Rainbow School, Inc., has run a child-care facility in Fayetteville, North Carolina, for more than twenty years. In addition to using the word "rainbow" in its name, the school uses rainbow imagery on its logo. Rainbow Early Education Holding, LLC, operates child-care facilities in several states. Early Education opened a branch in Fayetteville near the Rainbow School under the name "Rainbow Child Care Center," which also used rainbow imagery on its logo. The school filed a suit in a federal district court against Early Education, alleging a violation of the Lanham Act. The parties entered into a settlement agreement that required Early Education to stop using the word "rainbow" in connection with its Fayetteville facility. The court issued an injunction to enforce the agreement. Nevertheless, Early Education continued to use the word "rainbow" in domain names, links, and meta tags associated with its Fayetteville facility's website. Rainbow School imagery was used in a mailer inviting residents to the "nearest Rainbow Child Care Center." Did Early Education violate the Lanham Act? Explain.

Bank of America hired Atlantic Resource Management, LLC, to collect a debt from Michael E. Engler. Atlantic called Engler's employer and asked his supervisor about the company's policy concerning the execution of warrants. The caller then told the supervisor that, to stop process of the warrant, Engler needed to call Atlantic about "Case Number $37291$ NY$0969$" during the first three hours of his next shift. When Engler's supervisor told him about the call, Engler feared that he might be arrested, and he experienced discomfort, embarrassment, and emotional distress at work. Can Engler recover under the Fair Debt Collection Practices Act? Why or why not?

Brian Cleary and Rita Burke filed a suit against cigarette maker Philip Morris USA, Inc., seeking class-action status for a claim of deceptive advertising. Cleary and Burke claimed that "light" cigarettes, such as Marlboro Lights, were advertised as safer than regular cigarettes, even though the health effects are the same. They contended that the tobacco companies concealed the true nature of light cigarettes. Philip Morris correctly claimed that it was authorized by the government to advertise cigarettes, including light cigarettes. Assuming that is true, should the plaintiffs still be able to bring a deceptive advertising claim against the tobacco company? Why or why not?

What damages might Santangelo be able to prove based on the depletion of his credit score ?

Leota Sage saw a local motorcycle dealer's newspaper advertisement offering a MetroRider EZ electric scooter for $\$ 1,699$. When she went to the dealership, however, she learned that the EZ model had been sold out. The salesperson told Sage that he still had the higher-end MetroRider FX model in stock for $\$ 2,199$ and would sell her one for $\$ 1,999$. Sage was disappointed but decided to purchase the FX model. When Sage said that she wished to purchase the scooter on credit, she was directed to the dealer's credit department. As she filled out the credit forms, the clerk told Sage, who is an Asian American, that she would need a cosigner to obtain a loan. Sage could not understand why she would need a cosigner and asked to speak to the store manager. The manager apologized, told her that the clerk was mistaken, and said that he would "speak to" the clerk. The manager completed Sage's credit application, and Sage then rode the scooter home. Seven months later, Sage received a letter from the manufacturer informing her that a flaw had been discovered in the scooter's braking system and that the model had been recalled. Using the information presented in the chapter, answer the following questions.

Assuming that the clerk required a cosigner based on Sage's race or gender, what act prohibits such credit discrimination?

Leota Sage saw a local motorcycle dealer's newspaper advertisement offering a MetroRider EZ electric scooter for $\$ 1,699$. When she went to the dealership, however, she learned that the EZ model had been sold out. The salesperson told Sage that he still had the higher-end MetroRider FX model in stock for $\$ 2,199$ and would sell her one for $\$ 1,999$. Sage was disappointed but decided to purchase the FX model.

When Sage said that she wished to purchase the scooter on credit, she was directed to the dealer's credit department. As she filled out the credit forms, the clerk told Sage, who is an Asian American, that she would need a cosigner to obtain a loan. Sage could not understand why she would need a cosigner and asked to speak to the store manager. The manager apologized, told her that the clerk was mistaken, and said that he would "speak to" the clerk. The manager completed Sage's credit application, and Sage then rode the scooter home. Seven months later, Sage received a letter from the manufacturer informing her that a flaw had been discovered in the scooter's braking system and that the model had been recalled. Using the information presented in the chapter, answer the question.

Suppose that Sage had ordered the scooter through the dealer's website but the dealer had been unable to deliver it by the date promised. What would the FTC have required the merchant to do in that situation?

McDonald's Corp.'s Happy Meal meal selection consists of an entree, a small order of french fries, a small drink, and a toy. In the early $1990$s, McDonald's began to aim its Happy Meal marketing at children aged one to three. In $1995$, McDonald's began making nutritional information for its food products available in documents known as "McDonald's Nutrition Facts." Each document lists the food items that the restaurant serves and provides a nutritional breakdown, but the Happy Meal is not included.

Marc Cohen filed a suit against McDonald's in an Illinois state court. Among other things, Cohen alleged that McDonald's had violated a state law prohibiting consumer fraud and deceptive business practices by failing to adhere to the Nutrition Labeling and Education Act (NLEA). The NLEA sets out different requirements for products specifically intended for children under the age of four-for instance, the products' labels cannot declare the percent of daily value of nutritional components. Does it make sense to have different requirements for children of this age? Why or why not? Should a state court impose such regulations? Explain.

