Legal Exam 3 (Ch. 17-22)
Hortense and Gus are each starting a business. Hortense's business is an Internet start-up. Gus will be opening a yarn store. Hortense needs millions of dollars in venture capital and expects to go public soon. Gus has borrowed $10,000 from his girlfriend, which he hopes to pay back soon. Should either of these businesses organize as an LLC?
An LLC is not the best choice for either of these businesses. Venture capitalists will insist that Hortense's business be a corporation, especially if it is going public soon. A yarn store has few liability issues, and Gus can always buy insurance. Furthermore, he does not expect to have any outside investors. Hence, a sole proprietorship would be more appropriate for Gus's business.
A corporate stockholder is entitled to which of the following rights?
Approve dissolution
Wilma is one of five equal members of Polar, LLC. This year, Polar generates $5 million in profits. The company reinvests $4 million into the company, leaving $1 million to be divided equally among the members. How are federal income taxes paid on Polar's profits?
Wilma (and each of the members) pays taxes on their $200,000 million share ($1 million divided by 5) of profits distributed to them by Polar
Warfield hired Wolfe, a young carpenter, to build his house. A week or so after they signed the contract, Wolfe filed the charter for Wolfe Construction, Inc. Warfield made payments to the corporation. Unfortunately, the work on the house was shoddy; the architect said he did not know whether to blow up the house or try to salvage what was there. Warfield sued Wolfe and Wolfe Construction, Inc. for damages. Wolfe argued that if he was liable as a promoter, then the corporation must be absolved and that, conversely, if the corporation was held liable he, as an individual, must not be. Who is liable to Warfield? Does it matter if Wolfe signed the contract in his own name or in the name of the corporation?
Wolfe is personally liable on any contract signed before the charter was filed, no matter whose name is on the contract. The corporation is liable only if it adopts the contract. Did it do so here? The fact that the corporation cashed checks that were made out to it means that the corporation is also liable. So Warfield can sue both Wolfe and the corporation.
Finn learns that, despite his stellar record, he is being paid less than other salespeople at Barry Co. So he decides to start his own company. During his last month on the Barry payroll, he tells all of his clients about his new business. He also tells them that Barry is a great company, but his fees will be lower. After he opens the doors of his new business, most of his former clients come with him. Is Finn liable to Barry?
Yes, Finn has violated his duty of loyalty to Barry.
Figgins is the dean of a college. He appointed Sue acting dean while he was out of the country and posted a message on the college website announcing that she was authorized to act in his place. He also told Sue privately that she did not have the right to make admissions decisions. While Figgins was gone, Sue overruled the admissions committee to admit the child of a wealthy alumnus. Does the child have the right to attend this college?
Yes, because Sue had apparent authority
Tejasi brings suit against her employer under Title VII for disparate treatment on the basis of Tejasi's national origin. At trial, Tejasi proves that she is an Indian immigrant and that she was demoted at work after her boss stated to several coworkers: "Outsourcing is sending all of the good American jobs to India. I cannot believe that companies are giving good jobs to Indians in our own country, too." Tejasi's employer argues that her demotion was based on her poor performance and offers a poor review Tejasi received one week after the boss made his comment and one day before the demotion. Will Tejasi win her suit?
Yes, because Tejasi can likely prove that the poor review was merely pretext
Under the duty of care, directors will be liable if they:
engage in illegal behavior that is profitable to the company
By law, a candidate for the board of a publicly traded company must:
receive a plurality of the votes cast.
A sole proprietorship:
requires no formal steps for its creation
A principal will not be liable to a third party for a tort committed by an agent:
unless the tort was committed within the scope of the agency relationship.
Assuming all other requirements are met, a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has:
100 or fewer stockholders
An existing collective bargaining agreement (CBA) has expired, and the union and company are unable to reach an agreement on economic issues during negotiations for a new CBA. The expired CBA has a no-strike clause and states that the terms of the old CBA will continue in force as long as the parties are negotiating a new CBA. The union goes on strike and the company refuses to continue negotiations until the union at least agrees that continuing to bargain would not waive the company's claim that the union had illegally struck. Eventually the two sides return to bargaining after the company hires replacement workers. The striking workers offer to return to work, but the company refuses to rehire many of them. In court, the union claims that the company committed an unfair labor practice (ULP) by (1) insisting the strike was illegal and (2) refusing to bargain until the union acknowledged the company's position. Why it is very important to the union to establish the company committed a ULP?
