Devry MGMT520 Final Exam 1 ANSWERS

MGMT 520 Final Exam 1 ANSWERS
Page 1
This page includes one fact pattern and questions over TCOs A, B,
C, D, and I.
Note that questions over TCO D and I are short answer only (and
have small boxes for your answer) worth 15 points each. Answer those question
succinctly.
Questions over TCO A, B, and C are essay questions and have large
boxes for your answer. Be sure to fully explain, analyze, and evaluate the full
essay questions. These are worth 30 points each.
1. TCO D Short
Answer Question and Facts for Page 1 Questions:
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.”
Casings, Inc., had negotiated that clause into the contract after a lawsuit
from a person who was shot by a gun resulted in a partial judgment against
Casings for contributory negligence.
List any bases
Robins & Robins could sue Casings, Inc., under contract theory ONLY for the
damages caused by the explosives in their drugs, over and above the cost of the
capsule shells. (short answer question)(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)
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 an employee with the FDA. You are drafting a memo to your
boss analyzing the FDA’s liability and explaining why the FDA did the right
thing in deciding not to pass the original tracking bar (UPC) rule. You are
specifically being told to respond to the issue of the deaths and illnesses.
What would you write? Include (and fully explain) any defenses you feel that
the FDA could use against any negligence or public relation cases. Explain what
liability (if any) the FDA could have to the victims and their families.
(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 child died from the medication
sues the FDA for allowing the sale of dangerous medication in Canada. The
lawsuit is filed in the International Court of Justice (ICJ). Is this the
proper court to hear this case? Why or why not? (short answer question)
(Points: 15)
Page 2
Question 2 – 2 essays, 30 points each.
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:
Dear Staff:
There is a new sheriff in town – and it is me. As your new leader,
I am implementing a dress code that includes no slacks or shorts for women and
no earrings for male teachers. Men shall all be clean shaven. Violators will be
docked 1 week’s pay; second offenses will result in a 1 week suspension without
pay and third offenses, dismissal. All teachers will address me as “Pastor
Forester” or “Amen, Pastor Forester.” Teachers who fail to abide by these
dictates will be docked two points on their annual evaluations. Amen, Pastor
Forester.”
That day, one teacher, Anna Seenandfeld has a birthday party at
the school, having just turned 40. Her frown at the party shows everyone she is
not happy about her party. Pastor Forestor had bought black balloons for her
and jokes with the other teachers about the “over the hill” teacher. The next
day, Pastor Forester goes into the teacher’s lounge and calls all nontenured
teachers into his office. He tells them that he has assigned himself to be
their mentoring teacher and that effectively immediately they will be evaluated
weekly. One teacher, Anna Seenandfeld, begins to cry. Another teacher, Andy
DuFrane, rolls his eyes and says, “God! These menopausal women should not be
allowed around our students.” Pastor Forester goes to Anna and hugs her,
offering her a tissue. He pats her gently on the behind and whispers, “Act your
age, please.” When she forcefully pulls away from him, Pastor Forester assigns
her to work Saturday detention for the next 3 weeks to “toughen her up.”
A pregnant P.E. teacher, Lisa Ready, is reassigned by Pastor
Forester to a math position (even though she has only three credits in math)
because Pastor Forester says this position is “less strenuous for a pregnant
lady.”
On the third week of detention duty, a student stabs Anna,
wounding her severely. Although she survives and recovers, she loses one kidney
as a result of the injury. The school doesn’t offer health insurance, and Anna
incurs over $55,000 for her hospital bills; the student (and his family) is
insolvent.
One month later, a parent complains about his student being unable
to succeed in his math course due to the teacher’s (Lisa’s) incompetence,
Pastor Forester fires Lisa Ready for her inability to perform her job. Pastor
Forester tells Lisa in front of her class of students, and then walks her out
of the building; 2 hours later, Lisa goes into premature labor and delivers her
first son, who has severe health issues as a result of being premature. The
baby’s doctor states the cause of early labor as being from “intense duress and
undue stress.” Lisa’s husband’s health insurance covers all of the costs of the
birth and the baby’s care.
