Managers and the Legal Environment Strategies for Business

Cover......Page 1
Dedication......Page 5
Contents in Brief......Page 6
Table of Contents......Page 8
About the Author......Page 17
Preface......Page 19
Table of Cases......Page 29
Unit 1: Foundations of the Legal and Regulatory Environment......Page 43
Introduction......Page 44
1-1 The Systems Approach to Law, Business and Society......Page 45
1-2 Law and Public Policy......Page 48
1-3 The Legally Astute Manager......Page 52
Questions and Case Problems......Page 57
2-1 Ethics Matter......Page 58
2-2 The Ethical Tone Is Set at the Top......Page 61
2-3 The Ethical Business Leader's Decision Tree......Page 62
2-4 Finding the "Sweet Spot"......Page 67
2-6 Failing to Meet Societal Expectations......Page 69
2-7 Positive Action......Page 72
2-8 Promoting Ethical Behavior......Page 75
2-9 Honor or "The Morals of the Market Place"......Page 76
Questions and Case Problems......Page 82
3-1 How to Read a Case Citation......Page 85
3-2 Sources of Law......Page 86
3-4 Federal Jurisdiction......Page 88
3-5 Federal Courts......Page 90
3-6 State Courts......Page 92
3-8 Personal Jurisdiction......Page 93
3-9 Choice of Forum, Waiver of Right to Trial by Jury, and Choice of Law......Page 95
3-10 Alternatives to Litigation......Page 96
3-11 Class Actions......Page 97
3-12 Civil Procedure: Litigation Steps......Page 100
3-14 Negotiation......Page 103
3-15 Mediation......Page 105
3-16 Arbitration......Page 106
3-17 ADR Hybrids......Page 112
3-18 Discovery......Page 113
3-19 Document Retention and Deletion......Page 115
3-20 Attorney-Client Privilege, Attorney Work-Product Doctrine, and Other Privileges......Page 116
Key Words and Phrases......Page 124
Questions and Case Problems......Page 125
4-2 Separation of Powers......Page 128
4-3 Supremacy Clause and Preemption......Page 132
4-4 Federalism......Page 133
4-5 The Commerce Clause......Page 134
4-7 Protection of Individual Liberties......Page 136
4-8 Freedom of Speech and the Press......Page 138
4-10 Freedom of Religion......Page 149
4-12 Due Process under the Fifth and Fourteenth Amendments......Page 150
4-13 Compensation for Takings......Page 152
4-14 Equal Protection......Page 153
4-15 Right to Jury Trial......Page 157
Key Words and Phrases......Page 160
Questions and Case Problems......Page 161
5-2 Types of Agency Relationships......Page 164
5-3 Fiduciary Duty......Page 168
5-4 Agent's Ability to Bind the Principal to Contracts Entered into by the Agent......Page 171
5-5 Liability for Torts of Agents......Page 173
5-6 Liability of the Principal for Civil and Criminal Violations by an Agent......Page 175
Key Words and Phrases......Page 178
Questions and Case Problems......Page 179
6-1 How Administrative Agencies Act......Page 182
6-2 Administrative Agencies and the Constitution......Page 185
6-4 Standards for Judicial Review of Agency Actions......Page 189
6-5 Limits on Decision-Making Power of Agencies......Page 193
6-7 Obtaining Documents from an Agency......Page 194
Questions and Case Problems......Page 199
Unit II: The Legal Environment......Page 203
Introduction......Page 204
7-2 Agreement......Page 205
7-3 Consideration......Page 207
7-4 Capacity......Page 208
7-6 Promissory Estoppel......Page 209
7-7 Precontractual Liability for Failure to Negotiate in Good Faith......Page 210
7-8 Unconscionability......Page 213
7-9 Genuineness of Assent......Page 216
7-10 Statute of Frauds......Page 218
7-11 The Parol Evidence Rule......Page 219
7-12 Changed Circumstances......Page 220
7-14 Discharge of a Contract......Page 221
7-16 Third-Party Beneficiaries......Page 222
7-17 Remedies......Page 224
7-18 Contracts Relating to Mergers and Acquisitions......Page 226
Questions and Case Problems......Page 234
Introduction......Page 237
8-2 Software Licenses......Page 238
8-3 Contract Formation......Page 240
8-5 Electronic Contracts: The Uniform Electronic Transactions Act and the E-Sign Act......Page 244
8-6 Duty of Good Faith under the UCC......Page 245
8-7 Warranties......Page 246
8-10 Allocation of the Risk of Loss......Page 249
8-12 Unconscionability......Page 250
