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Case 2.2 Ethics: Starbucks Corporation v. Wolfe's Borough Coffee, Inc.Facts: Starbucks is a seller of specialty coffees and other products sold in more than 10,000 locations worldwide, and owns more than 60 trademarks and service marks related to its business. Wolfe's Borough Coffee, Inc., d.b.a. Black Bear Micro Roastery (Black Bear), manufactures and sells roasted coffee beans and related products via a retail outlet and online. Black Bear uses the trademark names "Mister Charbucks," Mr. Charbucks," and "Charbucks Blend." Starbucks sued Black Bear in U.S. district court, alleging trademark dilution in violation of the Trademark Dilution Act. The U.S. district court concluded that Starbucks failed to prove that Charbucks marks were likely to dilute the Starbucks marks. Starbucks appealed.Issue: Did the Charbucks marks cause dilution to the Starbucks marks?Decision: The United StatesCourt of Appeals for the Second Circuit found that Starbucks had failed to prove a likelihood of dilution and permitted defendant Black Bear to continue to use the "Charbucks" name.Reason: The United States Court of Appeals for the Second Circuit concluded that there was only a minimal similarity between the Charbucks and Starbucks marks, with a low likelihood of association diluting Starbucks' intellectual property. Ethics Questions: 1)It does seem likely that the defendant was consciously using the name recognition of the Starbucks marks when it created the "Charbucks" brand. The fact that both companies are purveyors of coffee makes this even more likely. 2)Even though Black Bear was found not to have violated the law, remember that the ethical standard of conduct often far exceeds the legal standard
Case 2.3 Humanitarian Violations: Kiobel v. Royal Dutch Petroleum CompanyFacts: The petitioners were residents of Nigeria. The respondents are multinational corporations conducting business globally, including oil exploration and production in Nigeria and other business in the United States. Petitioners were granted political asylum by the United States and are now residents. They filed a complaint in U.S. district court against the respondents, alleging that while they were in Nigeria, they protested the environmental practices of Shell Petroleum Development Company of Nigeria, Ltd. (SPDC), one of the respondents. Petitioners alleged a collaborative effort between respondents and the Nigerian government to suppress the protest, using military force and committing various atrocities against the petitioners, their people, and their villages. The petitioners asserted that the United States had jurisdiction to hear the case under the Alien Tort Statute (ATS), which permits aliens to bring lawsuits in federal court. The U.S. district court dismissed part of the case, and the U.S. court of appeals dismissed the entire case. The petitioners appealed to the U.S. Supreme Court, which granted review.Issue: Does the Alien Tort Statute permit U.S. federal courts to decide issues regarding conduct that occurred in another country?Decision: The U.S. Supreme Court held that the petitioners' case seeking relief for humanitarian violations occurring outside of the United States was prohibited.Reason: The U.S. Supreme Court relied on the presumption that United States law governs domestically but does not "rule the world." Ethics Questions:1) The petitioners likely sued in U.S. district court based on the belief that the United States standard for humanitarianism is significantly higher than the standard recognized in Nigeria. 2)The petitioners also likely believed that they would not receivea fair trial in Nigeria, since Nigeria allegedly worked in conjunction with SPDC and the other respondents in suppressing the environmental demonstrations. 3) Whether the United States owes a duty to enforce humanitarianism laws worldwide is subject to debate—many United States citizens now believe that the U.S. should no longer "police the world" due to the associated expense and controversy from engaging in such practices.
4) It is also subject to debate as to whether the United States should bar corporations from doing business in the U.S. if those corporations are violating humanitarian laws in other countries. What specific violation(s) would merit such a ban? Which humanitarian laws would apply?
