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Solution Manual for Business Law, 10th Edition

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    Chapter 1 Legal Heritage and the Digital Age Answer to Critical Legal Thinking Case 1.1 Fairness of the Law Many students will react that the statute is unfair as it does not afford women equal status in the workplace. In light of today’s standards, that position is well founded. However, it is a useful exercise to consider arguments for the opposite position in the context of the time period. In enacting such a statute, the legislature presumably entertained the view that women had special needs, were subject to certain weaknesses, and therefore the demands made on them had to be accommodated in the workplace. T hat these premises, i.e., special needs and presumed weaknesses, might be false does not necessarily preclude one from acting morally. Moralists might label this ignorance as excusable in that it is “invincible,” i.e., an ignorance that cannot be destroyed or offers no moral reason for doing so. Of course, modern experience and knowledge require that we question these premises. It almost certainly would not be lawful today. Not only have the items relevant to the test of equal protection broadened under pre sent constitutional interpretations, but also Title VII of the Civil Rights Act of 1964 prohibits any discrimination on the basis of sex in the “terms, conditions and benefits of employment.” W. C. Ritchie & Co. v. Wayman, Attorney for Cook Country, Illinois , 91 N.E. 695, 1910 Ill. Lexis 1958 (Supreme Court of Illinois) Answers to Ethics Cases 1.2 Ethics Case Yes, the hunting, fishing, and gathering rights granted to the Mille Lacs Band of the Ojibwe Indians by the federal government in the 1837 treaty are valid and enforceable. The U.S. Supreme Court held that these rights were not extinguished when the state of Minnesota was

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    admitted as a state in 1858. The state of Minnesota argued that the Ojibwe’s rights under the treaty were extinguished when Minnesota was admitted to the Union. There is no clear evidence of federal congressional intent to extinguish the treaty rights of t he Ojibwe Indians when Minnesota was admitted as a state in 1858. The language admitting Minnesota as a state made no mention of Indian treaty rights. It was illegal for the state of Minnesota to try to extinguish clearly delineated legal rights granted to the Ojibwe Native Americans more than 150 years before. The hunting, fishing, and gathering rights guaranteed to the Ojibwe Indians in the 1837 treaty are still valid and enforceable. The state of Minnesota did not ethically when it tried to abolish the hunting, fishing, and gathering rights guaranteed to the Ojibwe Indians by treaty. The Ojibwe relied on the promises of the treaty, which must be kept by the government. Minnesota v. Mille Lacs Band of Chippewa Indians , 526 U.S. 172, 119 S.Ct. 1187, 1999 U.S. Lexis 2190 (Supreme Court of the United States) 1.3 Ethics Case The better case is made by the dissent. The law has not been progressive in this instance. It is likely that legislators entertained an unconscious premise that women should not be required to fight a war. This speculation might be supported by the fact th at the majority of the Supreme Court summoned a technical legal point to justify their ruling. The Court held that Congress was the proper party to articulate the public policy that women should not fight at the front, thereby removing themselves from any further consideration of the substantive issue, i.e., whether equality was being served as a matter of fairness. Rostker, Director of the Selective Service v. Goldberg , 453 U.S. 57, 101 S.Ct. 2646, 1981 U.S. Lexis 126 (Supreme Court of the United States)

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    Chapter 2 Courts and Jurisdiction Answers to Critical Legal Thinking Cases 2.1 Personal Jurisdiction No, defendants Live Siri Art, Inc. and Siri Galliano are not subject to lawsuit in New York pursuant to New York’s long - arm statute. This is because defendant Live Siri Art, Inc, a California corporation, and defendant Siri Galliano, a California resident, did not have the requisite minimum contacts with the state of New York to make them subject to a lawsuit brought by plaintiff Richtone Design Group LLC (Richtone), a New York LLC, in a New York court pursuant to the New York long - arm statute. Assuming tha t the defendants did violate the plaintiff’s copyright by selling Richtone’s pilates manuals in New York using a website and made $1,000 in more than a decade doing so, this is but de minimis contact that does not arise to the minimum contact required by d ue process to subject them to a lawsuit in New York. The U.S. district court dismissed plaintiff Richtone’s New York lawsuit against the California defendants for lack of personal jurisdiction. Richtone Design Group, LLC v. Live Art , Inc. , 2013 U.S. Dist. Lexis 157781 (United States District Court for the Southern District of New York, 2013) 2.2 Service of Process Yes, May Facebook, Inc. may use alternative service of process by sending email notices to the defendants’ websites. Facebook sued the defendants for trademark infringement, cybersquatting,

