BUS 340

Moral principles applied to social behavior; may include what is considered to be right or wrong behavior or whether an action is fair or just

A consensus of what constitutes right or wrong behavior in the business world and the application of moral and ethical principles to the marketplace/workplace

1. Individuals’ Standards and Values

2. Managers’ and Coworkers’ Influence

3. Corporate Codes and Compliance Requirements

Directors, officers, partners owe a fiduciary duty (legal confidence or trust) to the company, shareholders, customers, community, employees, and suppliers to act in a certain manner (create predictability and trust) to sustain viability of the company; a code of ethics establishes preset acceptable behavioral expectations (when duties and expectations conflict, ethical dilemmas are created)

1. Conflict of interest

2. Fairness/honesty

3, Communications (marketing puffery OK otherwise claims need proof)

4. Business relationships (customers/vendors/hiring)

Capturing future earnings in current financials

RULE (fraud openly committed test?): (1) goal? (2) employer/employee aligned? (3) sanctioned from above?

IRAC (ruling): (1) passed (2) passed (3) not sanctioned (Board not liable)

Moral/ethical minimum, but simply obeying the law does not necessarily make the business practice ethical (Outsourcing, Affirmative Action, Salaries, Bonuses)

“Gray” areas in the law mean business leaders must contemplate the ethical implications of a business decision (Advertising, Operations, Employment)

Duty Based Ethics - derived from religious and philosophical principles

• Religious Ethical Standards (Golden Rule)
• Kantian Ethics (categorical imperative = if everyone acted the same way)
• Principle of Rights (how decision would affect others rights by order of importance)

Outcome-Based Ethics - seek to ensure a given outcome; it is “right” if the greatest amount of good is created

Utilitarianism ("good" decision results in greatest good)

Treating public company like private one resulted in delisting

RULE: (1) FC innocent? (2) SEC unjustified?

IRAC: (1) FC "dirty deeds" (2) NASD has broad discretion

Monitoring foreign suppliers (child labor, low wages, female exploitation)

Foreign Corrupt Practices Act (FCPA): Prohibits US businesspersons from bribing foreign officials to secure advantageous contracts (payments to minor officials are acceptable “grease the skids”)

1. Law (lowest level)

2. Procedures/rules (letter AND spirit)

3. Values (personal, societal, corporate)

4. Conscience

5. Commitments

6. What would yo' mama say?

Civil wrong resulting injury to a person or property caused by a breach of a legal duty NOT arising from breach of contract

Compensatory:

1. Special: quantifiable (medical, wages, benefits (now/future), irreplaceable items, damaged property)

2. General: nonmonetary (pain & suffering (physical/emotional), loss of companionship/consortium/reputation/mental & physical capacity, disfigurement)

Punitive:

3. Punitive: punish & deter (particularly egregious conduct) (mainly intentional torts or "gross" negligence of another's life or property)

1. Intentional (resulting in harm even if good intent)

2. Unintentional (negligence)

3. Strict liability (absolute liability)

1. Consent (complete or partial defense)

2. Self-defense (need "reasonable apprehension" to your FACE; deadly force OK)

3. Defense of others (in "real and apparent" danger, deadly force OK)

4. Defense of property (removing intruders deadly force NOT OK)

Assault: the reasonable apprehension of a harmful or offensive contact

Battery: completion (contact) of the assault

"Reasonable suspicion crime is afoot" resulting in confinement/restriction without justification; merchants can detain a suspected shoplifter as long as there is probable cause (threats of future harm have no legs)

Extreme and outrageous conduct or repeated annoyances coupled with threats (some courts require physical symptoms)

Publication of a false statement (oral or written) that injures a person’s good reputation (contempt, ridicule or hatred in the community); individual who re-publishes the statement will be liable

Slander: oral defamation requires special damages (temporary harm must have quantifiable damages to prove in court)

Libel: writing or other permanent form- general damages presumed (deliberate harm)

Exception to proving special damages: "slander per se" (re: disease, business improprieties, imprisonment, sexual misconduct)

1. Truth

• 2. Privileged speech 
•        Absolute: judicial and legislative proceedings / debate
•        Qualified: good faith, limited (employee evaluation)

3. Public figures (fair game, plaintiff must show statement made with “actual malice”)

Intentionally deceiving another to believe in a condition that is different from the condition that already exists (intentional deceit resulting in justifiable/detrimental reliance by innocent party) ("puffery" not legally binding = opinions v. facts, unless one has superior knowledge)

1. Known falsity or reckless disregard for the truth

2. Intent to induce another

3. Justifiable reliance

4. Damages suffered as a result

5. Causal connection between parties

Misrepresenting leased premises size resulted in operating to increase rental payments

RULE: fraudulent misrepresentation?