1) No. Plaintiff Jazlyn Bradley has not stated a valid case against McDonald's for deceptive and unfair acts and practices in violation of the New York Consumer Protection Act. It is well-known that fast food in general, and McDonald's products inparticular, contain high levels of cholesterol, fat, salt, and sugar, and that such attributes are bad for one. The plaintiff therefore either knew or should have known enough of the critical facts. Bradley is alleged to have "consumed McDonald's foods her entire life during school lunch breaks and before and after school, approximately five times per week, ordering two meals per day." What the plaintiff has not done, however, is to address the role that a number of other factors other than diet may come to play in obesity and the health problems of which the plaintiff complains. In order to allege that McDonald's products were a significant factor in the plaintiff's obesity and health problems, the complaint must address these other variables and, if possible, eliminate them or show that a McDiet is a substantial factor despite these other variables. Similarly, with regards to the plaintiff's health problems that she claims resulted from her obesity, it would be necessary to allege that such diseases were not merely hereditary or caused by environmental or other factors. Without this additional information, McDonald's does not have sufficient information to determine if its foods are the cause of the plaintiff's obesity, or if, instead, McDonald's foods are only a contributing factor. The U.S. District Court granted the motion of defendant McDonald's to dismiss the plaintiff's complaint.2. McDonald's knew that it sold food products that could cause obesity. As required by law, McDonalds and other fast food restaurants must now disclose calorie and other information about its food products. 3. McDonald's does not, however, disclose at its restaurants that "super heavy users"—defined as those persons who eat McDonald's ten times or more a month—make up approximately 75 percent of McDonald's sales. Bradley v. McDonald's Corporation, 2003 U.S. Dist. Lexis 15202 (United States District Court for the Southern District of New York). One can argue either way whether they should disclose this, or whether heavy usersshould know from the information disclosed that the results could be obesity.
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 levelofficers direct, control, and coordinate the corporation's activities. We believe that the 'nerve center' will typically 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 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
No, the court did not grant Pathmark's motion for summary judgment. The court held that there were material and genuine issues of fact to be decided by a jury and affirmed the motion court's denial of Pathmark's motion for summary judgment. The court noted that the plaintiff alleged that she tripped over cases of soda that were stacked on the floor of defendant's supermarket. It appears that at the time of the accident, the supermarket's shelves, in accordance with usual practice, were being "packed out" with soda by an employee of either defendant bottling company or defendant soda distributor. The supermarket moved for summary judgment, contending that it did not create the alleged dangerous condition and that the plaintiff's deposition testimony, to the effect that she walked to the soda aisle immediately after entering the store and did not see any soda on the floor before falling, shows that she cannot establish how long the soda had been on the floor before she fell. The appellate court found that the motion court correctly held that such testimony does not establish, prima facie, the supermarket's lack of prior actual or constructive notice of the soda on the floor. The appellate court held that there were material and genuine issues of fact that must bedecided by a jury and upheld the motion court's denial of summary judgment to the defendant. Toote v. Canada Dry Bottling Company of New York, Inc. and Pathmark Stores, Inc., 7
A.D.3d 251, 776 N.Y.S.2d 42, 2004 N.Y. App. Div. Lexis 6470 (Supreme Court of New York, Appellate Division, 2004)
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 arising from the parties' arrangement would be resolved through arbitration using Wisconsin law. The court upheld the arbitrator's finding that Johnsonbreached the agreement by attempting to sell its products directly to Panamanian developers, circumventing Edman. 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 contract with 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 stated, "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 tryfor a second bite at the apple. That is what has happened here." Johnson Controls, Inc. v. Edman Controls, Inc., 712 F.3d 1021, 2013 U.S. App. Lexis 5583 (United States Court of Appeals for the Seventh Circuit, 2013)
