MGMT 520 Legal, Political and Ethical Dimensions of Business Final Exam Week 8 Set 1 (Version 2014)

MGMT 520 Legal, Political and Ethical Dimensions of Business Final Exam Week 8 Set 1 (Version 2014)

MGMT 520 FINAL EXAM Set 1

Week 8

1. (TCOs G and I) In the 1930s, after immigrating to the U.S. from a region in central Europe threatened by the onset of World War II, Luigi and Maria Spongee opened a bakery in Chicago. They specialized in snack cakes. Spongee Cup Cakes became so popular in the area that the family stopped being actual bakers and became manufacturers/ food processors of the snack cakes on a regional basis. After returning from the war, their son Steve completed college and began working in television advertising in the early 1950s. Steve approached his parents and his older brother Tom, who was now running the business, about the possibilities of advertising and “going national.” The family liked the idea and began advertising and expanding. In addition, to fuel the expansion, they offered retailers price discounts and other incentives if they prominently positioned the displays set-up by Spongee rack jobbers. By the 1960s, they were a national brand, controlling over 80 percent of the snack food industry………….

…………A child in Idaho, with food allergy problems, even died. Her parents served her the snack, relying on the advertising, not knowing that some of the natural ingredients used in the Canadian-made product were dangerous to her.

The Spongee family seeks your advice and opinion regarding:
(1) Herbal Snacks’s advertising campaign.
(2) The marketing and distribution campaigns both companies have engaged in.
(3) The liability issues Herbal Snacks faces regarding their use of food manufactured outside of the United States

2. (TCOs A, E, F)John and Janet Fonda, siblings and actors, decide to retire after years on the road. They remember a town in New Jersey they were familiar with from their travels. From the internet, they learn of a farm a few miles outside of town that seems ideal. There is a great house and lots of land. ………….As the area near the farm was once occupied by a large chemical plant, when the realtor represents local purchasers, as a precaution, she advises the buyers to get the maximum possible title search and title insurance, and to get all possible inspections done. It is her regular practice to caution local purchasers who she represents about the former chemical plant.
After closing on the property, the Fondas learn of the old chemical plant. They seek your advice as to their liability and the liability of any other parties.

3. (TCOs A, E, F)John, Lionel, and Evelyn Harrymore, siblings and actors, decide to retire after years on the road. They remember a town in Illinois they were familiar with from their travels. From the internet, they learn of a farm a few miles outside of town that seems ideal. There is a great house and lots of land. The Harrymores wish to convert the farm to a restaurant-hotel with a dinner theater. They contact the realtor by phone, and make arrangements to buy the parcel. ………….It is her regular practice to caution local purchasers who she represents about the former chemical plant. After closing on the property, the Harrymores learn of the old chemical plant. They seek your advice as to their liability and the liability of any other parties.

1. (TCO C) Three professors from Keller’s New Jersey campus, Robinson, Romney, and Obama, decide to visit ABC Go-kart facility together in Pennsylvania. This decision is made after a lengthy faculty brunch, at which unlimited alcoholic mimosas were served. ABC Go-kart advertises at the college’s various campuses and, in fact, the professors use their faculty discount at the facility……………..At autopsy, it was later learned that Professor Robinson had been rendered brain dead by accident at the ABC Go-kart facility.

(a) What claims may Professor Robinson’s widow bring against the various parties?

(b) What defenses might each party bring against the possible claims asserted by Professor Robinson’s widow?

(c) In what state should the case be brought? (Points: 30)

(TCOs A, B, F, H

PART A

Paul and Thomas Hamilton, brothers, are college students and web designers. While at the University of Megalopolis, a private, for-profit college in the “Quad State” area, they started an online chat service called LinkTime. Paul attended and resided at the college’s campus in the State of Quadrahenria. Thomas, who was on probation during college for a low level felony drug conviction, could not be a resident student and took classes at the campus in the Commonwealth of New Guernsey campus. ………..The brothers would like to maintain a majority interest in the business, give about 20 percent to the six friends from their undergraduate days who helped them run the service, and use the remaining interest in the business to attract other investors and use employee incentives. They seek your advice on (a) the form of business they should use, (b) who might have a claim on the business, and (c) how they might protect themselves from claims regarding a computerized internet platform?

PART B

LinkTime has been a phenomenal success for over ten years. They are now a worldwide social networking phenomenon. Over the years and the various incarnations of the business enterprise, they are now a corporation with just under 100 shareholders. In anticipation of a public offering, they have just completed a private stock offering and allowed several of the initial equity owners to exercise stock options. The Hamilton brothers each exercised options to purchase 10,000 shares for $5 a share. ………………Big Profit had formally filed its opposition to the SEC’s regulation when it was proposed. After the public offering was completed, LinkTime stock stabilized at $40 a share, well below the initial offering price of $70 a share. In light of the fiasco of the public offering and the bad press that it generated, users began to drop LinkTime in favor of a new, upstart rival service offered by TronCom. Fearful that the new advertisers would back out of their contracts, the Hamilton brothers sold a great deal of their stock. What issues doesLinkTime, its officers, and stockholders face under (a) state securities law, (b) the Securities Act of 1933, and (b) the Securities and Exchange Act of 1934?