IRAC: appellate reversed because McClain had "justifiably relied" on landlords

Malicious prosecution: malicious lawsuit; loser must prove malice and can countersue for costs & lost profits

Abuse of process: wrongful use of subpoenas, court orders, attachments, etc.; doesn't need to prove malice or loss in prior proceeding

3 necessary elements:

1. Valid/enforceable contract

2. 3rd party knowledge of existing contract

3. 3rd party intentionally induces breach (not liable if no knowledge of existing contract)

Interference was justified/permissible


Bona fide competitive behavior is permissible even if it results in breach of contract

Entry onto, above, or below the surface of another’s land without permission (exclusive possession right of owner = no harm need be done)

1. Owner must establish trespass (by posting, asking to leave, immediate by illicit activity)

2. Owner must show reasonable duty of care (dog warnings, attractive nuisance risks, reasonable removal of trespassers)

Trespass was warranted (assistance in danger, license to enter (revocable))

Unlawful taking, harming, or interference with another’s right to exclusive possession (Tort version of larceny)

Wrongfully taking or retaining another’s personal property and placing it in service even if granted initial permission or unknowing of stolen goods (Tort version of theft)

Superior right of holder to possess v. owner

"Clouding of title" causing 3rd party to refrain from dealings

1. Slander of quality/trade libel (re product)

2. Slander of title (re ownership)

Occurs when someone suffers injury because of the defendant’s failure to comply with a legal duty (unintentional)

1. Duty: "reasonable person standard" (professionals (higher standard), business invitees (common area safety/risks, except obvious ones), mothers, spouses, strangers in peril = NO)

2. Breach: failure to meet "reasonable person/profession standard"

• 3. Causation: connection (need BOTH):
•      Causation in fact: "but for ..." test (limits set by...)
•      Proximate cause: "foreseeability" strong between cause and injury (can break causation connection)

• 4. Damages: Legally recognizable injury required
•      Compensatory: Special (quantitative) and General (nonmonetary)
•      Punitive: "Gross" negligence ONLY

No foreseeability (proximate cause) breaks causal connection

RULE: R/R Negligence?

IRAC: established foreseeability test for proximate cause

1. Disprove at least ONE required element of negligence (Duty/Breach/Causation/Damages)

OR use ONE Affirmative defense:

1. Assumption of the Risk: Knowledge of the risk AND voluntary assumption of risk (except in violation of STATUTE)

2. Comparative Negligence (CA): As long as Plaintiff is less than 50% at fault, she can recover a pro-rata share of the verdict.

3. Superseding Intervening Cause: Event must be unforeseeable to break the causal connection

Court infers negligence haws occurred (switches burden of proof to defendant to prove they were not negligent)

Defendant's violation of a statute causes breach of duty to plaintiff

Someone trying to avoid harm causes harm to another; original wrongdoer is liable to anyone injured (idea is rescuer should not be held liable)

Usually involves "abnormally dangerous" activities and risks that cannot be prevented (dynamite, excavation, dangerous animals)

Absolute liability = does not require fault, intent, or breach of duty

PRODUCT - distinctive mark, motto, device, emblem identified on market (must be sufficiently distinctive)

When one uses a mark that is SAME AS or CONFUSINGLY SIMILAR (dilution: reduces value) to a protected trademark, service/certification/collective mark, trade name, or trade dress (image) WITHOUT LICENSE (results in injunction: damages, lost profits, destruction); META TAG (keywords) protected from infringement also

Can be registered if (1) currently in commerce (2) plans to market within 6 months

1. Strongest: fanciful/invented words (Xerox)

2. Arbitrary: common words nor ordinarily associated (Dutch Boy)

3. Suggestive: about product without describing (Dairy Queen)

SECONDARY MEANING: descriptive, geographic, personal names receive protection when accompanied by a secondary meaning (university color schemes)

GENERIC TERMS: "bicycle", "computer" receive NO protection

Copied goods, labels, packaging

Penalties: >$2 mil / prison >10 yrs / restitution

PRODUCTS - may be protected if trade name = product name

Top level domain (TLD) - right of period

Second level domain (SLD) - left of period

Domain names SAME or CONFUSINGLY SIMILAR to trademark name

Anti-cybersquatting Consumer Protection Act (1999) amended Lanham Act: domain name illegal if (1) identical/confusingly similar (2) if bad faith intent to profit

Penalties: actual and statutory damages ($1,000 - $100,000)

Misspelling domain name to confuse (businesses should register ALL domain names to protect themselves)

Does not require proof that consumers are likely to be confused (for this reason, products do not have to be similar) (Candyland example)