No, the utility companies are not negligent. The utility poles were legally placed twenty-five feet from Edgewood Avenue at the far edge of the companies' easement right of way. It was Sarah Mitchell, who was driving the car, with the backing of Adam Jacobs and David Messer, who decided to jump the "big hill" on Edgewood Avenue. In a 40 miles per hour zone, Mitchell crested the hill at 80 miles per hour, went airborne, and landed on the road and spun out of control with the car hitting the two utility poles owned by defendants Bell Telephone Company and Indianapolis Power & Light Company. The court found that it was the negligence of Mitchell that caused the accident and the death of the passenger Adam Jacobs, and not the fault of the utility companies. And it was Jacobs, whose mother brings this lawsuit, who suggested that they jump the hill. The court of appeals stated, "It strains reason to suggest that the utility companies should foresee the sort of wilful disregard for the law and personal safety that indisputably led to this accident. There is nothing to suggest that the poles' location is inherently dangerous to those who engage in the ordinary and normal public use of Edgewood Avenue." The court of appeals held that the defendants were not negligent and affirmed the trial court's grant of summary judgment to the defendant utility companies. Carter v. Indianapolis Power & Light Company and Indiana Bell Telephone Company, Inc., 837 N.E.2d 509, 2005 Ind. App. Lexis 2129 (Court of Appeals of Indiana, 2005)
Yes. The court held that Clancy was negligent when he fell asleep at the wheel while driving his truck and hit and injured Dianna Goad, who was driving a motorcycle on the other side of the road. The court held that Clancy owed a duty to drive his vehicle safely, and he did not do so by falling asleep at the wheel. Clancy did not mean for the accident to happen, but nonetheless he has been negligent. Clancy was the actual cause and proximate cause of the accident, and of causing the injuries to Dianna. Prior to the accident, Dianna was an active and athletic person. She was an avid runner, often jogging three-and-a-half miles a day. She belonged to a health club where she regularly trained with free weights. Dianna enjoyed rollerblading, hiking, and cross country skiing. Dianna also worked full-time in a managerial accounting position where she planned to work until she retired. The court found that the injuries Dianna received in the accident as a result of Clancy's accident were catastrophic. She spent two weeks in a coma. Surgeries were performed to medically amputate her leg above the knee and to set her broken pelvic bones and her broken elbow. Dianna's spleen could not be repaired and was inevitably removed, resulting in an increased lifetime risk of infection. Dianna has endured multiple skin graft procedures. At the time of the trial, Dianna had undergone seven surgeries, taken more than 6,800 pills, and her medical expenses totaled more than $368,000. Furthermore, Dianna's medical expenses and challenges continue and are expected to continue indefinitely. In addition, Dianna has been fitted with a "C-leg," a computerized prosthetic leg. A C-leg needs to be replaced every three to five years at full cost. The trial court took judicial notice that Dianna's life expectancy is 35.4 years. The jury returned a verdict finding Clancy 100 percent at fault for the accident and awarded Dianna $10 million in compensatory damages. The court of appeals affirmed the judgment of the trial court finding Clancy liable for negligence and upheld the jury verdict awarding Dianna $10 million in damages. Clancy v. Goad, 858 N.E.2d 653, 2006 Ind. App. Lexis 2576 (Court of Appeals of Indiana, 2006)
Yes. Sta-Rite Industries, Inc. is liable to Peterson for strict liability. Lorenzo Peterson was injured when heswam to the bottom of a swimming pool to retrieve something that he thought his friend had his arm inside the drain, 300 to 400 pounds of pull of the drain pump held Peterson trapped underwater for 12 minutes before he was rescued. Peterson suffered irreversible brain damage. Evidence at trial showed that Sta-Rite's drain covers are designed to screw down, but often a drain cover becomes loose. Further evidence showed that there had been more than 20 prior suction-entrapment accidents involving Sta-Rite's drain covers and pumps. Previously, experts had designed a pool drain pump with a mechanism that would automatically shut off a pool drain pump when it detected that it was pulling more than it should. Sta-Rite did not install such safety features on its drain pumps, however. The court found that the underwater pool drain was defectively designed by Sta-Right because it did not contain a shut-off mechanism. The court found Sta-Rite strictly liable and awarded Lorenzo $32 million for past and future medical expenses and $72 million for pain and suffering

Should Sta-Rite be assessed punitive damages because it knew there were more than20 prior suction entrapment accidents?Based on the evidence, it can be concluded that Sta-Rite Industries did not act ethically in this case. The company had not redesigned its pool drain covers and pumps even though there had been more than 20 suction-entrapment accidents prior to the accident in this case. The jury believed Sta-Rite should have acted to redesign its pool drain covers and pumps to prevent catastrophic accidents like the one in this case from reoccurring. Sta-Rite Industries, Inc. v. Peterson, 837 So.2d 988, 2003 Fla. App. Lexis 1673 (Court of Appeal of Florida, 2003)