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    and false designation of origin by their use of typosquatting schemes whereby the defendants register internet domain names that are confusingly similar to facebook.com (e.g., facebock.com) so that potential users of Facebook’s website who enter a typograp hical error are diverted to the typesquatter’s website, which is designed to look strikingly similar in appearance to Facebook’s website, to trick users into thinking that they are using Facebook’s website. Facebook has introduced evidence that it has not been able to serve the defendants personally, by mail, or by telephone. The U.S. district court granted Facebook’s motion to be permitted to serve these defendants by sending an email notice to the defendants’ websites. The U.S. district court stated “Here , service by email is reasonably calculated to provide actual notice.” The U.S. district court issued an order permitting Facebook to serve the defendants by email. Facebook, Inc. v. Banana Ads LLC . 2012 U.S. Dist. Lexis 65834 (United States District Court for the Northern District of California, 2012) 2.3 Standing to Sue Michigan law, and not Ohio law, applies in this case. The court noted that because the accident took place in Michigan, there is a presumption that Michigan law applies absent any other jurisdiction having more substantial contacts. Plaintiff Bertram, howe ver, contended that Ohio law should apply, because all of the parties were residents of Ohio at the time of the accident and all consequences flowing from his injury occurred in Ohio. The court disagreed. The court stated, ”Because the snowmobiling acciden t took place in Michigan, the place where the conduct causing Bertram’s injury occurred in Michigan and Michigan has enacted specific legislation involving the risks of snowmobiling, we find that Michigan law clearly controls in this case. While all partie s are residents of and have their relationships in the State of Ohio, we are not

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    persuaded by Bertram’s argument that this issue should control.” The Court of Appeals of Ohio held that the law of the state of Michigan, where the accident occurred, and not the law of the state of Ohio, the state of the residence of the parties, applied. The court applied the Michigan assumption of the risk statute and granted summary judgment to the three defendant friends of plaintiff Bertram. Bertram v. Norden, et al. , 823 N.E.2d 478, 2004 Ohio App. Lexis 550 (Court of Appeals of Ohio, 2004) 2.4 Long - Arm Statute Yes, the Missouri court has personal jurisdiction over the Illinois casino based on Missouri’s long - arm statute. Although the Casino Queen casino is located in Illinois, it could reasonably foresee its pervasive advertising directed at Missouri residents w ould entice those residents, such a Mark Myers, to cross the state line into Illinois to participate in gambling at the Illinois casino. If an Illinois defendant can reasonably foresee that his or her negligent actions have consequences felt in Missouri, p ersonal jurisdiction is authorized under the Missouri long - arm statute. The U.S. court of appeals held that Casino Queen, which operated a casino in Illinois, is subject to personal jurisdiction in courts in Missouri under Missouri’s long - arm statute. The court of appeals stated, “While Myers’s injuries did not arise out of Casino Queen’s advertising in a strict proximate cause sense, his injuries are nonetheless related to Casino Queen’s advertising activities because he was injured after responding to the solicitation.” The court of appeals ruled that Casino Queen must stand trial in a Missouri court and defend the charges brought against it by Myers. Myers v. Casino Queen, Inc. , 689 F.3d 904, (United States Court of Appeals for the Eighth Circuit, 2012)