Leota Sage saw a local motorcycle dealer's newspaper advertisement offering a MetroRider EZ electric scooter for $\$ 1,699$. When she went to the dealership, however, she learned that the EZ model had been sold out. The salesperson told Sage that he still had the higher-end MetroRider FX model in stock for $\$ 2,199$ and would sell her one for $\$ 1,999$. Sage was disappointed but decided to purchase the FX model.

When Sage said that she wished to purchase the scooter on credit, she was directed to the dealer's credit department. As she filled out the credit forms, the clerk told Sage, who is an Asian American, that she would need a cosigner to obtain a loan. Sage could not understand why she would need a cosigner and asked to speak to the store manager. The manager apologized, told her that the clerk was mistaken, and said that he would "speak to" the clerk. The manager completed Sage's credit application, and Sage then rode the scooter home. Seven months later, Sage received a letter from the manufacturer informing her that a flaw had been discovered in the scooter's braking system and that the model had been recalled. Using the information presented in the chapter, answer the question.

Did the dealer engage in deceptive advertising? Why or why not?

Comcast argued that it had refunded Santangelo's $\$ 50$, plus interest in the amount of $\$ 10$, four months after pulling his credit report. Does this argument undercut the plaintiff's claim to have standing? Why or why not?

Credit-Card Rules. Maria Ochoa receives two new credit cards on May $1$. She has solicited one of them from Midtown Department Store, and the other arrives unsolicited from High-Flying Airlines. During the month of May, Ochoa makes numerous credit-card purchases from Midtown Department Store, but she does not use the High-Flying Airlines card. On May $31$, a burglar breaks into Ochoa's home and steals both credit cards, along with other items. Ochoa notifies the Midtown Department Store of the theft on June $2$, but she fails to notify High-Flying Airlines. Using the Midtown credit card, the burglar makes a $\$ 500$ purchase on June $1$ and a $200 purchase on June$3$. The burglar then charges a vacation flight on the High-Flying Airlines card for$\$1,000$ on June $5$ . Ochoa receives the bills for these charges and refuses to pay them. Discuss Ochoa's liability for the charges. (See Credit Protection.)

Under the plaintiff's suggested reading of the regulation at issue in this case, what difficult choice would the Port Authority face?

Indorsements. A check drawn by Cullen for $\$ 500$ is made payable to the order of Jordan and issued to Jordan. Jordan owes his landlord $\$ 500$ in rent and transfers the check to his landlord with the following indorsement: "For rent paid, [signed] Jordan." Jordan's landlord has contracted to have Deborah do some landscaping on the property. When Deborah insists on immediate payment, the landlord transfers the check to Deborah without indorsement. Later, to pay for some palm trees purchased from Better-Garden Nursery, Deborah transfers the check with the following indorsement: "Pay to Better-Garden Nursery, without recourse, [signed] Deborah." Better-Garden Nursery sends the check to its bank indorsed "For deposit only, [signed] Better-Garden Nursery." (See Indorsements.)

(a) Classify each of these indorsements.

(b) Was the transfer from Jordan's landlord to Deborah, without indorsement, an assignment or a negotiation? Explain.

Napster, Inc., offered a service that allowed its users to browse digital music files on other users' computers and download selections for free. Music industry principals sued Napster for copyright infringement, and the court ordered Napster to remove files that were identified as infringing from its service. When Napster failed to comply, it was shut down.

A few months later, Bertelsmann, a German corporation, loaned Napster $85 million to fund its anticipated transition to a licensed digital music distribution system. The terms allowed Napster to spend the loan on "general, administrative and overhead expenses." In an e-mail, Napster's chief executive officer referred to a "side deal" under which Napster could use up to$10 million of the loan to pay litigation expenses. Napster failed to launch the new system before declaring bankruptcy. A group of song writers and music publishers filed a suit against Bertelsmann, alleging that its loan had prolonged Napster's infringement. The plaintiffs asked the court to order the disclosure of all of Bertelsmann's attorney-client communications related to the loan. (See Confidentiality and Privilege.)

(a) The first group will identify the principle that Bertelsmann could assert to protect these communications and outline the purpose of this protection.

(b) The second group will decide whether this principle should protect a client who consults an attorney for advice that will help the client commit fraud.

(c) A third group will determine whether the court should grant the plaintiffs' request.

John Warren wanted to buy a condominium in California. Hildegard Merrill was the agent for the seller. Because Warren's credit rating was poor, Merrill told him he needed a co-borrower to obtain a mortgage at a reasonable rate. Merrill said that her daughter Charmaine would "go on title" until the loan and sale were complete if Warren would pay her $10,000. Merrill also offered to defer her commission on the sale as a loan to Warren so that he could make a$20$ percent down payment on the property. He agreed to both plans. Merrill secured the mortgage in Charmaine's name alone by misrepresenting her daughter's address, business, and income. To close the sale, Merrill had Warren remove his name from the title to the property. In October, Warren moved into the condominium, repaid Merrill the amount of her deferred commission, and began paying the mortgage. Within a few months, Merrill had Warren evicted. Warren subsequently filed a suit against Merrill and Charmaine. (See Duties of Agents and Principals.)

(a) The first group will determine who among these parties was in an agency relationship.

(b) The second group will discuss the basic duty that an agent owes a principal and decide whether that duty was breached here.

(c) The third group will explain whether Warren is entitled to any remedies in this situation.