The U.S. Supreme Court held that the use of a thermal-imaging device aimed at a private home from a public street to detect relative amounts of heat within the home was a "search" within the meaning of the Fourth Amendment. The Supreme Court stated, "At the very core of the Fourth Amendment stands the right of a man to retreat into his own home and there be free from unreasonable government intrusion." The Supreme Court noted that, with few exceptions, the question of whether a warrantless search of a home is reasonable and hence constitutional must be answered no. The present case involves officers on a public street engaged in more than naked-eye surveillance of a home. The court framed the issue, "The question we confront today is what limits there are upon this power of technology to shrink the realm of guaranteed privacy." The Supreme Court found that obtaining, by sense-enhancing technology, any information regarding the interior of the home that could not otherwise have been obtained without physical intrusion into a constitutionally protected area constitutes a search. This ruling assures preservation of that degree of privacy against government that existed when the Fourth Amendment was adopted. On the basis of this criterion, the Supreme Court held that the information obtained by the thermal imager in this case was the product of a search within the meaning of the Fourth Amendment. Kyllo v. United States, 533 U.S. 27, 121 S.Ct. 2038, 2001 U.S. Lexis 4487 (Supreme Court of the United States, 2001)
There is no enforcable contract here.The court of appeal applied the mirror image rule and held that no contract had been created between the parties. The court stated, "Florida employs the 'mirror image rule' with respect to contracts. Under this rule, in order for a contract to be formed, an acceptance of an offer must be absolute, unconditional, and identical with the terms of the offer." The court examined the facts of the case and found the following. Norma English made an offer to purchase a house owned by Michael and Lourie Montgomery (Montgomery) for $272,000,which included the purchase of some personal property of Montgomery, including paving stones and a fireplace screen worth $100. Montgomery then made a counteroffer whereby they made many changes to English's offer, including deleting the paving stones and fireplace screen from the personal property that English wanted. When English replied, she accepted all of Montgomery's changes except that she did not accept Montgomery's change that deleted the paving stones and fireplace screen from the deal. Therefore, when Montgomery was selling their house to another buyer for $285,000, English sued and asked the court to find that an enforceable contract existed between Montgomery and her and to order Montgomery to specifically perform the contract. However, the court applied the mirror image rule and held that English had not accepted Montgomery's counteroffer, so no contract existed between them. Montgomery was free to sell their house to another purchaser. The court concluded, "Applying the mirror image rule to these undisputed facts we hold that, as a matter of law, the parties failed to reach an agreement on the terms of the contract and, therefore, no enforceable contract was created." Montgomery v. English, 902 So.2d 836, 2005 Fla. App. Lexis 4704 (Court of Appeal of Florida, 2005
Ernest & Julio Gallo Winery (Gallo) wins. Gallo registered the trademark "Ernest &Julio Gallo" in 1964 with the United States Patent and Trademark Office (PTO). The company spent over $500 million promoting its brand name and sold more than 4 billion bottles of wine. Its name has taken on a secondary meaning as a famous trademark name.Spider Webs, which registered the domain name, and its owners Steve, Pierce, and Fred Thumann, argue that they did not act with a "bad faith intent to profit," which is required to find a violation of the federal AnticybersquattingConsumer Protection Act (ACPA). Spider Webs has no intellectual property rights or trademark in the name "ernestandjuliogallo," aside from its registered domain name. The domain name does not contain the name of Spider Webs or any of its owner defendants.Spider Webs had no prior use or any current use of the domain name in connection with the bona fide offering of goods or services. Steve Thumann admitted that the domain name was valuable and that they hoped Gallo would contact them so that they could "assist" Gallo in some way. There is uncontradicted evidence that Spider Webs was engaged in commerce in the selling of domain names and that they hoped to sell this domain name someday. In sum, the factors support a finding of bad faith. The U.S. Court of Appeals held that the name Ernest and Julio Gallo was a famous trademark name and that Spider Web Ltd. and the Thumanns acted in bad faith when they registered the Internet domain name The court ordered the defendants to transfer thedomain name to plaintiff E. & J. Gallo Winery. E. & J. Gallo Winery v. Spider Webs Ltd., 286 F.3d 270, 2002 U.S. App. Lexis 5928 (United States Court of Appeals for the Fifth Circuit, 2002)