Because if the union's strike was a ULP strike, the company is required to rehire the workers
The CBA at Red Corp. has expired, as has the CBA at Blue Corp. At Red, union and management have bargained a new CBA to impasse. Suddenly, Red locks out all union workers. The next day, during a bargaining session at Blue, management announces that it will not discuss pay increases
Blue has committed a ULP, but Red has not
While working part time at a Supercorp restaurant, Jenna spills a bucket of hot French fries on a customer. Who is liable to the customer?
Both Jenna and Supercorp
Russell and Rachel have designed a new type of cell phone that they believe will revolutionize the market. They would like to start a company to produce, market, and sell the phone, and they know that they will need a considerable amount of up-front capital investment to develop a prototype and later to create inventory to sell. What is the best form of business for Russell and Rachel?
Corporation
Which of the following activities is legal under Title VII?
Craig refuses to hire Ben, who is blind, to work as a playground supervisor because it is essential to the job that the supervisor be able to see what the children are doing
You are the vice president of administration at a hospital. A hospital study reveals that both male and female patients prefer to have a male neurosurgeon, while men prefer male urologists and women prefer female gynecologists. Can you act on this information when hiring doctors?
Customer preference does not justify discrimination except in cases of sexual privacy. You cannot consider sex when hiring neurosurgeons, but you can when selecting urologists and gynecologists
Which of the following duties does an agent not owe to his principal?
Duty to reimburse
Power, Inc., which operated a coal mine, suffered financial losses and had to lay off employees. The United Mine Workers of America began an organizing drive. Power's general manager warned miners that if the company was unionized, it would be shut down. An office manager told one of the miners that the company would get rid of union supporters. Shortly before the election was to take place, Power laid off 13 employees, all of whom had signed union cards. A low-seniority employee who had not signed a union card was not laid off. The union claimed that Power had committed ULPs. Comment.
Each of the acts described was a ULP. Threatening layoffs or company closure are classic examples of ULPs. Laying off those who had signed union cards, but not those who refused, was clear discrimination
Camille has been working at a new architecture firm for eight months when she learns that her co-worker Ryan earns $10,000 more than she does each year. Camille is shocked because she and Ryan perform identical services for the firm and have the same rank. What should Camille do?
File a claim with the EEOC regarding a violation of the Equal Pay Act.
When Bess signed up for a fancy trip, she emphasized to her travel agent that she was seriously allergic to lead paint, and therefore, she could stay only in new hotels. The agent assumed that Hotel Augustine would be fine because it had been renovated at a time after lead paint was banned. However, the renovation had not removed all the lead paint, and Bess became ill after staying at the hotel.
From this set of facts, there is no reason to believe that the travel agent was disloyal, disobeyed instructions, or failed to provide information. But the agent did violate his duty of care when choosing hotels for Bess. He should have made sure that there was no lead paint.
George and Susan open a dry cleaning business together, but do not execute any documents or perform any formalities other than obtaining a "d/b/a" certificate for their business name: "G & S Clean". One day, when George is out for lunch, Susan burns a large hole in a customer's fur coat while cleaning it. Who is liable for the cost of the coat?
G & S Clean is liable and both Susan and George are personally liable
George is president of Plumbers, Inc. He signs a contract with Susan, which calls for Susan to perform some services and receive $10,000. Susan performs, but Plumbers does not pay. Which of the following, if true, will grant Susan the right to recover from George personally?
George commingled personal assets with corporate assets
Someone painting the outside of a building you own crashed through a window, injuring a visiting executive. Which of the following questions would your lawyer not need to ask to determine if the painter was your employee?
Had you checked the painter's references?
When Brook went to work at an advertising agency, his employment contract stated that he was "at-will and could be terminated at any time." After 28 months with the company, he was fired without explanation. Which of the following statements is true?
He could be fired for any reason except a bad reason
To ensure that its employees did not use illegal drugs in or outside the workplace, Marvel Grocery Store required all employees to take a polygraph exam. Moreover, managers began to check employees' Facebook pages for reference to drug use. Jagger was fired for refusing to take the polygraph test. Jonathan was dismissed after revealing on his Facebook page that he was using marijuana. Has the company acted legally?
