Management Principles - Law, Ethics, and Business | PDF

Management Chapter 1- Law and Legal Reasoning “Law”=enforceable rules Provides 1.​ stability 2.​ Continuity 3.​ Predictability Black letter law: Used to describe the clear and well-settled legal principles that have been established by the courts. *critical thinking and legal rea...

Management Chapter 1- Law and Legal Reasoning “Law”=enforceable rules Provides 1.​ stability 2.​ Continuity 3.​ Predictability Black letter law: Used to describe the clear and well-settled legal principles that have been established by the courts. *critical thinking and legal reasoning skills Civil law- gives back compensation Business Activities: Intellectual property- trademark, copyrights, patents Sources of Law= constitution (supreme law of land) *State constitutions Business and the “Bill of Rights” Series of Amendments to Constitution adopted in 1789 providing protections for individual and “legal persons”from federal government interference First Amendment: Guarantees the freedoms of religion, speech, and the press, including right to assemble peaceably;  Second: Right to keep and bear arms; Fourth: Prohibits unreasonable searches and seizure of persons or property; Fifth: Prohibits compulsory self-incrimination/double jeopardy; Sixth: Guarantees the accused in criminal case to speedy and public trial by an impartial jury; right to cross-examine witnesses; Seventh: Guarantees right to trial by jury *Fourteenth Amendment: Guarantees equal protection under law Role of the Supreme Court -9 members -Equal justice under the law ​ Supremacy Clause and Federal Preemption -direct conflict between federal and state law=law is invalid -When U.S. Congress chooses to act exclusively in a concurrent area, a valid federal law or regulation will preempt (prevent) the state/local law or regulation and take precedence American Law (sources) ​ Statutory Law/Uniform Laws -Uniform commercial code (ARTICLE 2) Administrative= SEC *Case Law= court decisions England and the Common Law American colonial heritage: ​ English Common Law incorporated Traditions, social customs, rules, and cases dating back to the 1066 A.D.Battle of Hastings (where French-Normans led by ‘William the Conqueror’ defeated the English King Harold and the Saxons). ​ ‘King’s Courts’ established by William the Conqueror applied a uniform set of customs and general rules throughout the kingdom. Common Law Tradition: 2 separate law court systems: -courts of law (remedy) and courts of equity (non-monetary relief) Remedies of Equity Specific Performance Ex) Realestate - arena gives exactly what the buyer wants (ordering a party to perform an agreement as promised). Injunction Ex) intellectual property- us court order telling party to stop (ordering a party to cease engaging in a particular activity). -restraining order Recission Ex)going back to original contract (cancelling a contract obligation) ​ Same court can give remedies 1) compensatory damages (money or item of value) or 2 ) equitable relief Stare Decisis: Judge made; holds that courts and judges should honor “precedent”—or the decisions, rulings, and opinions from prior cases ★​ Adds stability and predictability ★​ Serves as a binding guide for future cases ​ A state or federal court shall not be overturned unless there is a compelling reason Ex) Roe v Wade ​ “First impression”: court can refer to public policy Legal reasoning process (1) Isolate key facts and issues. (2) Determine what rules of law govern the matter. (3) Apply the rules of law to the particular facts and issues. (4) Reach conclusion (business decision). Classifications that apply to law Substantive (ex. law provides employees with the right to workers’ compensation benefits for on-the-job injuries). Procedural (ex. establish method for employee to notify employer and prove the on-the-job injury). Civil (spells out the rights and duties that exist between persons and between persons and their government). OJ Simpson trial (tort/Wrongful Death) Criminal (concerns wrongs against society and the ‘public as a whole’; criminal acts are prosecuted by public officials, such a district attorney, and not by victims or third parties). OJ Simpson trial (crime/Murder) CyberLaw the legal framework that governs activities and transactions conducted online or through digital technologies Primary sources of us law= Statutory and Administrative law Chapter 3- Ethics in Business Ethics: study of right or wrong behavior Importance ​ Short-term profit vs long-term ​ Can it ruin reputations? (image is everything) Sources ​ Family, teachers, and religion -bible with the ten commandments (thou shalt not lie) Making Ethical Business Decisions Evaluate: Legal implications. Public relations impact (including social media). Safety risks for consumers and employees. Financial