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    2.5 Standing to Sue No. The U.S. District Court held that Phoenix of Broward, Inc. (Phoenix), a franchisee of Burger King did not have standing to sue McDonald’s and dismissed the case. In deciding the case the court noted that the goal of standing is to determine whether the plaintiff is a proper party to invoke judicial resolution of the dispute and the exercise of the court's remedial powers. It was Simon Marketing, Inc. (Simon), who McDonald’s hired to operate the promotional games, who committed fraud by steering cash pri zes of up to $1 million to its conspirators. McDonald’s may have been negligent in allowing this to happen. Thus, McDonald’s customers who did not have a chance to win the cash prizes because of the fraud would have standing to sue Simon and McDonald’s. Ho wever, the court held that Phoenix of Broward, Inc. (Phoenix), a franchisee of Burger King, did not have standing to sue McDonald’s. The court stated, “In this case, the harm caused by McDonald's allegedly false advertisements more directly affects the cus tomers who were denied the opportunity to compete for the high - value prizes criminally co - opted by Jacobson. While these customers do not have standing to sue under the Lanham Act, they could and did vindicate the public interest by suing McDonald's for fr aud. Thus, there is no need to empower Phoenix to act as a private attorney general in this case.” Phoenix of Broward, Inc. v. McDonald’s Corporation , 441 F.Supp.2d 1241, 2006 U.S. Dist. Lexis 55112 (United States District Court for the Northern District o f Georgia, 2006) 2.6 U.S. Supreme Court Decision This is a plurality decision of the U.S. Supreme Court and does not create precedent for further cases. This is because although 5 justices upheld the Salinas’s verdict of guilty, 3 did so for one reason and 2 did so for a different reason. If the 5 justic es would have agreed to the verdict of

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    guilty based on the same reason as to why the evidence of the defendant’s silence at the precustodical hearing could be admitted at trial, then it would have been a majority opinion, and a majority opinion would have become precedent. However, in this case , 5 justices upheld the guilty verdict, but 3 for one reason and 2 justices for another reason, with 4 justices dissenting, created a plurality decision that does not create precedent. Salinas v. Texas , 133 S.Ct. 2174, 2012 U.S. Lexis 4697 (Supreme Court o f the United States, 2012) Answers to Ethics Cases 2.7 Ethics Case Yes, the Maryland court has personal jurisdiction over the Florida defendant Ladawn Banks. Chanel is engaged in the business of manufacturing and distributing throughout the world various luxury goods, including handbags, wallets, and numerous other products under the federally registered trademark “Chanel” and monogram marks. Chanel alleged that Banks owned and operated the fully interactive website www.lovenamebrands.com, through which she sold handbags and wallets bearing counterfeit trademarks identical to the registered Chanel marks. According to Chanel, although defendant Banks is a resident of Florida, she conducted business in Maryland via several interactive websites. The Zippo court distinction between interactive, semi - interactive, and passive websites is particularly relevant. Defendant’s website at issue in this case was highly interactive and provided a platform for the commercial exchange of information, goods, and funds. Thus, the Maryland court, under its long - arm statute, has personal jurisd iction over the Florida defendant Banks in this matter. The court granted default judgment

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    to Chanel, assessed damages of $133,712 against Banks, and issued a permanent injunction prohibiting Banks from infringing on Chanel’s trademarks. Regarding the issue of ethics, if defendant Ladawn Banks operated the website www.lovenamebrands.com and sold knock - off handbags and wallets bearing counterfeit trademarks identical to the registered Chanel marks, she has acted unethically. Stealing another party’s rightful trademarks and selling knock - off goods bearing those trademarks is not only unethi cal but it also constitutes illegal trademark infringement. Chanel, Inc. v. Banks , 2010 U.S. Dist. Lexis 135374 (United States District Court for Maryland, 2010) 2.8 Ethics Case No, Hertz Corporation is not a citizen of California and therefore is not subject to plaintiff Melinda Friend’s — a California citizen — suit in California state court. A corporation is a citizen of the state in which it is incorporated and in which it has its principal place of business. Hertz Corporation is incorporated in the state of Delaware and has its headquarters office in the state of New Jersey. Hertz is not incorporated in California nor does it have its principal place of business in California. The U.S. Supreme Court stated, “We conclude that the phrase ‘principal place of business’ refers to the place where the corporation’s high level officers direct, control, and coordinate the corporation’s activities. We believe that the ‘nerve center’ will typ ically be found at a corporation’s headquarters. The metaphor of a corporate ‘brain,’ while not precise, suggests a single location.” Here, that location for Hertz was Hertz’s headquarters office in New Jersey. Because Hertz was not a citizen of California , and plaintiff Friend was a resident of California, there was diversity of citizenship and Hertz can legally have Friend’s lawsuit moved from California state court to the U.S. district court in California. It was probably not unethical for Hertz to deny citizenship in California even though it has