8-13 Commercial Impracticability......Page 251
8-14 Remedies......Page 252
Questions and Case Problems......Page 259
9-1 Elements of an Intentional Tort and Defenses......Page 262
9-2 Intentional Torts to Protect Persons......Page 263
9-3 Intentional Torts That Protect Property......Page 265
9-4 Intentional Torts That Protect Certain Economic Interests and Business Relationships......Page 267
9-5 Negligence......Page 270
9-6 Liability of Accountants and Other Professionals to Third Parties......Page 276
9-8 Strict Liability......Page 278
9-9 Respondeat Superior and Vicarious Liability......Page 279
9-11 Damages......Page 281
9-13 Liability of Multiple Defendants......Page 282
9-14 Privacy Protection......Page 283
9-15 Identity Theft......Page 288
Key Words and Phrases......Page 296
Questions and Case Problems......Page 297
10-1 Theories of Recovery......Page 299
10-2 Litigation Strategy and the Availability of Punitive Damages......Page 302
10-3 What Is a Product?......Page 304
10-4 What Makes a Product Defective?......Page 305
10-6 Successor, Market-Share, and Premises Liability......Page 310
10-8 Common Law Defenses......Page 314
10-9 Preemption Defense......Page 316
10-10 State Legislative Limits on Liability......Page 318
10-11 Guns, Tobacco, and "Big Food"......Page 321
Questions and Case Problems......Page 327
11-1 Patents......Page 330
11-2 Obtaining Patent Protection......Page 334
11-3 Patent Infringement and Litigation......Page 335
11-4 Copyrights......Page 338
11-5 Registered Mask Works......Page 346
11-6 Trademarks......Page 347
11-8 Trade Dress......Page 353
11-9 Trade Secrets......Page 354
Key Words and Phrases......Page 365
Questions and Case Problems......Page 366
Unit III: Human Resources......Page 369
12-1 At-Will Employment......Page 370
12-2 Wrongful Discharge......Page 371
12-3 Statutory and Constitutional Protections for Whistleblowers......Page 373
12-4 Fraudulent Inducement......Page 374
12-5 Noncompete and Other Agreements......Page 375
12-7 References for Former Employees......Page 377
12-8 Employer Testing and Surveillance......Page 378
12-9 Responsibility for Worker Safety......Page 382
12-10 Minimum Wage, Overtime Payments, and Child Labor......Page 385
12-11 Pension Plans and Other Employee Benefit Plans......Page 389
12-12 Worker Adjustment and Retraining Notification Act (WARN Act)......Page 392
12-13 Immigration Law......Page 393
12-14 Labor-Management Relations......Page 395
Questions and Case Problems......Page 407
Introduction......Page 411
13-1 Overview of Civil Rights Legislation......Page 412
13-3 Traditional Discrimination Claims under Title VII......Page 415
13-4 Harassment Claims under Title VII......Page 419
13-5 Title VII Duty to Accommodate Religious Beliefs......Page 424
13-6 Retaliation......Page 426
13-7 Proving Causation under Title VII......Page 427
13-9 Remedies under Title VII......Page 428
13-11 Age Discrimination......Page 429
13-12 Disability Discrimination......Page 431
13-15 Family and Medical Leave Act......Page 436
13-17 Affirmative Action......Page 438
13-19 The Extraterritorial Reach of U.S. Employment Discrimination Laws......Page 440
Questions and Case Problems......Page 446
Unit IV: The Regulatory Environment......Page 449
14-1 Definition of a Crime......Page 450
14-2 Elements of a Crime......Page 451
14-4 Criminal Procedure......Page 453
14-5 The Constitution's Ex Post Facto Clause......Page 455
14-6 The Fourth Amendment's Ban on Unreasonable Searches and Seizures......Page 456
14-7 The Fifth Amendment's Protections......Page 462
14-8 The Sixth Amendment's Procedural Protections......Page 463
14-10 Nonconstitutional Protections......Page 464
14-11 Federal Sentencing Guidelines......Page 465
14-12 Individual Liability for Criminal Acts......Page 468
14-13 White-Collar Crime......Page 472
14-14 Other Federal and State Regulatory and Tax Offenses......Page 487
14-15 Amnesty and Leniency Programs......Page 489
Questions and Case Problems......Page 492
Introduction......Page 495
15-1 Overview of Environmental Laws......Page 496
15-2 Administration of Environmental Laws......Page 497
15-3 Standing......Page 498