implications. Tylenol example-20 years ago they had a situation where in chicago somebody went to a drug store and had poisoned a number of bottles. Tylenol got a lot of publicity and had to figure out the right thing to do about it and decided to eliminate the entirety of bottles in every store nationwide. (took the broader approach) They were applauded for the way They dealt with the situations, because also reputation is very important. As a result tylenol earned praise. It Cost them 100s of millions, but no one today questions the safety of the brand. (beta-company) ​ Relationship of laws and ethics: compliance with the law= “moral minimum” Rise of corporate social responsibility -Those who manage corporations should be responsible for their actions (good citizens) Ex) They started looking closely at employment worker conditions. Other countries who were providing tech for apple or clothing. Sweatshops were terrible. Told the foreign shops that if they didn’t make changes to conditions they were going to stop doing business with the companies. ​ “Codes of Conduct” a set of rules which is commonly written for employees of a company, which protects the business and informs the employees of the company's expectations Chapter 4- Courts and Alternative Dispute Resolution Judicial Review ​ Marbury v Madison (1803) first supreme court case that established judicial review ​ Indian removal act during the tenth year of Andrew Jackson Before a lawsuit can be brought before a court, three requirements must be met: Jurisdiction Venue Standing to sue Jurisdiction: “Juris” (law) “diction” (to speak) is the power of a court to hear a dispute and to “speak the law” into a controversy and render a verdict that is legally binding on the parties to the dispute. Jurisdiction over person: Gives court power to force the parties to appear in court and respond to complaint; don’t fail to appear, because then the court is entitled to give a default judgement, so the plaintiff gets all the relief they desire. Jurisdiction over property: Gives the court jurisdiction over property within its geographical borders. Rem gives the court the power to decide, whether it’s personal or tangible/intangible. Jurisdiction over out-of-state person: “Long-arm”statutes to obtain jurisdiction for non-resident parties. Must satisfy “minimum contacts”. The party you’re seeking must also have property/business in the state that you’re suing them in. Ex) California plaintiffs have the ability to get Arizona assets if they don’t show up. Jurisdiction over the subject matter: Ex) U.S. bankruptcy courts are handled by federal law -​ Probate courts are state courts; only these courts have jurisdiction over state info such as a will. Original jurisdiction vs Appellate jurisdiction Ex) Original: Lowest court- Trial Court (starting point) -4 federal district courts in California (2 in Santa Ana) Ex) Appellate: California court of appeals, or U.S federal court of appeal for the Ninth Circuit; have power to hear an appeal from a court trial decision Jurisdiction of the U.S Federal courts: -Article III of the U.S. Constitution “Diversity of Citizenship” cases: -the parties have to be residents of different states -controversy is greater than $75 k -Corporation = state that it is in or it headquarters​ Exclusive vs Concurrent Jurisdiction Ex) Exclusive: Federal and state courts have exclusive jurisdiction over certain cases Ex) Concurrent: booth state and federal have the ability to hear and adjudicate a case Jurisdiction of courts in Cyberspace: Let say you want to bring a claim against a foreign producer; you probably agreed, signed, or clicked online. Let's say you purchased over the internet and you want to sue them at a California court. (Chinese Vender) Try and bring it into federal Court. This is decided through the Sliding Scale Standard; Did they conduct substantial business over the internet? Do they engage in activity over the internet with a third party? Is the defendant engaged in ‘passive’ advertising through the website? No: Passive website Yes: Substantial business interaction International Jurisdictional Issues CASE 2.2 GUCCI AMERICA, INC.V. WANG HUOQING (2011). U.S. federal district court in northern California exercised jurisdiction in a trademark infringement case brought against a Chinese national who advertised and sold “counterfeit” goods over the internet after finding that “minimum contacts” standard had been met when out-of-country defendant made one internet sale to an undercover investigator in California). -hired an investigator in northern california, that investigator made one purchase through mr.wang through his internet site. Mr.Wang never showed up in Court so Gucci got a default judgement. They want to get a restraining order. They don’t care about the profits that Mr.Wang is making, they want the