Here, Marvel has no reason to believe that a crime occurred, so it cannot require a polygraph test. Jonathan's Facebook postings have nothing to do with work conditions, and illegal activity is not protected. So the company is liable to Jagger for requiring him to take the polygraph exam, but not to Jonathan for firing him over illegal drug use
Vern owned 32 percent of Coast Oyster Co. and served as president and director. Coast was struggling to pay its debts, so Vern suggested that the company sell some of its oyster beds to Keypoint Co. After the sale, officers at Coast discovered that Vern owned 50 percent of Keypoint. They demanded that he give the Keypoint stock to Coast. Did Vern violate his duty to Coast?
If the shareholders and directors did not know of Vern's interest in Keypoint, they could not properly evaluate the contract. By not telling them, he violated the rule against self-dealing. Also, by purchasing stock in Keypoint, Vern took a corporate opportunity. He had to turn over to Coast any profits he had earned on the transaction, as well as his stock in Keypoint.
While on a business trip, Trevor went sightseeing on his day off. Although company policy forbade talking on a cell phone while driving, Trevor answered his cell phone in his car. Distracted, he crashed into Olivia's house, causing substantial damage. Was his employer liable for the damage?
In a similar case, the court ruled that the employer was liable because it is foreseeable that travelling employees will go sightseeing and, therefore, companies should include this potential liability as a cost of doing business.
Which of the following statements is true?
In about half the states, employees have the right to bring guns into their workplace parking lot.
Daisy was the founder of an Internet start-up company. Mac was her driver. One day, after he had dropped her at a board meeting, he went to the car wash. There, he told an attractive woman that he worked for a money management firm. She gave him money to invest. He was so excited that, on the way out of the car wash, he hit another customer's expensive car. Who is liable for Mac's misdeeds?
In this case, Daisy is liable for the damage to the car because that was a physical tort within the scope of employment. But she is not liable for the investment money because Mac did not have authority from her to take those funds.
Consider these two entrepreneurs: Judith formed a corporation to write a blog that is unlikely to generate substantial revenues. Drexel operated his construction business as a sole proprietorship. Were these forms of organization right for these businesses?
Judith would be better off with a sole proprietorship—her revenues will not support the expenses of a corporation. Also, her debts are likely to be small, so she will not need the limited liability of a corporation. And no matter what her form of organization, she would be personally liable for any negligent acts she commits, so a corporation would not provide any additional protection. But for Drexel, a sole proprietorship could be disastrous because his construction company will have substantial expenses and a large number of employees. If an employee causes an injury, Drexel might be personally liable. And if his business fails, the court would take his personal assets. He would be better off with a form of organization that limits his liability, such as a corporation or a limited liability company.
Which of the following employers has violated Title VII?
Max hired a male corporate lawyer because his clients had more confidence in male lawyers
For Michael, it was the job of his dreams—editor of Literature magazine. When Cyrus, the owner of the magazine, offered him the position, Michael accepted immediately. But he also revealed a secret few people knew—he was in the early stages of Parkinson's, a neurological disorder that affects the patient's ability to move. While that symptom is controllable with medication, about 40 percent of Parkinson's patients suffer severe dementia and eventually become unable to work. Michael had no signs of dementia—he was the host of a popular television talk show. Fifteen minutes after Michael returned to his hotel room, Cyrus called to withdraw the job offer. He said he did not like some of Michael's ideas for changing the magazine. Has Cyrus violated the ADA? Could he fire Michael if dementia set in?
Michael is covered by the ADA. He has an impairment that substantially limits a major life activity—movement. But Michael is able to perform the essential functions of the job, so Cyrus violated the law when he withdrew the offer. If Michael becomes demented in the future and can no longer run a magazine, Cyrus could fire him then
Kurt asked his car mechanic, Quinn, for help in buying a used car. Quinn recommends a Ford Focus that she has been taking care of its whole life. Quinn was working for the seller. Which of the following statements is true?
Quinn must pay Kurt the amount of money she received from the Ford's prior owner.
Which of the following activities would not be considered sexual harassment?
Nancy yells "Crap!" at the top of her lungs every time her Rotisserie Baseball team loses.