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    such a large presence in California with its 270 rental car locations and more than 2,000 employees in California. Finding diversity in this case does not mean that Friend cannot sue Hertz in California. Friend will get her day in court against Hertz, but it will be in a U.S. district court in California and not in a California state court. Hertz Corporation v. Friend , 130 S.Ct. 1181, 2010 U.S. Lexis 1897 (Supreme Court of the United States, 2010)

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    Chapter 3 Judicial, Alternative, and E - Dispute Resolution Answers to Critical Legal Thinking Cases 4.1 Summary Judgment No, the defendants’ motions for summary judgment should not be granted. The U.S. district court found that substantial issues of fact needed to be decided at trial, which included whether the butter popcorn flavoring made by the defendants was dangerous, a nd if so the extent of the danger caused to someone who smelled and ate microwave popcorn, the amount of popcorn flavorings eaten by Deborah that was produced by each of the three defendants — Chr. Hansen, Inc., Symrise, Inc., and Firmenich, Inc. — and, if lia bility was found, what damages should be awarded and to what degree would each defendant be responsible. The court stated, “I find that the information and circumstances generate genuine issues of material fact as to whether defendants knew or had reason t o know that their butter flavorings posed a potential risk, at some level, to consumers, thus triggering the necessity for a warning.” The U.S. district court denied the defendants’ motion for summary judgment based on failure to warn claims, thus permitti ng the case to go to trial. Daughetee v. Chr. Hansen, Inc. , 2013 U.S. Dist. Lexis 50804 (United States District Court for the Northern District of Iowa, 2013) 4.2 Service of Process No, plaintiff Jon Summervold did not properly serve defendant Wal - Mart, Inc. South Dakota law requires that service of process on a corporate defendant be made on president, officer, director, or registered agent of a defendant corporation. Here, plaintiff served a nonofficer employee of Walmart, the assistant manager of the apparel department of the Walmart store in Aberdeen, South Dakota. Based on the fact that the president, directors, or officers of Wal - Mart, Inc. were not located in South Dakota at the time of the plaintiff’s lawsuit, the plaintiff should have had the process server serve the registered agent the service of process. Because the plaintiff had failed to comply with South Dakota’s applicable service of process statute, the court held that the

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    service of process was invalid. Because the three year statute of limitations had run on the plaintiff’s claim, the court dismissed the plaintiff’s lawsuit against Walmart. The judge stated “It is a most unpleasant task for any judge to dismiss a case at t his stage.” Sommervold v. Wal - Mart, Inc. , 709 F.3d 1234, 2013 U.S. App. Lexis 4972 (United States Court of Appeals for the Eighth Circuit, 2013 ) 4.3 Summary Judgment Yes, Wal - Mart Stores, Inc. should be granted summary judgment. Summary judgment can be granted by a court where there is no dispute as to the material facts of the case. Here, the court of appeals held that there were no issues of material fact that needed to be heard by a jury and that the judge could therefore make a decision in this case. The court held that Wal - Mart did not provide a dangerous display and that the four corners of the display were clearing marked with “Watch Step” warning signs. The cour t stated that Walmart did not instruct the plaintiff to pick up her watermelon and take several steps around the display with it. The court noted that the safer option was for her to have pushed her shopping cart close to the display and then to have scoop ed the watermelon into her cart. This option would not have required her to take any steps, thus avoiding the unfortunate incident. The court rejected the contention that Walmart “created a trap” for the plaintiff. Based on the undisputed facts of the case , the court granted summary judgment to Walmart. Primrose v. Wal - Mart Stores, Inc. , 127 So.3d 13, 2013 La. App. Lexis 1985 (Court of Appeals of Louisiana, 2013) 4.4 Class Certification Yes, the class should be certified. The homeowners who have installed the Pex home plumbing system manufactured by Zurn Pex, Inc. and Zurn Industries, Inc. (Zurn) allege that the system has a crucial defect in that the brass fitting and crimp that joins the Pex tubing together is defective because it corrodes over time. Many homeowners have experienced water damage because of the corrosion; other homeowners who have installed the Pex system have not yet experienced water leakage but are still covered by the 25 - year warranty on the Pex plumbing system. Homeowners in Minnesota who have installed Zurn Pex plumbing, whether they have experienced water damage or not, seek class certification to bring a class action against Zurn to have Zurn repair or replace Pex plumbing systems according to the warranty. The U.S. district

