjective test as suggested by the defendants, the individual's right to liberty and freedom of movement would become subject to the 'honest * * * suspicion' of a shopkeeper based on his own 'inarticulate hunches' without regard to any discernible facts. In effect, the result would be to afford the merchant even greater authority than that given to a police officer. In view of the well established meaning of the words 'reasonable grounds' we believe that the Legislature intended to give these words their traditional [268 N.E.2d 864] meaning. This seems to us a valid conclusion since the Legislature has permitted an individual to be detained for a 'reasonable length of time.' This would be at least analogous to a 'stop' within the meaning of the Terry case.[4]

      23

      [359 Mass. 326] We also note that an objective standard is the criterion for determining probable cause or reasonable grounds in malicious prosecution and false arrest cases. Bacon v. Towne, 4 Cush. 217, 238--239. Wax v. McGrath, 255 Mass. 340, 343, 151 N.E. 317. We see no valid reason to depart from this precedent in regard to cases involving false imprisonment.

      24

      Applying the standard of reasonable grounds as measured by the reasonably prudent man test[5] to the evidence in the instant case, we are of opinion that the evidence warranted the conclusion that Goss was not reasonably justified in believing that the plaintiff was engaged in shoplifting. There was no error in denying the motion for directed verdicts and in the refusal to give the requested instructions.

      25

      Exceptions overruled.

      26

      [1] Although there were several other counts in the original and amended declarations we are here concerned with only two counts; one against Kennedy's, Inc. and the other against one Gerald Goss.

      27

      [2] See Carroll v. United States, 267 U.S. 132, 161, 45 S.Ct. 280, 288, 69 L.Ed. 543, where Chief Justice Taft, speaking for the majority of a divided court, said: 'The necessity for probable cause in justifying seizures on land or sea, in making arrests without warrant for past felonies, and in malicious prosecution and false imprisonment cases has led to frequent definition of the phrase.'

      28

      [3] The bill of exceptions recites that '(t)he defendants duly excepted to the failure of the Court to give their requested instructions 1, 2 and 3.' These requests are as follows: '1. If the defendant Goss had a belief to the extent of an honest and strong suspicion that the plaintiff had committed larceny or was attempting to commit larceny of goods for sale on Kennedy's premises, the jury should find that he acted reasonably. * * * 2. If the jury find the ascot * * * was concealed on or amongst the belongings of the plaintiff, they must find that the defendants had reasonable grounds to believe that larceny had been attempted or committed. 3. If the jury find that the defendant Goss reasonably suspected the plaintiff of theft or failing to pay for goods belonging to Kennedy's, they must return verdicts for the defendants on all counts.'

      29

      The defendants' brief refers only to request No. 1 although their argument appears to touch on the periphery of the remaining two requests.

      30

      [4] See Terry v. Ohio, supra, at p. 19, 88 S.Ct. at p. 1879, where the Supreme Court rejects 'the notions that the Fourth Amendment does not come into play at all as a limitation upon police conduct if the officers stop short of something called a 'technical arrest. " At p. 19, fn. 16, 88 S.Ct. at p. 1879, the court states that '(o)nly when the officer, by means of physical force or show of authority, has in some way restrained the liberty of a citizen may we conclude that a 'seizure' has occurred.'

      31

      We also note that the Terry case allows 'a reasonable search for weapons for the protection of the police officer, where he has reason to believe that he is dealing with an armed and dangerous individual, regardless of whether he has probable cause to arrest the individual for a crime.' Even in such circumstances, however, the court said that 'in determining whether the officer acted reasonably in such circumstances, due weight must be given, not to his inchoate and unparticularized suspicion or 'hunch,' but to the specific reasonable inferences which he is entitled to draw from the facts in light of his experience.' P. 27, 88 S.Ct. at p. 1883.

      32

      [5] The test for determining probable cause or reasonable grounds was established long ago in Bacon v. Towne, supra, at pp. 238--239, where Chief Justice Shaw wrote: 'Probable cause is such a state of facts * * * as would lead a man of ordinary caution and prudence to believe, or entertain an honest and strong suspicion, that the person arrested is guilty' (emphasis supplied).

      33

      We also note here that the defendants incorrectly rely on certain language in the case of Pihl v. Morris, 319 Mass. 577, 580, 66 N.E.2d 804, 806, to support their argument that only 'an honest and strong suspicion' is needed rather than 'reasonable grounds.' That case states that "an honest and strong suspicion' is a necessary part of probable cause' (emphasis supplied).

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