Carly is a director at Dazzle, a corporation that operates a chain of stores that sell fancy shoes and handbags. Zeb approaches Carly about partnering with him in his new business selling leather handbags with large buckles and other metal accents. Carly brings Zeb's offer to the Dazzle board of directors and shareholders, but they turn it down because Zeb's bags are too casual and do not fit in with the rest of their stores' merchandise. Carly loves Zeb's bags, though, so she decides to personally invest with him. Has Carly violated her fiduciary duty to Dazzle?
No, because Dazzle turned down the opportunity to work with Zeb
George is a majority shareholder in Soda Pop, Inc., a large soft drink maker. Citizens in India are threatening to sue Soda Pop for stealing water in rural villages, ruining crops, and depriving livestock of water. If they are successful in their suit, will George be liable to the Indian plaintiffs?
No, because George has no right to control Soda Pop operations.
George is a gay mechanic who works for a national chain of car repair shops. George's boss, who did not know George is gay, often made comments about his opposition to gay marriage and his belief that a gay man could never be a good mechanic. One day, George's boyfriend drops George off for work and as George's boss is pulling into the parking lot, George kisses his boyfriend goodbye. The next day, George is fired. Does George have a claim for discrimination under Title VII?
No, because George is not a member of a protected category
Malcolm is a newscaster for a national television network with hundreds of employees. He is steadily promoted to roles with more on-air time and asked to cover major news stories until he turns 35. At that point, Malcolm starts noticing that he is passed over for promotions for younger coworkers with less experience. When he asks why, the network tells Malcolm that his coworkers are more energetic, and that his age makes him out-of-touch with the young viewers. Does Malcolm have a claim under the Age Discrimination in Employment Act ("ADEA")?
No, because Malcolm is not old enough to be protected by ADEA
Frank, the CFO of Springer, Inc., concealed temporary financial losses the company suffered early in the fiscal year in Springer's annual report submitted to the Securities and Exchange Commission (SEC). It is illegal to submit fraudulent SEC filings, but Springer's financial situation had already improved greatly by the time the annual report was filed and Frank did not want to unnecessarily alarm shareholders. When news that Springer submitted fraudulent financials to the SEC broke, the company's stock price dropped by 15 percent and shareholders sued Frank under applicable securities laws. Frank defended on the basis that his actions were protected by the business judgment rule because he was acting in the company's best interests. Was Frank correct?
No, because the business judgment rule does not protect illegal activities.
In a random drug test by ConCom, one of its employees, Lily, tested positive for a prescription sleep aid. May ConCom fire Lily based on the results of the drug test?
No, because the drug test was in violation of the federal law
A law firm requires that applicants for paralegal positions take a technology skills test and will hire only individuals who can type a certain number of words per minute, create sophisticated spreadsheets, and compile a slideshow presentation in under a certain amount of time. All of these are tasks the firm routinely asks paralegals to perform. Many more black applicants fail the test than white applicants. Does the test violate Title VII?
No, because the requirement is job-related and there are not less discriminatory ways to achieve the same result.
The Fellowship is a not-for-profit corporation whose primary purpose is promoting goodwill among churches and synagogues. Its annual meeting featured various vendors with display booths. Keener, a church representative, approached the booth of Chris's Cars and Trucks (CCT) about buying a bus for his church. While Keener was test-driving one of CCT's buses, the brakes malfunctionedand Keener was killed in the resulting crash. If CCT is liable for the accident, could The Fellowship also be liable as CCT's principal?
No, because there was no control or consent between CCT and The Fellowship
The unionized employees of the Premier Music Center, which owns and operates a large concert hall, have gone on strike and are picketing in front of the venue for alleged unfair labor practices. Premier and its employees have worked closely for years with the non-unionized security guards employed by Safe Event, Inc., who also work in the hall and the nearby parking lot. May the Premier employees picket in front of the Safe Event's office as well?
No, the union can only picket in front of the concert hall
Wanda, Derek, and Mitchell formed B. Flowers, LLP three years ago. A year ago, Derek and Mitchell decided that the company was ready to open a new location and had B. Flowers take out a loan from a bank for the extra capital needed to expand. The new location has not performed well, and B. Flowers is unable to pay the remaining $50,000 owed to the bank. Is Wanda liable to the bank for the debt?
