MGMT 520 Final Exam

1. TCO D A well known pharmaceutical company, Robins & Robins, is working through a public scandal. Three popular medications that they sell over the counter have been determined to be tainted with small particles of plastic explosive. The plastic explosives came from a Robins & Robins supplier named Casings, Inc., that supplies the capsule casings for the medication pills. Casings, Inc., also sells shell casings for ammunition. Over $8 million in inventory is impacted. The inventory is located throughout the Western United States, and it is possible that it has also made its way into parts of Canada. Last fall, the FDA had promulgated an administrative proposed rule that would have required all pharmaceutical companies that sold over-the-counter medications to incorporate a special tracking bar code (i.e., UPC bars) on their packaging to ensure that recalls could be done with very little trouble. The bar codes cost about 35 cents per package. Robins & Robins lobbied hard against this rule and managed to get it stopped in the public comments period. They utilized multiple arguments, including the cost (which would be passed on to consumers). They also raised “privacy” concerns, which they discussed simply to get public interest groups upset. (One of the drugs impacted is used for assisting with alcoholism treatment – specifically for withdrawal symptoms – and many alcoholics were afraid their use of the drug could be tracked back to them.) Robins & Robins argued that people would be concerned about purchasing the medication with a tracking mechanism included with the packaging and managed to get enough public interest groups against the rule. The FDA decided not to impose the rule. Robins & Robins' contract with Casings, Inc., states, in section 14 B.2.a., "The remedy for defects in supplies shall be limited to the cost of the parts supplied plus any and all damages caused by the defects, including loss of good will to Robins & Robins, as valued by the accounting firm selected by Robins & Robins." The accounting firm determines the loss of "good will" value to Robins & Robins as a result of this disaster is $140 million. This clause was buried on page 285 of the contract in small, 9-point type. List any defenses Casings, Inc., may have in trying to avoid the results of this clause of their contract. (Points: 15)

2. TCO B. The FDA discovers that, during the public comment process, Robins & Robins bribed one of the members of the administrative panel that decided to pull the rule from consideration. The member of the panel was removed and is being charged criminally. As a result, the FDA immediately implements an emergency order that puts into effect the “tracking bar” requirement and makes the rule retroactive, but only to Robins & Robins.

Provide two arguments Robins & Robins can make to have the rule determined to be invalid under the Administrative Procedures Act. Explain your answer. (Points: 30)

Name one argument that Robins & Robins could have used to fight against the imposition of a tracking bar (UPC) requirement in the event their lobbying efforts during public comments had failed. Explain the argument and the procedural method Robins would use to fight it. If Robins had not gotten involved in the public comments period, would your answer change? Why?

3. TCO C. Robins & Robins immediately issued a massive recall for the tainted medication upon learning of the situation. Despite the recall, 1,400 children and 350 adults have been hospitalized after becoming very ill upon taking the tainted medication. Each of them had failed to note the recall after having already purchased the medication. It is quickly determined that they will need liver transplants and many of them are on a waiting list. During the wait, to date, 12 children have died. Their families are considering suing for both 402A and negligence. The attorneys stated that but for the lobbying efforts, the recall process would have been automated and the people would not have gotten sick or died. You are the public relations advisor for Robins & Robins, and your boss tells you to write him a memo that he will use to draft a public announcement. He needs you to explain to him why Robins & Robins should not be found negligent for these deaths and illnesses. Draft the memo utilizing the elements of 402A and negligence. Include (and fully explain) any defenses you feel that Robins & Robins may have. Recall that your boss needs all pertinent information for him to write an announcement to the public after reading your memo.(Points: 30)

4. TCO A. It is discovered that Robins & Robins knew about the tainted medication 2 months earlier than they announced the recall. They hid it and, in fact, sent out contract buyers to try to buy up all of the medication off the shelves. Their “fake” recall failed. Using the Blanchard and Peale method of analyzing ethical dilemmas, analyze the ethical dilemma faced by the CEO of Robins & Robins for the fact that they saved 35 cents/package and are now in the middle of a major, life-threatening recall. Analyze their “fake” recall as well. Show all of the steps of the model and give a recommendation to the CEO of what to do now that the deaths are escalating. What is the “right” thing for the CEO to do in this case?(Points: 30)