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    court noted that the class is readily identifiable, the Pex product that is claimed to be defective is the same product that has been installed in all of the covered homes, the defendants are easily identifiable, and all of the homes are covered by a simil ar warranty. Therefore, the U.S. district court certified the following class: “All persons and entities that own a structure located within the State of Minnesota that contains a Zurn Pex plumbing system with Zurn brass crimp fittings.” The U.S. court of appeals affirmed the class certification. In re Zurn Pex Plumbing Products Liability Litigation , 644 F.3d 604, 2011 U.S. App. Lexis 13663 (United States Court of Appeals for the Eighth Circuit, 2011) 4.5 Arbitration Yes, the contract dispute between the parties is subject to arbitration. The U.S. Supreme Court held that there was a valid arbitration agreement entered into between Nitro - Lift Technolo gies, L.L.C. and its former employees, Eddie Howard and Shane D. Schneider . When Howard and Schneider sued Nitro - Lift in Oklahoma state court to have the noncompetition agreement declared null and void, they ignored the arbitration clause contained in the same agreement. The U.S. Supreme Court held that the dispute was subje ct to the arbitration clause and must be submitted to arbitration. The U.S. Supreme Court held that the contract dispute in the case was to be heard by the arbitrator and not by the Oklahoma state court. The U.S. Supreme Court stated “The Oklahoma Supreme Court m ust abide by the Federal Arbitration Act (FAA) , which is the Supreme Law of the Land.” Nitro - Lift Technologies, L.L.C. v. Howard , 133 S.Ct. 500, 2012 U.S. Lexis 8897 ( Supreme Court of the United States , 2012) Answers to Ethics Cases 4.6 Ethics Case Yes, the issuance of a default judgment against the defendants is warranted in the case. BMW North America, LLC and Rolls - Royce Motor Cars NA, LLC and their parent and affiliate companies (plaintiffs) filed a lawsuit in U.S. district court for trademark i nfringement against the corporate defendants, DinoDirect Corporation, DinoDirect China Ltd., and B2CForce International Corporation, and the individual defendant Kevin Feng, for selling counterfeit goods