The state supreme court held that the provision of services, and not the sale of goods, was the predominant feature of the transaction whereby, during the course of an operation, a medical doctor surgically implanted a ProteGen Sling (sling) into Brandt for treatment of urinary incontinence. The issue was whether the predominate portion of the transaction was the sale of a good or the provision of a service. If the predominate part was the sale of the good—the ProteGen Sling—then the UCC Article 2 (Sales) applied. If the predominate part of the transaction was the provision of medical services, then the UCC does not apply and the Health Center is not liable for the defective sling. In this case, Brandt's bill from the Health Center reflects that of the $11,174.50 total charge for her surgery, a charge of $1,659.50, or 14.9%, was for the sling and its surgical kit. The remainder of the charges was for various services, including the hospital and operating rooms and various kinds of medical testing and treatment. A charge for the implantation of the sling by the surgeon was not included in the hospital's bill. A majority of the charges were for services rather than goods. Only a small fraction of the total charge was for the sling, the goods at issue in this case. The court held that because a predominate feature of the transaction between Brandt and Health Center was the provision of services and not the sale of goods, then Health Center was not liable under Article 2 (Sales) of the UCC. Brandt v. Boston Scientific Corporation and Sarah Bush Lincoln Health Center, 792 N.E.2d 296, 2003 Ill. Lexis 785 (Supreme Court of Illinois, 2003
Yes. The court of appeals held that Ford Motor Company had breached the implied warrantyof merchantability concerning the use of the Bronco II and awarded Nancy Denny $1.2 million in damages. The court found that the evidence did not support Ford's claim that the Bronco II was intended as an off-road vehicle and was not designed to be used as a conventional passenger automobile on paved streets. Instead, the court found sufficient evidence that Ford marketed and sold the Bronco II specifically to consumers who were only interested in driving the vehicle on paved streets. Denny produced a Fordmarketing manual that predicted many buyers would be attracted to the Bronco II because utility vehicles were suitable to "contemporary lifestyles" and were "considered fashionable" in some suburban areas. According to this manual, the sales presentation of the Bronco II should take into account the vehicle's "suitability for commuting and for suburban and city driving." Additionally, the vehicle's ability to switch between two-wheel and four-wheel drive would "be particularly appealing to women who may beconcerned about driving in snow and ice with their children." Plaintiff testified that the perceived safety benefits of its four-wheel drive capacity attracted her to the Bronco II. She was not at all interested in its off-road use. Thus, under the evidence of the case, the court concluded that the vehicle was not safe for the "ordinary purpose" of daily driving for which it was marketed and sold. Denny v. Ford Motor Company, 87 N.Y.2d 248, 662 N.E.2d 730, 639 N.Y.S.2d 250, 1995 N.Y. Lexis 4445 (Court of Appeals of New York
f UAL Corporation (UAL) was not in bankruptcy and defaulted on its secured loans or leases, the secured creditors could use state law and foreclose on their security interests and recover these assets as collateral. UAL would be left without most of its major assets that it would need to operate its business. By filing for Chapter 11 bankruptcy, however, the automatic stay of federal bankruptcy law goes into effect and prevents the secured creditors from using state law to foreclose on UAL's assets. The automatic stay also prevents unsecured creditors from using state legal procedures to collect their unsecured debts. Therefore, UAL will be able to continue to operate its business while being reorganized under bankruptcy law protection.Under bankruptcy court protection, UAL's plan of reorganization should propose to reduce its unsecured debts to a proportion of what they were prior to its filing for bankruptcy, and ask the bankruptcy court to discharge the unpaid unsecured debt. UAL should try to reduce its unsecured debt to a level that it could reasonably afford to pay after coming out of the bankruptcy proceeding. This often means reducing unsecured debt to 40%-60% of its prior level.Further, UAL should examine all of its executory contracts and unexpired leases. After carefully analyzing the benefits and detriments of each contract and lease, UAL should make a determination as to which contracts and leases are beneficial to it and those which are not beneficial to it. In its plan of reorganization, UAL should propose to keep those contracts and leases that are beneficial to the company's survival and reject those it believes would be detrimental to the company's survival in the future. UAL has executory labor contracts with the pilots' union, the flight attendants' union, the maintenance workers' union, and other unions.Bitter disputes to reduce the pay and benefits of UAL's labor unions may result. If UAL's good faith negotiations with the labor unions do not reach an acceptable outcome, then UAL can request that the bankruptcy court rule on the legality of rejecting the labor contracts.When UAL emerges from Chapter 11 bankruptcy, it will still have most of its assets. The secured creditors will remain secured creditors, and in order to come out of bankruptcy,UAL must pay any arrearages that UAL owes to its secured creditors. UAL will then have to continue to make payments to the secured creditors as required by the credit agreements. UAL's unsecured credit will be substantially reduced, and the unpaid portion will be discharged. But UAL must, after coming out of bankruptcy, make the required payments to unsecured creditors. UAL's shareholders will most likely lose the value of their stock and be wiped out in the bankruptcy. UAL will probably have to try to find new investors to purchase an equity interest in the corporation. In re UAL Corporation