2. (TCOs A, D, E)Marvin worked at the local country club pool as a lifeguard, not a swim teacher, for the summer of 2013. Marvin was a public school physical education teacher. The country club did not do a background check or confirm any references when they hired him. They relied on the “say-so” of Marvin’s brother, a member of the country club board of directors. The country club only did a cursory internet search of the state’s Department of Education website to verify that he had a valid teaching certificate. When one of the swim instructors unexpectedly quit one day, he took over the class. Initially, the class went well. Eventually, Marvin also took over coaching the club’s competitive swim team. …………..

Several parents brought suit against the local country club, Marvin, and the country club director. The young lifeguard has also brought suit. The local country club pool alleges that they are not liable. Discuss the ethical, liability, and agency issues presented by this matter, and all defenses available to the local country club pool.

4. (TCOs A, E, F) John and Edwin Booth, brothers and actors, decide to retire after years on the road. They remember a town in Louisiana they were familiar with from their travels. From the internet, they learn of a farm a few miles outside of town that seems ideal. There is a great house and lots of land. ……………….As the area near the farm was once occupied by a large chemical plant, when the realtor represents local purchasers, as a precaution, she advises the buyers to get the maximum possible title search and title insurance, and to get all possible inspections done. It is her regular practice to caution local purchasers who she represents about the former chemical plant.

After closing on the property, the Booths learn of the old chemical plant. They seek your advice as to their liability and the liability of any other parties.

(TCOs B, C, G, I) KWRF, a small market radio station, learns from reading in the industry trade magazine that the Federal Communications Commission (FCC) has proposed a regulation change. The regulation will require radio stations to do an additional 20 minutes of public service announcements each week. As KWRF serves a small niche market, and has minimal advertising revenue, the loss of 20 minutes of air time could bankrupt them. What should KWRF do regarding the proposed change?

(TCOs G and I) In the 1930s, after immigrating to the U.S. from a region in central Europe threatened by the onset of World War II, Bruno and Helga Kreamie opened a bakery in Brooklyn. They specialized in snack cakes. Kreamie Cup Cakes became so popular in the area that the family stopped being actual bakers and became manufacturers/ food processors of the snack cakes on a regional basis………….A child in Oregon, with food allergy problems, even died. Her parents served her the snack, relying on the advertising, not knowing that some of the natural ingredients used in the Mexican-made product were dangerous to her. The Kreamie family seeks your advice and opinion regarding:

(1) Granola Snacks’s advertising campaign.

(2) The marketing and distribution campaigns both companies have engaged in.

(3) The liability issues Granola Snacks faces regarding their use of food manufactured outside of the United States.

(TCOs D, E, F) Frank Jones is a college student who had a plow attached to his jeep so he could earn extra money plowing during the winter. Jones was under contract to plow the driveways of Mr. Washington and Ms. Adams, two neighbors down the street. John Smith lives between Washington and Adams. …………..After Smith’s obnoxious response, Jones yelled: “I will see you in court!” What legal arguments could Jones make to enforce his $600 bill? What legal arguments could Smith make to avoid liability?

(TCOs B, C, G, I) Lonestar Trucking, a large freight carrier servicing the Southwest, learns from reading in the industry trade magazine that the Federal Motor Carrier Safety Administration (FMCSA) has proposed a regulation change………..They are concerned that the field drug tests used by police officers are notorious for giving “false positive” results, and that the proposed regulation will require that a test be given even when “the other diver” is clearly at fault. What should Lonestar Trucking do regarding the proposed change?

(TCO C) Three professors from Keller’s Illinois campus, Favre, Bush, and Clinton, decide to visit XYZ Go-kart facility together in Minnesota. This decision is made after a lengthy faculty brunch, at which unlimited alcoholic mimosas were served…………At the hospital, Favre dies from insulin shock and other complications due to his diabetes while the emergency room doctor was doing a procedure to prevent blood clots and a possible stroke from the head injury. At autopsy, it was later learned that Professor Favre had been rendered brain dead by accident at the XYZ Go-kart facility.

(a) What claims may Professor Favre’s widow bring against the various parties?

(b) What defenses might each party bring against the possible claims asserted by Professor Favre’s widow?