whole selling to stop. INJUNCTION! The one sale made in California created the ability to satisfy “minimum contacts” Venue ​ Venue is concerned with most appropriate location for the trial; generally where the injury or wrong occured​ Standing to Sue ​ Company must have “standing” to bring a lawsuit ​ Party must have sufficient “stake” (reason) in the controversy ​ Must be a “justiciable controversy” Trial Courts ‘General Jurisdiction’ ‘Limited Jurisdiction’ Appellate: affirm, reverse, remand U.S. supreme court= 9 justices ADR; Alternative dispute resolution ​ -resolve disputes ​ -may be less expensive ​ -more efficient Common “alternative dispute” resolution methods: (1)negotiation: Negotiation is an informal, unstructured process where parties, sometimes without attorneys, resolve differences through preparation, strategy, and evidence to reach a mutually agreeable settlement. (2)mediation: Mediation, one of the oldest forms of ADR, is an assisted negotiation process where a neutral third-party mediator facilitates discussions between disputing parties, often encouraging compromise to reach a settlement. Advantages: Few procedural rules; parties select the mediator; Antagonistic behavior Disadvantages: Mediator can only help parties reach a settlement; mediator can’t impose a deadline (3)arbitration: Written into the contract; Formal ADR process; A neutral arbitrator, appointed per an agreement arbitration provision, hears the case with subject-matter expertise and renders a legally binding decision. Arbitration Clause: All disputes related to this Agreement shall be resolved by a single arbitrator through the American Arbitration Association under its commercial rules in Orange County, CA. The written arbitration award will detail its factual and legal basis, be final and binding, and enforceable in court. The award shall remain confidential unless required by law. -The FAA does not dictate arbitration procedures but enforces arbitration agreements and awards. Courts must uphold arbitrators' decisions without second-guessing. -The arbitration process begins with the Claimant filing a petition against the Respondent, after which a case manager helps select an arbitrator. The arbitrator holds a preliminary scheduling hearing, followed by a full hearing where both parties present evidence. Finally, the arbitrator issues a decision/award, which can be enforced by a court if necessary. ​ Mandatory employment and health care arbitration clauses are generally enforceable. ​ Class action waivers in arbitration agreements are debated but upheld by the U.S. Supreme Court. ​ The Court ruled that employment arbitration agreements with class action waivers do not violate the NLRA or FAA. ​ Courts rarely vacate (set aside) an arbitrator’s decision; findings and conclusions are final. ​ Arbitration agreements limit court interference, even if errors exist. Courts may set aside an award only if: ​ Arbitrator showed bias or corruption. ​ Key evidence was ignored. ​ A major conflict of interest was undisclosed. ​ Arbitrator’s misconduct harmed a party’s rights. -Pro se: person is representing themselves in court Chapter 5- Court Procedures ‘adversarial system of justice’: Lawyer/advocate uses the clients facts towards the judge or jury to convince them that the clients facts are correct (1)​Pretrial (2)​Trial (3)​Post trial Dealing with attorneys -Engagement and Retainer agreements Attorneys compensation: 1.​ Contingency fee arrangement; takes percentage of damage recovery 2.​ Hourly fee basis 3.​ Monthly retainer fee; negotiate a litigation with the client where they pay the lawyer x amount of $ a month Best way to find an attorney is reference not from a billboard (1)​Pre-trial; Pleadings and Motions ​ Plaintiffs complaint; creates a cause of action ​ Service of process: personal or via email ​ Defendant's answer can include: -Affirmative defense; case not timely filed under applicable statute of limitations or Counterclaims (sue them back) -Pretrial motions; motion to dismiss Typical complaint Negligence case: When a person is injured in an accident, they will file a lawsuit against a person or an entity alleging that the other party was negligent. That means that the other party failed to exercise a reasonable standard of care under the circumstances. Ex) resident is state of new york and the other resident is from new jersey; there is a diversity in the citizenship, which then led Litigation stages in Pretrial ​ Depositions and written interrogations ​ Requests for documents ​ Electronic discover; significance of metadata; what will happen is emails can leave info left behind tracing back to the identifiers Ex)Police were able to track someone down who fled because he was emailing and banking ​ Affidavits (sworn statements by parties or witnesses given written testimony) ​ “Hearsay evidence” is generally not admissible at trial Ex) if a witness testifies, "My friend told me the defendant ran the red light," that statement is hearsay because the witness did not personally see the event but is instead relaying what someone else said. Litigation stages in Trial; right to trial by jury (7th amendment) ​ Guaranteed in criminal matters and most civil lawsuits ​ Jury trial must be requested ​ “Per se”: party can represent themself At Trial Phase: Jury Selection ​ Trials can be with or without jury  ​ Voir Dire: Attorneys ask questions to uncover possible juror bias ​ Either attorney can challenge a juror and request them not to be sworn in as a juror At Trial: Adversarial Process at Work -Opening arguments by attorneys. Plaintiff’s Case Presented: -Direct testimony from plaintiff’s witnesses -Defense cross-examines those witnesses Defendant’s Case Presented -Direct testimony from the defendant's witnesses -Plaintiff cross-examines defense witnesses At Trial ​ ‘Closing Arguments’ made by attorneys. ​ Jury Instructions given to jurors by trial judge on how to apply the law; jury members adjourn to the jury room to deliberate. ​ Standard of Proof: “Preponderance of the Evidence” in civil cases is much less strict than criminal cases which is “Guilt Beyond a Reasonable Doubt”) standard. ​ Verdict/Judgment/Award Post-Trial: Appeal process 1.​ File the appeal: Parties file brief pointing out legal “reversible error” by the court 2.​ Appellate review: Courts don't consider new information; rule strictly on the recorded information Post-Trial: Enforcing the judgement/award in civil cases ​ Availability of assets: usually the plaintiff looks to see if the defendant has sufficient assets before the suit is filed ​ Writ of Execution: directs sheriff to seize defendant's not exempt property and sell them To pay for the judgement ​ Defendant will file for BANKRUPTCY Chapter 6- Tort Law Tort= Wrongs; compensation -designed to compensate those who have suffered loss or injury due to someone else's wrong Provides remedies for the violation of protected interests ​ Interest in personal physical safety ​ Interest in reputation and freedom from false statements of fact ​ Interest in freedom of movement ​ Interest in protection of property ​ Interest in the right to be left alone; solitude Compensatory damages: reimbursement plaintiff for actual loss Special Damages: quantifiable losses (that can be calculated such as medical expenses, lost wages and benefits, costs of repairing damaged property. General damages: non-monetary losses such as pain and suffering, loss of companionship or consortium, loss of reputation, disfigurement (note that many state legislatures have placed limitation caps on damage awards) Punitive damages: designed to punish the wrongdoers and deter others from similar conduct ​ Gross negligence ​ Limitation under the “due process” clause ​ -more than 30 states have banned punitive damages Two types of torts: Intentional: the individual that committed the tort must attend the consequences of the act -Assault: an intentional act that causes another person to be apprehensive of immediate harm ​ Battery: Only comes with action; if someone followed through and hit someone  -False imprisonment: somebody without approval restricts your ability to move without justification -Infliction of emotional distress: an intentional act that results in extreme and outrageous conduct resulting in severe emotional distress to another; if a dad pulled out their gun to threaten Man to marry his daughter -defamation: freedom of speech is not absolute! Not entitled to whatever comes to their head. Refrain from making false statements of fact about others. Must have proof requirements: defendant made a false statement; the statement was understood, then was published, and if the plaintiff is a public Figure. If a public figure then must prove malice (wasn’t made in a malicious intent). Slander:Verbally said something not true; plaintiff must prove special damages Libel: written statement; plaintiff doesn’t have to prove actual injury (includes compensation) ​ Defenses: ​ Truth is an absolute defense ​ Privileged speech (no action that defamation can arise); go into a court and people are saying all kinds of stuff, some of which may not be true, but can’t be sued because court proceedings are immune to any defamation proceedings. ​ Actual Malice (1)​Statement is made with knowledge of falsity (2)​Statement is made with “reckless disregard of the truth” ​ Privileged communications ​ -absolute: privilege protects statements made by judges and attorney during legislative debate ​ -Qualified or conditional privilege: written evaluations -invasion of privacy: A person has the right to solitude and freedom from prying public eyes; appropriation of identity; right of publicity; not