Pastor Forester is really not a pastor. His real name is Jerry
Birches, a parolee with convictions for child molestation. His parole agreement
prohibits him being closer than 1,000 feet to any school. In order to cut
costs, the school had stopped doing background checks on new employees, and
this slipped through the cracks. This comes to the attention of the school
board, and the president of the board of directors immediately fires Pastor
“Jerry Birches” Forester and notifies his parole officer of the violations.
Pastor Forester claims the board knew about his background because one member
of the board (his aunt Theresa) knew the truth.
1. TCO E. Anna and Lisa both sue Pastor Forester and the school
under Title VII. Analyze their Title VII lawsuit against the school and Pastor
Forester. Explain whether you feel that the two injured teachers have cases for
recovery (describe the theories and whether you feel they will be successful).
Discuss whether the school being a religious, private school has any bearing on
liability or protection from liability. Include all defenses available to the
school and Pastor Forester. (Points: 30)
2. TCO H and E. In the discovery portion of the case, it is
determined that Pastor Forester is really not a pastor. His real name is Jerry
Birches, a parolee with convictions for child molestation. His parole agreement
prohibits him being closer than 1,000 feet to any school. In order to cut
costs, the school had stopped doing background checks on new employees, and
this slipped through the cracks. The president of the board of directors
immediately fires Pastor “Jerry Birches” Forester and notifies his parole
officer of the violations. Pastor Forester claims the board knew about his
background because one member of the board (his aunt Theresa) knew the truth.
He claims her knowledge should be imputed to the entire board of directors. He
then sues the school for firing him for being a convicted felon. He claims that
is illegal, and he publicly attacks the church for their “less-than-Christian”
behavior in firing him.
The board immediately convenes to discuss “damage control.” It
knows you took a law and ethics course recently and asks you to write a news
release to the local newspaper explaining the situation. Using ethical and
legal considerations (including the fact you are in the middle of multiple
lawsuits), write the brief news release. Then, explain why you wrote it the way
you did. (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.
1. TCO F. Ellen DeGeneres sues Clean Clothes for the use of a
look-alike model for the slacks advertisement. She includes Lanham Act,
misappropriation, and “right of publicity” claims in her complaint. Clean
Clothes countersues for product disparagement. Joseph A. Bank (JOSB) sues Ellen
for impacting their men’s clothing sales with her unsolicited comment. What
facts will Ellen use to support her cases, and why will those support her cases?
What defenses will Ellen have against Clean Clothes’s and JOSB’s countersuits?
Do you think any of the three will win their cases? Why or why not? (Points:
30)
2. TCO G. It is discovered that 2 weeks before the Ellen show, she
had sold $2 million in JOSB stock (at a gain of about $2,200). The morning
after her show, Ellen sold JOSB short (which means she was betting the stock
price would go down), and she made another $210,000 in the next week on that
trade. The swing in the price was not directly tied to her comments but was
suspected to be a result of a recall JOSB made on their entire line of men’s
black and brown dress slacks when it was discovered that they had been sewn
together with white thread. Ellen’s previous trading activity shows that she made
it a normal practice to “vigorously trade” the stock of any company with which
she did business. A review of her trading activity for the past year showed
that she had bought and sold JOSB stock 25 different times, including short
sales like this one. Her overall trading for JOSB stock for the last 12 months
was a net loss of $82,000.00. Do you think the SEC will file anything against
Ellen for her sales of JOSB? Is there any cause to do so? Analyze her
transactions with respect to insider trading activity (based on what you know)
and whether she should be concerned. Is her prior trading activity a defense?
Should Ellen have avoided discussing JOSB publicly on her show because she
typically trades their stock? (Points: 30)