Legal and Ethical Challenges in Business Organizations, law homework help

Part 1

Read the scenarios and the questions that
follow. Identify and analyze the legal issue(s). Apply legal concepts
and make potential arguments as directed using laws, cases, examples,
and/or other relevant materials. Consider using short headings (consult
APA materials) to separate the topics. Summarize the facts; do not copy
the scenarios into the paper. After you have answered the questions and
before the conclusion, propose recommendations to help the organization
avoid at least five of the issues identified in the scenarios in the
future. Support your answers with information from at
least five scholarly sources, prepare an 8- to
12-page paper that identifies the legal issues and potential solutions
and answers all questions presented, supported by relevant legal
authority. Do not exceed the page length by more than two pages, as the
instructor is not required to read excess pages. Properly cite all
sources using APA format.


Famous Subs and Pizza Company (FSPC) is a
publicly traded corporation headquartered in Tallahassee, Florida,
operating restaurants in ten states. The company also owns a food
processing and distribution facility in Jackson, Mississippi.
Approximately 20% of the employees work full time; however, FSPC
primarily hires part-time employees as delivery drivers, cooks, and
sandwich makers. FSPC leases space for most of its restaurants in
shopping centers, but the company owns a few of the properties as well
as its headquarters office and the distribution facility. The company
experienced explosive growth over the last three years, but with the
growth came increased legal issues. The CEO, Chip Stone, seeks your
advice on the following legal and ethical issues.

S1: Business Organizations

Charmaine, Delia, and Mary met while working
for FSPC in Atlanta, Georgia. Charmaine was attending college to earn a
degree in management. Delia was attending culinary school to become a
chef, and Mary was a recent graduate in sales and marketing. The three
ladies decided to open their own sandwich restaurant on wheels, also
known as a food truck. They planned to start small with one truck but
had big dreams to own a whole fleet of trucks that served a variety of

Charmaine took a business law class and
remembers there are several forms for organizing businesses. The ladies
have come to you for advice about the various forms of business

  • Analyze three forms of business organizations
    including advantages and disadvantages related to the business the
    ladies plan to operate.
  • Defend selection of one of
    the three types of business form for the new business, including the
    requirements for starting that form of business in your state.

S2: Intellectual Property

In addition to the confidentiality and
noncompete provisions, the employee handbook also contained a section
about intellectual property. Employees are required to disclose any
inventions made during the period of employment that are related to the
company’s business. Devlin created a new app that will make it easier
for customers to order food for delivery or takeout. The app provides
additional access for blind and deaf customers so that they can also
place orders by using the app. Devlin searched the patent applications
and did not find any other patent that was similar to his new
food-ordering app and intends to file for protection of his patent as
soon as possible.

  • Evaluate the arguments for FSPC and Devlin concerning ownership of the invention under the following assumptions:
    • Devlin did not use any company resources, including time, to create the app.
    • Devlin used some company time and a computer to develop the app.

S3: Securities

On June 30, 2015, FSPC predicted
first-quarter earnings of $0.25 per share. On July 13, 2015, FSPC
received an e-mail from their in-house attorney related to a $2.5
million claim for personal injury of a three-year-old child who was
allegedly injured when choking on a toy contained in a kid’s meal sold
by one of the FSPC restaurants. Chip Stone, the CEO of FSPC, instructed
the attorney to prepare a press release describing the claim. Before the
press release was sent to the copy center at FSPC’s executive office,
the vice president of sales sold his FSPC shares at the prevailing
market price of $35.25 per share.

Charlene Copier, who ran the photocopying
machine at FSPC’s executive office, saw the draft press release. She
called her broker, Bradley Broker; told him about the press release; and
ordered him to sell the 250 shares of FSPC that she had acquired in
FSPC’s initial public offering. Broker then called his best client,
Calvin Client, and suggested that he sell his 10,000 shares of FSPC’s
stock but did not tell him why. Client agreed, and Broker sold Copier’s
and Client’s stock at $35.25 a share right before the market closed on
July 15.

The press release was publicly announced and
was reported on the Business Wire after the market closed on July 15.
The next day, FSPC’s stock opened at $27.75 per share. Plaintiffs have
brought a private class action suit, and the SEC has commenced
enforcement proceedings. Criminal prosecution is threatened by the US
Attorney’s Office:

  • Evaluate the potential claims by the plaintiffs in
    the class action lawsuit and the basis for the criminal action by the US
    Attorney’s Office.
  • Assess the potential liability for securities violations of Stone, the vice president, Copier, Broker, and Client.

S4: Bankruptcy and Secured Transactions

Coastal Property Restoration (CPR)
periodically purchased used restaurant equipment from Famous Subs and
Pizza Company. CPR refurbishes and sells restaurant equipment to small
restaurants. In December 2014, CPR purchased five used pizza ovens for
$50,000. Because of the good relationship between the companies, FSPC
financed the ovens for two years; however, FSPC did not obtain a
perfected security interest in the ovens. In July 2015, CPR sold four of
the ovens to another refurbishing company for $4,000 two days before
filing bankruptcy. CPR still owes approximately $35,000 to FSPC for the

  • Evaluate the legal and ethical issues associated
    with CPR’s sale of the pizza ovens before filing bankruptcy. What
    recourse does FSPC have in recovering the monies still owed on the
    equipment or the remaining oven?

S5: Physical Access and Public Accommodation

Individuals may place orders for pizza by
phone or fax or through the FSPC website. The FSPC website does not
contain features that allow a blind person full access, such as the
ability to order online. The National Federation of the Blind has filed
suit on behalf of a group of blind individuals.

  • Evaluate the basis on which lawsuits might be filed
    on behalf of blind individuals and propose a potential outcome supported
    by cases or scholarly sources.

S6: Bribery and Facilitation Fees

FSPC purchased two packaging machines for
the distribution center and ten pizza ovens from a supplier in Italy.
Between the shipping costs, delays, and unanticipated duties, the
purchasing manager was worried that his boss would be upset about the
total costs. In an effort to reduce costs, the manager offered a US
Customs officer $500 in cash to re-classify the imported goods to reduce
the amount of duties owed.

  • Analyze the legal and ethical ramifications of the purchasing manager’s offer to the customs official?
  • Would it make a difference
    if the purchasing manager offered to donate $500 to St. Jude Children’s
    Research Hospital if the officer expedited the paperwork necessary to
    release the goods from custom’s custody?

S7: Recommendations

As the new Director of Compliance, you have
reviewed each of the issues presented. The CEO, Chip Stone, requested
that you propose specific recommendations on how to avoid both legal and
ethical issues in the future related to a minimum of five areas that
need improvement. Be specific and detailed and be sure to base
recommendations on relevant legal and ethical principles. Do not provide
generic resolutions such as “the company should provide training and
implement procedures to avoid future problems.”

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