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    bearing the trademark names “BMW” and “Rolls - Royce.” The plaintiffs properly served these defendants with the complaint against them. The defendants replied to the court with many emails but failed to appear in court or to file an answer to the complaint filed against them. After giving the defendants ample opportunities to appear and file an answer, the court issued a default judgment against the defendants holding them liable for trademark infringement. In the default judgment, the court permanently enjo ined the defendants from engaging in similar trademark infringement in the future, issued an order for the destruction of any counterfeit goods in the possession of the defendants, and awarded the plaintiffs $1.5 million against the defendants for willful trademark infringement. Selling counterfeit goods bearing valid trademarks of other companies is unethical behavior. Here, the brand names BMW and Rolls - Royce are well recognized in the United States and around the world as being those of companies producing luxury automobiles a nd other products. The defendants were trying to make illegal profits by selling counterfeit goods bearing these trademarks. Trademark owners lose hundreds of millions of dollars each year from counterfeiters illegally selling knock - off s bearing their tra demarks. BMW of North America v. Dinodirect Corporation , 2012 U.S. Dist. Lexis 170667 (United States District Court for the Northern District of California, 2012) 4.7 Ethics Case No, the federal court should not vacate the arbitrator’s award. The agreement signed between Johnson Controls, Inc. and Edman Controls, Inc. gave Edman the exclusive rights to sell Johnson products in Panama. The agreement stipulated that any dispute arisi ng from the parties’ arrangement would be resolved through arbitration using Wisconsin law. The court upheld the arbitrator’s finding that Johnson breached the agreement by attempting to sell its products directly to Panamanian developers, circumventing Ed man. The U.S. district court upheld the arbitrator’s decision, as did the U.S. court of appeals. The court of appeals held that the parties had entered into a binding arbitration agreement and that the dispute between the parties had been properly decided by the arbitrator. The court noted “Attempts to obtain judicial review of an arbitrator’s decision undermine the integrity of the arbitral process.” The district court and court of appeals affirmed the arbitrator’s decision that Johnson had breached its co ntract with

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    Edman and upheld the arbitrator’s award $733,341 in lost profits and damages, $252,127 in attorney’s fees, $39,958 in costs, and $23,042 in prejudgment interest against Johnson. Johnson acted unethically in two regards in this case. First, Johnson breached its agreement with Edman by directly competing with Edman in the Panama building market, violating the express terms of their agreement. Concerning this, the court of appeals s tated, “Johnson breached the agreement, circumventing Edman. There was nothing subtle about this.” The second way Johnson acted unethically was by trying to avoid the arbitrator’s decision and award. In regards to Johnson’s attempt to avoid the arbitrator’ s award by appealing to the courts, the court of appeals noted “Although arbitration is supposed to be a procedure through which a dispute can be resolved privately, losers sometimes cannot resist the urge to try for a second bite at the apple. That is wha t has happened here.” Johnson Controls, Inc. v. Edman Controls, Inc. , 712 F.3d 1021, 2013 U.S. Dist. Lexis 5583 (United States Court of Appeals for the Seventh Circuit, 2013)

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    Chapter 4 Constitutional Law for Business and E - Commerce Answer to Critical Legal Thinking Case s 4 .1 Supremacy Clause Yes. The U.S. Supreme Court held that the Massachusetts’ anti - Myanmar law conflicted with federal law and was therefore preempted by the Supremacy Clause of the U.S. Constitution. The Supreme Court stated, “Within the sphere defined by Congress, then, the federal statute has placed the president in a position with as much discretion to exercise economic leverage against Burma, with an eye toward national security, as our law will admit. It is simply implausible that Congress would have gone to such lengths to empower the president if it had been willing to compromise his effectiveness by deference to every provision of state statute or local ordinance that might, if enforced, blunt the consequences of discretionary presidential action.” The court stated that it was unlikely that Congress intended both to enable the president to protect national security by giving him the flexibility to suspend or terminate federal sanctions and simultaneously to allow Massachusetts to act at odds with the president’s judgment of what national security requires. And that is just what the Massachusetts Burma law would do in imposing a different, state system of economic pressure against the Burmese political regime. The U.S. Supreme Court held that the Massachusetts anti - Myanmar law conflicted with federal law and was therefore preempted by the Supremacy Clause of the Constitution. The Supreme Court ruled in favor of the National Foreign Trade Council. Crosby, Secretary of Administration and Finance of Massachusetts v. National F oreign Trade Council , 530 U.S. 363, 120 S.Ct. 2288, 2000 U.S. Lexis 4153 (Supreme Court of the United States, 2000) 4 .2 Establishment Clause Yes, the display of the Ten Commandments in the courthouses violates the Establishment Clause. The First Amendment’s Establishment Clause mandates governmental neutrality regarding religion, that is, a government cannot promote religion. However, the U.S. Supreme

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