Yes. The court held that McDonald's was negligent and was therefore liable to Martin's parents and Dudek and Kincaid. This was so even though a third party, the burglar, Peter Logan, actually killed Martin and injured Dudek and Kincaid during his burglary of the McDonald's franchise. The court determined that McDonald's Corporation had a duty to protect plaintiffs Laura Martin, Maureen Kincaid, and Therese Dudek from harm. The court held that based on the facts of the case, McDonald's Corporation voluntarily assumed a duty to provide security to plaintiffs and protect them from harm. This was because McDonald's established a corporate division to deal with security problems at its franchises, prepared a manual for restaurant security operations,and required its franchisees to adhere to these procedures which included the rules that no one should throw garbage out the backdoor after dark, and that trash and grease were to be taken out the side glass door at least one hour prior to closing, and that a McDonald's inspector inspected the franchise store and notified the franchisee of numerous violations of the rules but never returned to determine if the violations had been corrected.Once McDonald's Corporation assumed the duty to provide security and protection totheplaintiffs, it had the obligation to perform this duty with due care and competence, and any failure to do so would lead to a finding of breach of duty. There was ample evidence that McDonald's had breached its assumed duty to the plaintiffs. The court held that McDonald's was negligent for not following up and making sure that the security deficiencies it had found at the Oak Forest franchise had been corrected. The court held McDonald's liable for negligence and awarded damages of $1,003,445 to the Martins for the wrongful death of their daughter and awarded $125,000 each to Dudek and Kincaid. Martin v. McDonald's Corporation, 572 N.E.2d 1073, 1991 Ill. App. Lexis 715 (Court of Appeals of Illinois)
Veil Northeast Iowa Ethanol, LLC (Northeast Iowa) wins. The court held that the doctrine of piercing the corporate veil applied in this case, thus allowing the plaintiffs to pierce the corporate veil of Global Syndicate International, Inc. (GSI) and reach the personal assets of Drizin, the shareholder of GSI. Generally, a corporation is a distinct entity from its shareholders. Therefore, shareholders are notpersonally liable for the debts and obligations of the corporation. However, in certain circumstances the court will "pierce the corporate veil" and hold shareholders personally liable for the debts and obligations of the corporation. The court found thatfacts existed to pierce the corporation's veil in this case. The corporation was severely undercapitalized, having only $250 capital yet holding over $3 million of the plaintiffs' money. In addition, Drizin, the shareholder of GSI, commingled the corporation's funds with his personal funds. Without question, this case presents exceptional circumstances warranting the piercing of GSI's corporate veil and finding Mr. Drizin personally liable for GSI's misdeeds, as the sole purpose of establishing GSI was to perpetuate fraud. GSI engaged in no legitimate business transactions whatsoever. The $250 initial capitalization of GSI was, in fact, trifling compared with the business to be done and the risk of loss. Justice and equity call for piercing the corporate veil. The U.S. District Court held that the corporate veil of GSI could be pierced to reach its shareholder Drizin. The court awarded the plaintiff compensatory damages of $3.8 million and punitive damages of $7.6 million against Drizin. Northeast Iowa Ethanol, LLC v. Drizin, 2006 U.S. Dist. Lexis 4828 (United States District Court for the Northern District of Iowa, 2006)
The plaintiff investors win and may sue the defendants for the alleged violations of Section 10(b) of the Securities Exchange Act of 1934. The defendants had asserted that the common-law defense of in pari delicto("unclean hands") prohibited the plaintiffs from suing because they hadparticipated in the fraud with the defendants, i.e., the plaintiffs thought they were trading on "inside information" when they purchased the TONM securities. Under the in pari delicto theory, if two parties to illegal conduct are mutually or equally at fault, they cannot use the court system to sue the other party to the illegal conduct. The issue in this case is whether the in pari delictotheory should be applied to securities laws.The U.S. Supreme Court held that the in pari delictotheory does not apply to actions brought for alleged violations of securities laws. Thus, the plaintiffs in this case who had participated in the insider-trading scheme with the defendants could sue the defendants for disclosing false inside information to them. The Supreme Court stated: "We conclude that the public interest will most frequently be advanced if defrauded tippees are permitted to bring suit and to expose illegal practices by corporate insiders and broker dealers to full public view for appropriate sanctions." The court held that the in pari delictotheory did not apply to suits alleging violations of Section 10(b) and that the plaintiffs could maintain their lawsuit against the defendants. Bateman Eichler, Hill Richards, Inc. v. Berner,472 U.S. 299, 105 S.Ct. 2622, 1985 U.S. Lexis 95 (Supreme Court of the United States)