15-4 The Clean Air Act......Page 499
15-5 Addressing Climate Change......Page 502
15-6 The Clean Water Act......Page 504
15-7 Other Federal and State Chemical Regulations......Page 505
15-8 The Resource Conservation and Recovery Act (RCRA)......Page 506
15-9 The Federal Superfund Law (CERCLA)......Page 508
15-11 Enforcement Activities and Sanctions for Noncompliance......Page 514
15-12 Strategic Environmental Compliance Systems......Page 517
Questions and Case Problems......Page 527
Introduction......Page 530
16-2 Section 1 of the Sherman Act: Agreements in Restraint of Trade......Page 531
16-3 Product Bundling and Other Tying Arrangements......Page 538
16-5 Section 2 of the Sherman Act: Monopolies and Attempts to Monopolize......Page 540
16-6 Mergers: Section 7 of the Clayton Act......Page 547
16-7 Price Discrimination: The Robinson-Patman Act......Page 551
16-10 Antitrust Enforcement......Page 553
16-11 The Extraterritorial Reach of U.S. Antitrust Laws......Page 556
Key Words and Phrases......Page 562
Questions and Case Problems......Page 563
17-1 Commissions and Agencies......Page 566
17-2 Safety, Packaging, and Labeling of Conventionally Grown Foods......Page 568
17-3 Genetically Modified Foods and Pesticides......Page 571
17-4 Drugs and Medical Devices......Page 573
17-5 Tobacco and E-Cigarettes......Page 575
17-6 Labeling of Other Products......Page 576
17-7 Broadcasting and the Internet......Page 577
17-8 The Consumer Product Safety Commission......Page 578
17-9 Automobile Safety......Page 580
17-10 Protecting Consumer Privacy and Canning Spam......Page 581
17-11 Misleading Advertising and Other Unfair or Deceptive Trade Practices......Page 582
17-12 Self-Regulation of the Advertising Industry......Page 588
17-14 Consumer Credit (Including Mortgages)......Page 589
17-15 Regulation of Virtual Currencies......Page 595
Questions and Case Problems......Page 600
18-1 Forms of Ownership......Page 603
18-2 Transfer of Ownership......Page 606
18-3 Recording Statutes and Title Insurance......Page 607
18-5 Acquisitions and Dispositions......Page 609
18-6 Environmental Due Diligence......Page 610
18-7 Preliminary Agreements......Page 611
18-8 Financing......Page 612
18-9 Appraisal Methods......Page 614
18-11 Commercial Leasing......Page 615
18-12 Environmental Impact Statements and Assessments......Page 616
18-13 Government Regulation of Land Use......Page 617
18-14 Physical Accessibility to Commercial Facilities and Public Accommodations: The ADA and State Analogues......Page 624
Key Words and Phrases......Page 628
Questions and Case Problems......Page 629
Unit V: Corporate Governance, Ownership, and Control......Page 633
19-2 Sole Proprietorships......Page 634
19-4 Joint Ventures......Page 635
19-7 Master Limited Partnerships......Page 636
19-8 Corporations......Page 637
19-9 Limited Liability Companies......Page 638
19-11 Income Tax Considerations......Page 642
19-12 Effect of Agency Law on Limited Liability for Managers......Page 643
19-13 Partnership Mechanics......Page 644
19-14 Limited Partnership Requirements......Page 649
19-15 Incorporation......Page 650
19-16 Piercing the Veil of a Corporation or Limited Liability Company......Page 653
19-17 Management of the Corporation......Page 654
19-18 Structural Corporate Changes......Page 661
Questions and Case Problems......Page 667
20-1 The Business Judgment Rule and the Duty of Care......Page 670
20-2 Duty of Good Faith......Page 677
20-4 Duty of Candor......Page 680
20-5 Duties in the Context of Mergers and Acquisitions Approved by the Board......Page 681
20-6 Hostile Takeovers, Takeover Defenses, and Application of the Unocal, Blasius, and Revlon Tests......Page 685
20-8 Executive Compensation......Page 691
20-9 Duties of Controlling Shareholders......Page 693
Key Words and Phrases......Page 700
Questions and Case Problems......Page 701
Unit VI: Securities and Financial Transactions......Page 703
21-1 The Federal Statutory Scheme......Page 704
21-3 State Blue Sky Laws......Page 707
21-4 What Is a Security?......Page 708
21-6 Registration of Securities Offerings......Page 711