No, unless the partners have not complied with the LLP statutory filing requirements
Marcus owns common stock in XO, and an oil and energy company that is about to be liquidated. Is Marcus guaranteed to be paid in the process of dissolution?
No, unless there are assets remaining after all creditors and preferred stockholders are paid
The German-American Vocational League was formed in New York during World War II to serve as a propaganda agency for Nazi Germany. Under U.S. law, all foreign agents were required to register, but neither the Vocational League nor its officers did so. When they were charged with violating U.S. law, they argued that they were not agents of the German government because they had no formal agency agreement. Is this a strong argument?
No. A formal contract is not necessary to establish an agency relationship
Malik asks Petra, an expert in sports collectibles, to help him find a buyer for his collection of autographed baseballs. Petra finds a buyer who is willing to pay $5,000 for the collection, but Malik scoffs at the offer and insists it is worth at least double that amount. He says he would not even consider selling for less than $7,500. The next week, someone offers to pay $1,000 for the collection. Must Petra tell Malik about the offer?
No. If Petra has no reason to believe that Malik would be interested, she does not have to pass the offer on to him.
Dr. James Leonard wrote Dr. Edward Jacobson to offer him a position at a hospital. In the letter, Leonard stated that this appointment would have to be approved by the promotion committee. Jacobson believed that the promotion committee acted only as a "rubber stamp" and its approval was certain. Jacobson accepted the offer, sold his house, and quit his old job. Two weeks later, the promotion committee voted against Jacobson, and the offer was rescinded. Did Leonard have apparent authority?
No. Indeed, Leonard had told Jacobson that he did not have authority. If Jacobson chose to believe otherwise, that was his problem.
Sandy found a new job that would pay much more than her current job and, in accordance with company policy, gave her employer two weeks' notice that she would be leaving. Upset she was quitting, her employer terminated Sandy's employment immediately. Sandy cannot start her new job for two weeks. Sandy believes her employer has breached her employment agreement and she should be paid for the two weeks she is unemployed. Is she right?
No. Sandy is an at-will employee
Shapely Wear, a store that sells women's lingerie, undergarments, and sleepwear, posts the following on its website: "Now Hiring a New Sales Associate! 3 - 5 years of retail experience. Excellent people skills required. Ask for an application at the store. Women only - no boys allowed!" Has Shapely Wear violated Title VII?
No. The requirement that all applicants be female is a bona fide occupational qualification (BFOQ) in this case.
Madeline interviews with Orson for a position at Perfunctory magazine. During their discussion of the position's responsibilities, Orson says that Madeline will have at least three bylines per issue. Orson offers her the job and Madeline accepts. Madeline does not have a single byline in the next two editions of the magazine. The CEO of the Perfunctory tells Madeline that because Orson's byline promise is not in her contract, the magazine does not have to honor it. Is this true?
No. Verbal promises made during the hiring process are generally enforceable, even if not approved by the company's top executives.
Alan and Ivan opened a kosher delicatessen, Main Court, which failed after barely a year in business. One supplier sued for overdue bills. Alan and Ivan will be liable to the supplier if Main Court was which of the following types of organizations?
None of these answers is correct
Which of these rights does the NLRA not protect?
Right to block nonunion workers from company property
Kurt owns 55 percent of the New England Lumber Company (NELC) stock and is also the CEO. Kurt also owns two percent of the Boston Homes stock. Boston Homes is a construction company that builds houses throughout New England. Kurt wants NELC to provide Boston Homes with all of the lumber Boston Homes needs and to give Boston Homes a ten percent discount on all of its large orders. Four NELC board members who have no interest in Boston Homes form a special committee and approve the deal. If a NELC shareholder challenges the deal between NELC and Boston Homes in court, how should the court rule?
Strike down the deal unless it is entirely fair to NELC
Union workers are striking at Cheesey, forming picket lines in front of the restaurant during the lunch and dinner hours, but at no other times. The union members chant slogans denouncing their wages and working conditions, urging diners not to enter. There is no violence, but the picketers cause many prospective customers to stay away, and Cheesey suffers a substantial drop in business. The restaurant files a charge with the NLRB, claiming that the union has committed a ULP by 1. deliberately harming its business and 2. engaging in a secondary boycott Who will win?
Striking workers may urge the public not to cross the picket line. The union may not use violence to keep people out, but this union has not done so. This is not a secondary boycott, because it has not been established at a different company that does business with the employer. The company's loss of business is one possible—and legal—consequence of a strike. The union has committed no ULP.