D. Hays Trucking, Inc. is an independent contractor of Hercules, Inc. Therefore, Hercules, Inc. is not liable for the negligence of Mr. Hays of D. Hayes Trucking, Inc. when he negligently drove his large truck into the car driven by Phyllis Lewis, killing her. D. Hays Trucking, Inc. delivered tree trunks to Hercules, Inc.'s processing plant, but did so as an independent contractor. Hays owns its own equipment and delivery vehicles, hires its own truckers and other employees, pays for its employees' workers'compensation coverage, and withholds federal and state taxes from employees' paychecks. Hays directed the work of its employees who pulled stumps from the ground and the truckers who delivered the stumps to Hercules. The U.S. district court stated "It is Hays who determined the time, manner, and method of his work. Therefore no reasonable jury could determine that Hays is an employee and not an independent contractor." The U.S. district court held that Hays was an independent contractor, and not an employee, of Hercules, Inc. The court granted Hercules's motion for summary judgment.It is doubtful that Lewis acted unethically when she sued Hercules for the accident caused by Hays. In most lawsuits of this sort, the plaintiff sues all of the parties involved. In this case it included Mr. Hays, who caused the accident, his company D. Hayes Trucking, Inc., and Hercules, Inc. However, Hercules had to spend money on lawyer's fees and other costs of defending the lawsuit. Lewis v. D. Hays Trucking, Inc., 701 F.Supp.2d 1300, 2010 U.S. Dist. Lexis 28035 (United States District Court for the Northern District of Georgia, 2010)
Yes. Medrano's actions at the time of the automobile accident were within the course and scope of his employment, thus entitling his heirs to workers' compensation benefits. MEC argued that it received no benefit from Medrano's attendance at the apprenticeship class and the death claim was not compensable. However, the court held that there was substantial and competent evidence to support a finding that the classroom instruction was beneficial to Medrano and his employer. Mike Mills, the owner and president of MEC, testified: "The training made the employees more valuable to MEC by improving the quality of service to customers." The court stated that the record was sufficient to show that MEC derived substantial benefit from having its employees travel fromMarshall to Sedalia to fully participate in the apprenticeship program. MEC encouraged employees to attend the classroom instruction and covered the costs of tuition. Even though employees like Medrano obtained personal benefits in formalizing their education, MEC mutually benefited from the program as a convenient way for MEC to train its employees and ultimately provide a better quality of service to its customers. The court of appeals held that Medrano was acting within the course and scope of his employment when he was fatally injured in the car crash and that his family was entitled to receive workers' compensation death benefits. Medrano v. Marshall Electrical Contracting Inc., 173 S.W.3d 333, 2005 Mo. App. Lexis 1088 (Court of Appeals of Missouri, 2005)
The intentional tort exception did not apply in this case. The undisputed evidence compels no other conclusion than that there was no intentional tort. Though a number of employees had received shocks from the apparatus, there is no evidence that anyone, except for the decedent, suffered a similar electrocution. All of those employees who previously received the shocks suffered no more than a transient physical buzz or numbing. These minor incidents occurred over a period where there was a continuous, daily use of the apparatus at a busy manufacturing assembly line. Given these circumstances, an electrocution could not have been envisioned as a certain danger.Moreover, it is undisputed that the Nordyne's management, once aware of the apparatus's problem, took measures, however ineffective they may have been, to repair the apparatus. Nordyne's management also took another safety measure: warning the employees ofthe possibility of shocks. If anything, these remedial measures would have diminished the likelihood of any future electrical shocks. These measures would not have made an electrocution a certainty.To be sure, there was a risk of an injury arising from the use of the testing apparatus. Some, such as the plaintiff's expert, may even assert that the risk was quite high because the apparatus was defectively designed and built. However, given the record presented here, including the pleadings, briefs, affidavits, and deposition testimony of Bryson and Kendra, there is simply no evidence indicating that the electrocution injury was certain to occur at Nordyne's manufacturing plant in Holland, Michigan, on April 20, 1988. Glockzin v. Nordyne, Inc.,815 F. Supp.1050, 1992 U.S. Dist. Lexis 8059 (United States District Court for the Western District of Michigan)