entitled to use other person anything without their permission -Fraudulent misrepresentation:tortfeasor leads another to believe in a condition that is different from the condition that actually exists; if the land is not what was said to be (told was green but was brown) -wrongful death (OJ Simpson trial): BUSINESS TORTS ​ Wrongful interference with a contractual or business relationship Wrongful interference with a contractual or business relationship occurs when a third party knowingly induces a party to breach or terminate an existing contract with another party for unfair competitive advantage. While legitimate competition includes aggressive marketing and better pricing, predatory behavior—such as intentionally disrupting contracts—can lead to legal disputes, as seen in -eBay v. Amazon, where Amazon was accused of unlawfully poaching eBay sellers. Amazon got caught stealing information and using it to get ebay users to use amazon. Intentional Torts against property -Trespass to Land; without permission of property owner -Trespass to personal property; the item you bought was stolen property you are still liable for the tort of Conversion ( any act that deprives owner of the use of personal property without permission) -Disparagement of property; Trade libel; Slander of title occurs when false statements question someone's legal ownership of property, leading to financial damage Unintentional: tort of negligence that occurs when someone suffers injury because of another’s failure to live up to a required duty of care; didn’t wish to bring about an accident -The tort of “negligence” occurs when someone suffers injury because of another’s failure to live up to a required duty of care. -In contrast to intentional torts, the tortfeasor (negligent party) does not intend the consequences of the act or believe that they will occur ( fault without intent). -Tortfeasor’s conduct need only create a foreseeable risk of injury. (Would a reasonable person engaging in the same activity, anticipate the risk and guard against it?) Evaluated: 1)​ Did the defendentent owe a duty of care to the plaintiff? 2)​ Breach: did the defendant fail to perform that duty? 3)​ Causation in Fact: did the defendant’s breach of that duty cause a plaintiff’s injury 4)​ Damages; proximate cause: Was the defendant negligent the proximate cause of the plaintiff's injury?  ​ Duty of Care: Individuals must exercise a reasonable standard of care in their actions, a key principle in business law. ​ Negligence Cases: The level of care required varies based on factors like the defendant’s occupation and relationship with the plaintiff. Example:​ A doctor has a higher duty of care toward their patients than a store owner does toward customers. If a doctor fails to diagnose an illness due to negligence, they may be held liable. Similarly, if a store owner neglects to clean up a spill and a customer slips and falls, they could also be found negligent, but the standard of care differs between the two situations. Summary of Well-Established Duties of Care ​ Landowners/Landlords ○​ Must exercise reasonable care to protect visitors from harm (e.g., fixing hidden dangers like loose stair railings). ​ Retailers/Storekeepers ○​ Must warn customers of foreseeable risks (e.g., placing “Wet Floor” signs after mopping). ​ Professionals (Doctors, Lawyers, Accountants, etc.) ○​ Owe a higher duty of care due to their specialized knowledge (e.g., a surgeon must follow medical standards during surgery). ○​ Breach of this duty is called professional malpractice (e.g., an accountant providing incorrect tax advice that causes financial loss). Causation in Negligence Cases ​ Causation in Fact ("But for" test) ○​ The plaintiff must prove that the defendant’s actions directly caused their injury (e.g., a driver running a red light and hitting a pedestrian). ​ Proximate (Legal) Causation  ○​ The injury must be a foreseeable result of the defendant’s actions (e.g., a store failing to clear ice from its entrance, leading to a customer’s fall). Legal Protections and Additional Duties ​ Good Samaritan Statutes ○​ Protect individuals who voluntarily help others in emergencies from being sued for negligence (e.g., a passerby performing CPR cannot be sued if they accidentally break a rib). ​ “Dram Shop” & Social Host Liability ○​ Bar owners or party hosts can be held liable if they serve alcohol to an already intoxicated person who later causes harm (e.g., a bar overserves a patron who then causes a DUI accident). Defenses to Negligence Claims ​ Assumption of Risk ○​ A plaintiff who is aware of a risk and voluntarily participates in the activity cannot claim negligence. ○​ Example: A spectator at a baseball game gets hit by a foul ball but cannot sue the team because they assumed the risk by attending the game (Taylor v. Seattle Mariners). ​ Contributory Negligence ○​ If the plaintiff is even slightly negligent, they cannot recover damages from the defendant. ○​ Example: A pedestrian jaywalks and gets hit by a speeding car. Even though the driver was negligent, the pedestrian may not receive compensation if contributory negligence applies. ​ Comparative Negligence  ○​ The fault is divided between the plaintiff and defendant, and damages are assigned accordingly. ○​ Example: If a driver is 70% responsible for a car accident and the other driver is 30% responsible, the second driver’s damages will be reduced by 30%. Chapter 7- Strict Liability and Products Liability ​ Strict Liability: A legal doctrine where a person is held responsible for harm caused by certain activities, regardless of fault or negligence. ​ Established Case: Rylands v. Fletcher (1868) - A mill owner's reservoir flooded a coal mine, setting a precedent for liability without fault. Key Areas of Strict Liability 1.​ Abnormally Dangerous Activities ○​ Activities with a high risk of serious harm that cannot be mitigated by reasonable care. ○​ Examples: Blasting operations, storing explosives. 2.​ Keeping Animals ○​ Owners of wild animals are strictly liable for any harm caused. ○​ Domestic animal owners are liable if they knew or should have known the animal was dangerous (e.g., a dog with a history of biting). 3.​ Product Liability ○​ Strict liability applies to manufacturers, sellers, and lessors for physical harm or property damage caused by defective products. ○​ Liability can be based on: ​ Negligence (failing to exercise due care) ​ Misrepresentation (Fraud) (deceptive advertising, false safety claims)  ​ Warranties (breach of product guarantees) ​ Strict Liability (holding a business accountable regardless of fault) Manufacturer’s Duties of Care ​ Product Design: Must ensure safety from the outset. ​ Material Selection: Use safe and durable components. ​ Production Process: Maintain quality and consistency. ​ Testing & Assembly: Identify defects before distribution. ​ Warnings & Instructions: Inform users of potential risks. ​ Component Inspection: Ensure safety even in outsourced parts. Legal Considerations in Product Liability 1.​ Privity of Contract Not Required ○​ Injured parties can sue manufacturers even without a direct contractual relationship. ○​ Example: A consumer sues a tire manufacturer for a blowout, even though they bought the car from a dealership. 2.​ Misrepresentation (Fraud) ○​ Manufacturers are liable if they knowingly deceive consumers. ○​ Examples: False claims about product safety, concealing defects. 3.​ Strict Product Liability ○​ Based on public policy: ​ Protects consumers from unsafe products. ​ Ensures manufacturers bear responsibility for harm. ​ Spreads costs across the industry rather than burdening victims. Requirements for Strict Product Liability 1.​ Product was defective when sold. 2.​ Defendant was in the business of selling that product. 3.​ Defect made the product unreasonably dangerous. 4.​ Plaintiff suffered physical harm. 5.​ Defect was the direct cause of injury. 6.​ Product was not significantly altered after sale. Types of Product Defects 1.​ Manufacturing Defects ○​ Occur when a product departs from its intended design. ○​ Example: A batch of cars with faulty airbags. 2.​ Design Defects ○​ Product is inherently unsafe due to its design. ○​ Plaintiff must prove a safer alternative design was available. ○​ Example: A lawnmower without a safety shut-off switch. 3.​ Inadequate Warnings ○​ Failure to provide adequate instructions or safety warnings. ○​ Example: A medication that does not list potential side effects. Additional Considerations in Product Liability 1.​ Market-Share Liability ○​ When multiple manufacturers produce similar harmful products, each can be held liable based on market share. ○​ Example: Cases involving defective pharmaceuticals. 2.​ Bystanders and Component Suppliers ○​ Bystanders injured by defective products can sue manufacturers.  ○​ Component part suppliers (e.g., brake pad manufacturers without changing their composition and turns out they’re defective) both can be held liable. 3.​ Preemption by Government Regulation ○​ Government regulations can limit liability claims (e.g., vaccine manufacturers may have immunity). ○​ Industry lobbying often seeks limits on damages in lawsuits. Defenses Against Product Liability Claims ​ Product Misuse: Consumers used the product in an unintended way. ○​ Example: Using a hairdryer in the shower. ​ Comparative Responsibility: Plaintiff contributed to their own injury. ​ Commonly Known Dangers: No liability for obvious risks (e.g., knives are sharp). ​ Knowledgeable User Defense: Professionals (e.g., electricians) are expected to understand risks. ​ Statutes of Limitation and Repose: Claims must be filed within a certain period.