Use of another's trademark avoiding litigation by obtaining a license for certain limited purposes (Perry Ellis shoe example)

U.S. INVENTION - gives first person to invent (usually) exclusive right to make/use/sell for TWENTY YEARS; must apply within ONE YEAR or forfeit right

OTHER COUNTRIES - gives first person to file gets patent rights

Almost anything except laws of nature, natural phenomenon, and abstract ideas (like algorithms); must be novel/useful/NOT obvious

May occur even though invention not in commerce yet; ALSO even if parts are copied (in a process, however, ALL steps must be copied)

Injunction and damages (royalties and lost profits, legal fees); if willful can TRIPLE damages; patent holders not automatically entitled to permanent injunction (must prove injury and public interest NOT disserved by permanent injunction)

1978: LITERATURE/WORKS OF ART/MOVIES/SONGS/ARCHITECTURE/ORIGINAL COMPILATIONS (selected/coordinated) (NOT ideas) - must be "fixed in a durable medium" protected to life of author plus 70 year (publishers 95 years from publication or 120 from creation date, whichever first); multiple authors protected for 70 years after death of last survivor; even if not in certain category (not copyrighted) MAY STILL BE PROTECTED BY LAW

Penalties: Actual and Statutory (>$150K plus criminal fines/prison)

"FAIR USE" EXCEPTION - OK for criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research

FACTORS: (1) nonprofit (2) nature of work (3) portion used (4) EFFECT UPON MARKET

1980: SOURCE CODE/BINARY LANGUAGE/STRUCTURE/SEQUENCE/PROGRAM ORGANIZATION (excludes "look and feel")

1997: No Electronic Theft Act altered "fair use" for piracy (personal use) of electronic book, magazines, movies, music

Penalties: $250K and prison for >5 yrs

Trade secrets (valuable commercial info) cannot be patented, copyrighted, or trademarked (includes customer lists, plans, R&D, pricing info, marketing techniques, production methods) and employees sign confidentiality agreements (liable under contracts); unlike copyright/trademark protection TRADE SECRETS PROTECTION ETENDS TO BOTH IDEAS AND THEIR EXPRESSION

BERNE CONVENTION (1886): copyright recognition (notice NOT needed) (in U.S. ALSO)

TRIPS AGREEMENT (1994): cannot give its own nationals favorable treatment

MADRID PROTOCOL: easier registration process (whether member countries will protect mark still remains)

A wrong against society as proclaimed by statute

1. Punished by society

2. Fines and/or imprisonment

3. Unanimous jury verdict

4. Higher burden of proof than civil liability Beyond a reasonable doubt (no doubt of guilt) v. Preponderance of evidence (more than likely guilty)

State (prosecutor) must prove that defendant has committed EVERY essential element of the offense; if jurors not convinced, they MUST find not guilty and it MUST be unanimous (v. civil on 3/4 need to agree)

1. Actus Reus: guilty act (commission of an act or Omission of an act, if legal duty)

• 2.  Mens Rea: wrongful mental state (intent) Varies according to wrongful action
•         Criminal negligence (no intent required)
•         Criminally reckless

1.  Violent crime

2.  Property crime

3.  Public Order crime

4.  White Collar crime

5.  Organized crime

1. Felonies: Serious crimes punishable by death or by imprisonment over one (1) year

2. Misdemeanors: Less serious crimes punishable by fine or by confinement up to one (1) year.

3. Petty Offenses: Least serious criminal offense; traffic ticket

Infancy (juvenile)

Intoxication: voluntary vs. involuntary

Insanity (McNaghten test, Mental Disease impulse)

Justifiable use of force

Immunity

Mistake

Consent

Duress

Entrapment

Statute of Limitations

• 4th AMENDMENT:
• Protects the right of the people to secure in their persons, houses, papers, and effects
•     
• Search Warrants: Officer must have probable cause

Search and Seizure in Businesses: Warrant required in most cases

NO warrant required for contaminated food or highly regulated liquor or gun businesses

• 5th AMENDMENT:
• Prohibits deprivation of life, liberty, or property without due process 

Self-Incrimination:“Right to remain silent” or not testify against yourself  

Double Jeopardy: Person cannot be retried for the same offense in the same court

Civil action, however, is permitted 

Due Process of Law: Opportunity to object

Hearing before a neutral Magistrate

Evidence obtained in violation of constitutional rights (4th, 5th, and 6th  Amendments) must be excluded from trial

Evidence derived from illegal evidence is “fruit of the poisonous tree.” (Deters police from misconduct)

Herring v. United States (2009)

Reasonable grounds for believing that a person should be arrested or searched because 4th Amendment prohibits general warrants (officers cannot search beyond warrant except in household case)