Lionel is the personal assistant to the head coach of a professional football team. At the end of the football season, a football player's wife gives Lionel front row tickets to the opera. What must Lionel do?
Tell his boss about the tickets. His boss may choose to keep the tickets for himself.
Employees of Exxon Corp. paid some $59 million in corporate funds as bribes to Italian political parties to secure special favors and other illegal commitments. The board of directors decided not to sue the employees who had committed the illegal acts. Were these decisions protected by the business judgment rule?
The business judgment rule would not protect the underlying illegal payments, but it did protect the decision not to sue. In other words, anyone who made an illegal payment had violated the business judgment rule, but the people who had decided not to pursue the violators had not themselves breached the business judgment rule because they had not violated the duty of care or the duty of loyalty.
When Shiloh interviewed for a sales job at a medical supply company, the interviewer promised that she would only have to sell medical devices, not medications. Once she began work (as an employee at will), Shiloh discovered that the sales force was organized around regions, not products, so she had to sell both devices and drugs. When she complained to her boss over lunch in the employee lunchroom, he said in a loud voice, "You're a big girl now—it's time you learned that you don't always get what you want." That afternoon, she was fired. Does she have a valid claim against the company?
The company is liable to Shiloh for making false promises to her during the hiring process but not for the manner in which she was fired.
When the union went on strike, the company replaced Ashley, a union member, with Ben, a non-union member. The strike is now over, and a federal court has ruled that this was a ULP strike. Does Ashley get her job back?
The company is obligated to hire Ashley, even if that requires laying of Ben
Liam tells Emily that he wants to buy her friend Tamara's car, but does not think Tamara will sell it to him for personal reasons. Emily tells Tamara that she knows someone who would like to buy her car, and the two draw up a contract stating that Tamara will sell the car to "an undisclosed buyer" for $10,000. After Tamara has signed the contract and given Emily the keys, Emily has Liam sign the contract, agreeing to pay the $10,000 purchase price. Liam takes the car but disappears without paying. What, if anything, will Tamara be able to recover from Emily?
The contract price of the car because Liam is an unidentified principal.
The appearance policy at Starwood Hotels prohibited employees from wearing hairstyles that showed excessive scalp. When Carmelita Vazquez repeatedly came to work with her hair in cornrows, Starwood fired her for violating its policy. Vazquez was African-American and Hispanic. White women were allowed to wear their hair in braids. Vazquez filed a disparate treatment claim under Title VII.
The court found for Vazquez, believing that Starwood did have a discriminatory intent.
When Phil McConkey interviewed for a job as an insurance agent with Alexander & Alexander, the company did not tell him that it was engaged in secret negotiations to merge with Aon. When the merger went through soon thereafter, Aon fired McConkey. Was Alexander liable for not telling McConkey about the possible merger?
The court held that when Alexander hired him, it was making an implied promise that McConkey would not be fired immediately. The company was liable for not having revealed the merger negotiations
While working as a plant superintendent at Rodd, Joseph bought stock in the company. On his death, he owned 20 percent, while the founder's children owned the rest. Later, Joseph's widow, Euphemia, found out that Rodd had bought back all of the children's stock, while refusing to buy any of hers. What can Euphemia do?
The court ruled that the majority shareholders had violated their fiduciary duty to her and that the company had to buy her stock, too. Otherwise, Euphemia's stock was worthless
Dominique is the CEO of a pharmaceutical company and must decide whether to continue the company's research into a new skin treatment. Originally, the company had hoped the treatment would help burn victims recover quickly, but two years and $5 million in testing has revealed that it is only useful in relieving very dry skin if applied hourly. In addition, projections show that it will be so expensive to produce the treatment that the company will have to charge $100 a day for it in order to make a profit. However, the researcher in charge of the project is Dominique's best friend, so Dominique approves another $5 million to be spent on continued research of the treatment. If the company's shareholders challenge Dominique's decision, how will a court rule?
The court will rescind Dominique's decision and hold her liable for any losses suffered by the company as a result of the decision, unless Dominique can show the transaction was entirely fair to the shareholders.