(TCOs A, D, E) Judy Collinsworth, a then-unknown folk singer, signed a three album recording contract with Mercury Apollo Music, Inc. Mercury Apollo Music was a boutique label specializing in folk artists. Collinsworth’s first album for Mercury Apollo was moderately successful. The second album, unfortunately, was panned by the critics and did not sell. Mercury Apollo Music was acquired by NastiCondiMedia, Inc. NastiCondiMedia, in an effort to re-vitalize Collinsworth’s career, encouraged her to leave the folk style she was committed to and do more commercially viable pop material. Collinsworth rejected this request. Furious with NastiCondiMedia, Collinsworth wanted to end the contract. On her own, with what remaining personal funds she had left, she immediately went to an independent recording studio and did sessions toward a third album without approval or consent by NastiCondiMedia. Using her concert band, she recorded tracks for over 30 songs. Due to the financial failure of Collinsworth’s second album and her recent unsuccessful concert tour, NastiCondiMedia did not do the final production work on Collinsworth’s third album.
Collinsworth then entered into a contract with EasyListening Communications, Inc. She began recording a new folk album with EasyListening in conjunction with a concert tour that they financed and produced. At her concerts, Collinsworth would regularly introduce the new material that would be on her new album.
Shortly after the concert tour began, NastiCondiMedia brings suit against Judy Collinsworth and EasyListening Communications, Inc.
(a) What causes of action might NastiCondiMedia bring against Collinsworth and EasyListening?

(b) What causes of action might Collinsworth and EasyListening bring against NastiCondiMedia?

(c) What types of relief might either party seek?

(TCOs A, B, F, H)
PART A
Paul and Thomas Franklin, brothers, are college students and web designers. While at the University of Megalopolis, a private, for-profit college in the “Quad State” area, they started an online chat service called FaceLinked. Paul attended and resided at the college’s campus in the State of Quadrahenria. Thomas, who was on probation during college for a low level felony drug conviction, could not be a resident student and took classes at the campus in the Commonwealth of New Guernsey campus. The chat service began by putting information from the school’s student directory online, and offering blog, chat, and message board features………….The brothers would like to maintain a majority interest in the business, give about 20 percent to the six friends from their undergraduate days who helped them run the service, and use the remaining interest in the business to attract other investors and use employee incentives.
They seek your advice on (a) the form of business they should use, (b) who might have a claim on the business, and (c) how they might protect themselves from claims regarding a computerized internet platform?

PART B
FaceLinked has been a phenomenal success for over ten years. They are now a worldwide social networking phenomenon. Over the years and the various incarnations of the business enterprise, they are now a corporation with just under 100 shareholders. In anticipation of a public offering, they have just completed a private stock offering and allowed several of the initial equity owners to exercise stock options. The Franklin brothers each exercised options to purchase 10,000 shares for $5 a share……………
What issues does FaceLinked, its officers, and stockholders face under (a) state securities law, (b) the Securities Act of 1933, and (c) the Securities and Exchange Act of 1934?

(TCOs A, D, E) Woody worked at the local country club pool as a lifeguard, not a swim teacher, for the summer of 2013. Woody was a public school physical education teacher. The country club did not do a background check or confirm any references when they hired him. They relied on the “say-so” of Woody’s brother, a member of the country club board of directors……….Last year, he was arrested for physically abusing a child he coached at his school. Although the criminal charges were dropped, Woody is on administrative leave from his public school job until an administrative hearing with the state Department of Education can be held in the fall. The incident was reported in several local papers, and his administrative suspension is listed on the state’s database.

Several of the children, ages 6-8, reported to their parents that they had been physically assaulted by Woody while in swim class for not “working hard enough!” The children had bruises on their shoulders…………..The young lifeguard has also brought suit. The local country club pool alleges that they are not liable. Discuss the ethical, liability, and agency issues presented by this matter, and all defenses available to the local country club pool.

(TCOs G and I) In the 1930s, after immigrating to the U.S. from Ireland at the onset of World War II, Shamus and Mary McCream opened a bakery in Boston. They specialized in snack cakes. McCream Cup Cakes became so popular in the area that the family stopped being actual bakers and became manufacturers/ food processors of the snack cakes on a regional basis. After returning from the war, their son Steve completed college and began working in television advertising in the early 1950s………..
In the 1970s, with the advent of the hippie counter-culture and the back-to-Earth movement, a new competitor made an impact on the McCream business. The company, Healthy Snacks, began advertising that their products only used natural ingredients………….Her parents served her the snack, relying on the advertising, not knowing that some of the natural ingredients used in the Dominican Republic-made product were dangerous to her.

The McCream family seeks your advice and opinion regarding:
(1) Healthy Snacks’s advertising campaign.

(2) The marketing and distribution campaigns both companies have engaged in.

(3) The liability issues Healthy Snacks faces regarding their use of food manufactured outside of the United States.

(TCOs A, E, F) John and Edwin Booth, brothers and actors, decide to retire after years on the road. They remember a town in Louisiana they were familiar with from their travels. From the internet, they learn of a farm a few miles outside of town that seems ideal. There is a great house and lots of land……………..It is her regular practice to caution local purchasers who she represents about the former chemical plant. After closing on the property, the Booths learn of the old chemical plant. They seek your advice as to their liability and the liability of any other parties.