5. TCO I. A Canadian citizen whose son (resident of Ontario) died from the medication sues Robins & Robins in a California court. The court there is well known for being victim friendly and providing huge payouts to victim families. In Canada, the cap on nonpecuniary damages is around $300,000. Punitive damages in Canada are rarely allowed. Robins & Robins moves to dismiss the case under the theory of sovereign immunity. Will Robins & Robins win this motion using this theory? Why or why not? (short answer question) (Points: 15)

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TCO E and H. A private high school hires a new superintendent, George Forester. The school is owned by a local Lutheran church and is run by a board of directors chosen by church members. Supt. Forester shows up for his first day of work and sends a memo via intercompany mail to all teachers:

TCO E. Pastor Forester claims his firing was illegal because it was based on his being a convicted felon. His contract with the school provides him with defense coverage for any acts he takes while working for the school. Anna and Lisa sue Pastor Forester and the school for sexual harassment and discrimination, and Pastor Forester requests the school pay for his defense. Discuss whether Anna and Lisa will be successful in their claim of sexual harassment and discrimination against the school and Pastor Forester. Discuss whether the school illegally fired Pastor Forester. Will the school have to pay for the pastor's defense? Analyze and defend your answer.(Points: 30)

2. TCO H, E. It was actually in the discovery portion of the injury lawsuit that Pastor Forester's true background came to light. The convict, Birches, claims the knowledge of his aunt should be imputed to the entire board of directors. Three parents have alleged that their children are now seeing therapists due to abusive comments Birches made to them at various times during his time in the school.The board immediately convenes and discusses “damage control.” The board knows you took a law and ethics course recently and asks you to write it a memo of what liability it has in this case. List the elements of any tort you believe the school may be liable for and what defenses you may have. Include in your memo whether Aunt Theresa's knowledge will be imputed to the entire board. If so, under what statute, rule, case, or federal law do you base your decision?(Points: 30)

Page 3 – Two essays at 30 points each.

TCOs F & G. Laura Etheridge and Rita O’Donnell, the CEO and Creative Director of Clean Clothes (a Texas-based lesbian women’s clothing line) brainstormed together and came up with a tagline for their new slacks line: “Masculine Attitude, Feminine Fit.” They market the product on YouTube, Twitter, and Facebook showcasing their “Funky Femme” slacks collection, made from a material that resembles alpaca wool but is actually organic cotton. To further the advertising impact, the team uses an Ellen DeGeneres look-alike in the YouTube video, where the model does the “Ellen dance” – and mouths “love the pants” as she points to her legs, and then walks off leading an Alpaca by a halter. Within months, the slacks are a huge hit in the lesbian community. Clean Clothes sends a letter to their attorney asking him to trademark their tagline and moves forward without another thought about it.

Meanwhile, Men2Wimmin, a French company with a branch in New York, has established a huge following in the gay and cross-dressing community. It has used the tagline “Feminine Attitude, Masculine Fit” for many years to advertise its drag queen dress collection for men on billboards, the Internet, and television.

Ellen DeGeneres learns that her likeness is being used to advertise for Clean Clothes. She watches the ad and is incensed. She spends the next week on her show bashing the Clean Clothes company and states that she would never endorse the use of Alpaca wool for clothing as she feels shearing them is cruel. (She doesn’t catch that the pants are really made from cotton.) Further, she says she feels that lesbian women should not need to shop at special stores, although she admits she often shops in the men’s department at Joseph A. Bank (JOSB). Her comments cause a precipitous drop in sales at both Joseph A. Bank (JOSB) and Clean Clothes. Using the above fact pattern, analyze the following questions fully.

TCO F. Men2Wimmin (M2W) sends a cease and desist letter to Clean Clothes (CC) demanding CC stop using M2W’s tagline, which is registered with the Trademark Office. Clean Clothes responds, stating that (a) CC’s tagline is different enough as not to violate the trademark, (b) CC didn’t know about M2W’s tagline so they couldn’t have copied it, and (c) Men2Wimmin has no damages and therefore can’t sue Clean Clothes. Analyze the case for Men2Wimmin, including the elements of any case they have, and explaining any defenses that Clean Clothes might raise against them. What damages can they request, and do you think they will get them? Why or why not? (Points: 30)