You are the CEO of an app company. You will only allow your engineers to create apps for iPads, not for Android or Microsoft tablets because you think iPads are cooler. Some of your shareholders disagree with this policy. Is your decision protected by the business judgment rule?
The courts are very generous in defining a rational business purpose. They would probably uphold your decision as long as it was not in some way personally benefiting you, for instance, as long as you are not a major shareholder of Apple
Concrete Company was bargaining a CBA with the drivers' union. Negotiations went on for many months. Concrete made its final offer of $9.50 per hour, with step increases of $0.75 per hour in a year, and the same the following two years. The union refused to accept the offer, and the two sides reached an impasse. Concrete then implemented its plan, minus the step increases. Was its implementation legal?
The implementation was illegal because the company showed bad faith. Although the parties had reached an impasse, the company still did not have the right to implement a plan that it had never proposed at the bargaining table. To allow the company to implement something that it had never offered would defeat the whole purpose of bargaining
Which of the following steps is not required in a disparate treatment case?
The plaintiff must submit to arbitration
Ladies Plus refuses to hire Eric for a job as a sales associate because his credit score is too low to meet the store's hiring standards. Men, on average, have worse credit ratings than women. Has the store violated Title VII?
The store is in violation of Title VII unless it can show that 1. credit ratings directly relate to a sales associate's job performance and 2. no other requirement would accurately evaluate applicants for this work.
Jack was a top salesperson but a real pain in the neck. He argued with everyone, especially his boss, Ross. Finally, Ross had had enough and abruptly fired Jack. But he was worried that if Jack went to work for a competitor, he might take business away. So Ross told everyone who called for a reference that Jack was a difficult human being. Is Ross liable for these statements?
These statements were true, so Ross would not be liable. Before making the statements, though, he should ask himself if he wants the burden of having to prove them true in court.
During a job interview with Venetia, Jack, a promising candidate, reveals that he and his wife are expecting twins. Venetia asks him if he is planning to take a leave once the babies are born. When Jack admits that he would like to take a month off work, he can see her face fall. She ultimately decides not to hire him because of the twins. Which of the following statements are true?
Venetia has violated the FMLA
The Teamsters Union is attempting to organize the drivers at We Haul trucking company. Workers who favor a union have been using the lunchroom to hand out petitions and urge other drivers to sign authorization cards. The company posts a notice in the lunchroom: "Many employees do not want unions discussed in the lunchroom. Out of respect for them, we are prohibiting further union efforts in this lunchroom." Is this sign legal?
We Haul has violated the NLRA. The company has the right to urge employees not to join the union. However, it is not entitled to block the union from its organizing campaign. Even assuming the company is correct that some employees do not want unions discussed, it has no right to prohibit such advocacy
Employees of Triec, Inc., a small electrical contractor, contacted the International Brotherhood of Electrical Workers and began an organizing a unionization drive. Six of the 11 employees in the bargaining unit signed authorization cards. Triec declined to recognize the union, which petitioned the NLRB to schedule an election. Triec then granted several new benefits for all workers, including higher wages, paid vacations, and other measures. When the election was held, only two of the 11 bargaining unit members voted for the union. Did Triec violate the National Labor Relations Act (NLRA)?
Yes, because the company interfered with the union organization.
Hank, a science professor, attends a cultural sharing and team-building event for university faculty, during which he reveals that he is a practicing Muslim. Shortly after, the head of the science department begins asking Hank many questions about his ability to separate his beliefs from his teaching material. The department head requests that the university revoke Hank's access to the chemical research labs because "Hank's extreme beliefs create a liability for the school if he has access to these dangerous substances." Hank files a Title VII suit claiming a hostile work environment on the basis of his religion. The next semester, the university cuts the funding for Hank's ongoing research project and informs him that he will be co-teaching one course, rather than his normal three courses. Has the university committed a violation beyond the potential hostile work environment?
Yes, because the university's actions towards Hank would deter a reasonable university employee from complaining about discrimination.
An appraiser valued a subsidiary of Signal Co. at between $230 million and $260 million. One month later, Burmah Oil offered to buy the subsidiary at $480 million, giving Signal only three days to respond. The board of directors accepted the offer without obtaining an updated valuation of the subsidiary or determining if other companies would offer a higher price. Members of the board were sophisticated, with a great deal of experience in the oil industry. A Signal Co. shareholder sued to prevent the sale. Is the Signal board protected by the business judgment rule?