21-9 Reorganizations and Combinations......Page 718
21-10 Exemptions for Offerings by the Issuer......Page 719
21-12 Exemptions for Secondary Offerings......Page 725
21-14 Violation of the Registration and Prospectus-Delivery Requirements: Section 12(A)(1) of the 1933 Act......Page 729
21-15 Section 11 of the 1933 Act......Page 730
21-16 Section 12(A)(2) of the 1933 Act......Page 736
21-17 Criminal Penalties......Page 738
Questions and Case Problems......Page 741
22-1 Overview of Federal Antifraud Provisions......Page 744
22-2 Rule 10b-5......Page 745
22-4 Misstatement or Omission......Page 746
22-5 Materiality......Page 752
22-6 Scienter......Page 753
22-7 In Connection with the Purchase or Sale of Any Security......Page 754
22-8 Reliance......Page 755
22-12 Regulation AC and Securities Fraud Involving a Publicly Traded Company......Page 760
22-13 Litigation Reform Act Safe Harbor for Forward-Looking Statements......Page 761
22-14 Liability of Secondary Actors......Page 762
22-15 Section 17(A) of the 1933 Act......Page 763
22-18 Definition of Insider Trading......Page 764
22-22 Enforcement of Antifraud Prohibitions......Page 770
22-23 Whistleblower Protections and Bounty Payments......Page 772
22-24 Extraterritorial Application of the Securities Laws......Page 776
22-26 Other Requirements Applicable to Officers, Directors, and Greater-Than-10%  Shareholders......Page 777
Questions and Case Problems......Page 786
Introduction......Page 789
23-1 Loan Agreements......Page 790
23-2 Commercial Loan Categories......Page 794
23-3 Secured Transactions under Article 9 of the UCC......Page 795
23-4 Equipment Leasing......Page 798
23-5 Guaranties......Page 799
23-6 Subordination......Page 800
23-7 Lender Liability......Page 801
23-9 Management Duties May Shift When a Company Enters the Insolvency Zone......Page 804
23-10 Overview of Bankruptcy Law......Page 807
23-11 Provisions Applicable to All Bankruptcies......Page 812
23-12 Chapter 11 Reorganizations......Page 817
23-14 Chapter 7 Liquidations......Page 820
23-16 Municipal Bankruptcies under Chapter 9......Page 823
23-17 Cross-Border Insolvencies under Chapter 15......Page 824
Questions and Case Problems......Page 829
Unit VII: International Business......Page 833
Introduction......Page 834
24-1 Types of Legal Systems......Page 835
24-2 Sources of International Law......Page 839
24-3 National Laws Affecting International Business and Governmental Affairs......Page 841
24-4 Extraterritorial Application of National Laws......Page 842
24-5 Foreign Corrupt Practices Act and Other Bribery Bans......Page 845
24-7 U.S. Trade Regime......Page 848
24-8 Regional International Trade Regimes......Page 854
24-9 The World Trade Organization......Page 857
24-10 Regional Economic Integration......Page 860
24-11 The European Union......Page 861
24-13 Investing and Doing Business Abroad......Page 866
24-14 Contracting across National Borders......Page 870
24-15 Dispute Resolution in International Transactions......Page 872
24-16 Disputes with Foreign Governments......Page 874
Key Words and Phrases......Page 881
Questions and Case Problems......Page 882
Appendix A: The Constitution of the United States of America......Page 887
Appendix B: Title VII of the Civil Rights Act of 1964 (Selected Provisions)......Page 895
Appendix C: Americans with Disabilities Act of 1990 and ADA Amendments Act of 2008 (Selected Provisions)......Page 897
Appendix E: Clayton Act of 1914 as Amended (Selected Provisions)......Page 900
Appendix G: Securities Act of 1933 as Amended (Selected Provisions)......Page 901
Appendix H: Securities Exchange Act of 1934 as Amended (Selected Provisions)......Page 904
Appendix I: Rules 10b-5, 10b5-1, and 10b5-2 from Code of Federal Regulations......Page 905
Appendix J: Rule 14e-3 from Code of Federal Regulations......Page 907
Appendix K: Sarbanes-Oxley Act of 2002 as Amended (Selected Provisions)......Page 908
Appendix L: Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 as Amended (Selected Provisions)......Page 909
Appendix M: Article 2 of Uniform Commercial Code (Selected Provisions)......Page 911
Glossary......Page 917
Index......Page 953