Yes, because they acted in good faith
Beatrix is a diamond dealer who also works as a jewelry designer at Bunny Mayhew Designs (BMD). Beatrix arranges to have one of her own company's salesmen meet with a BMD representative to try to sell some of Beatrix's available stock. May Beatrix do this?
Yes, but Beatrix must tell BMD that the salesman works for her.
Alissa accepts a six-month unpaid internship at Jonah's dental practice. After one month, Alissa wants to quit but knows that if she does it will cost Jonah a lot of time and money to find and train someone new. Can she quit before the end of the six months?
Yes, but she must pay Jonah the cost of hiring and training a replacement
Fitness World is a corporation with 75 shareholders that are individuals who all hold common stock. At an annual meeting, the shareholders unanimously voted that Fitness World should register as an S corporation with the IRS so that the shareholders may enjoy the flow-through tax benefits. Is Fitness World eligible to register as an S corp.?
Yes, if all of the shareholders are U.S. citizens or residents
Connor owns ten percent of the stock issued by Outdoorsmen, Inc., an outdoor sporting supply company. The nominating committee has nominated an executive from a private equity firm for the open seat on the Outdoorsmen board. Connor believes the nominee does not have the industry knowledge to properly manage Outdoorsmen and that his good friend, Michael, who has produced popular nature documentaries and has a CPA, will be much more effective. Connor demands that Michael be included in the proxy materials sent to shareholders. Must the Outdoorsmen board comply with Michael's request?
Yes, if the company has proxy access bylaws
Mack is the local owner of a restaurant franchise. Though the national chain is known for its hotdogs, Mack wants to sell vegetarian burritos. Must Mack get permission from the franchisor?
Yes, if the franchise agreement demands it
Denise was a promoter for a proposed corporation, EVR-Young Corp. As promoter, she signed a three-year lease to rent office space from Landlord. She signed her name and indicated below her signature she is signing as "promoter for EVR-Young Corp., a company yet to be incorporated." EVR-Young never files incorporation documents with the state. Is Denise personally liable for the lease?
Yes, she remains liable as the promoter on a contract for which there has been no novation
In order to obtain limited liability, Tom and Doris properly formed a limited liability company (LLC) to operate their catering business. They sometimes deposited the proceeds from catering jobs into their personal checking accounts and if they needed to pay personal bills and were short of funds, they used the business account. If creditors of the business cannot get payment for their invoices, will a court order Tom and Doris to pay the creditors using their personal assets?
Yes, the court can pierce the veil of an LLC because Tom and Doris commingled assets
An elementary school custodian struck a teenager who wrote graffiti on the school's wall. Is the school district liable for this employee's intentional tort?
Yes, the school district is liable if the custodian intended to serve some purpose of the school when he struck the student.
Fiona, an employee at-will of Prestige Exterminators, is promoted to the manager of the accounting department. She notices that the some of the accounting procedures are not in line with the Foreign Corrupt Practices Act of 1977, so she implements some policies to bring Prestige into compliance with the anti-bribery statute. A week later, Fiona is fired for "interfering with the company's operations." Does she have a claim for wrongful termination?
Yes. Employees cannot be fired for refusing to break the law
Under the FMLA:
both men and women are entitled to take a leave of absence from their jobs for childbirth, adoption, or a serious health condition of their own or in their immediate family
When new hires are forced to join an existing union, a union shop ___________ exist. This kind of arrangement _________ legal under the NLRA
does; is
A whistleblower is:
always protected when filing suit under the False Claims Act.
During a union organizing drive, management urges workers not to join the union and discusses a competing company that lost business after a union was formed. Management:
committed no ULP
A limited liability company:
must register with state authorities.
Generally, a corporation's bylaws include all of the following except:
par value of the stock
A limited liability partnership:
protects the partners from liability for the debts of the partnership
Generally, a corporation's articles of incorporation must include all of the following except:
quorum requirements
An employer can legally require all employees to have a high school diploma if: Which of the following employers has violated Title VII?
the nature of the job requires those skills
A promoter is liable for any contract he signs on behalf of a corporation before it is formed, unless:
the other party agrees to a novation
An unemployed CPA generally would receive unemployment compensation benefits if the CPA:
was fired as a result of the employer's business reversals
