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1 – Foundations of Law and Ethics

Resolve the 3 parts on the attachments

1. Discussion.

2. Practice Assignment.

3. Apply Assignment.

Discussion – Learn: Applying Law and Constitution to Business.

, Respond to the following three questions in a minimum of 175 words each question.

1. Choose an issue recently covered in the news faced by a business in the United States.2 (175 words)

2. Discuss the issue involved. (175 words)

Explain how the law and constitution were applied in the resolution. (175 words)

Practice Assignment

Points:

Your Submission:

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1. Bookmark question for later

In the context of a court case process, what is the definition of beyond a reasonable doubt?

· Restoring credibility to a witness’ claim
· Plaintiff’s challenge to defendant’s claim
· No other explanation can be derived from the facts—evidence
· Reducing the integrity of a witness’ claim

2. Bookmark question for later

In the context of a court case process, what is the definition of sequestered?

· More likely than not evidence
· A jury is separated from the community during a trial
· Evidence assuming assent of the reasonable person
· First-sight evidence

3. Bookmark question for later

In the context of a court case process, what is the definition of affirmation?

· Return a case to a trial court for resolution
· Ratification of a trial court’s decision
· Changing a trial court’s decision
· Using compromise to settle a dispute

4. Bookmark question for later

In the context of a court case process, what is the definition of default?

· Filer of a complaint
· Failure of the defendant to fulfill an obligation
· The target of a complaint
· Court order to appear in trial

5. Bookmark question for later

In the context of a court case process, what is the definition of deposition?

· Determination of jurors’ fitness for jury duty
· A jury is enlisted
· Testimony out of court during pre-trial investigation
· Summoning of potential jurors

6. Bookmark question for later

In the context of a court case process, what is the definition of mediation?

· More likely than not evidence
· Court order to appear in trial
· Use of a third party to resolve a dispute, often legally binding
· Using a third party (specifically) to resolve a dispute

7. Bookmark question for later

What is the fundamental philosophy of the Natural school?

· Law is a means of redistributing wealth or promoting social justice
· Law is a function of economic forces
· Law is a product of people’s inalienable, natural rights
· Law is the means by which a ruling class maintains control

8. Bookmark question for later

A judge feels strongly that some of the jurors in a current trial have been responding with extreme bias against the defendant. After deliberation, the jury comes to a verdict which the judge does not completely agree with. Which of the following is most likely true?

· The judge may reject the jury’s verdict, but must first confer with a panel of three other judges.
· The judge must enter judgment based on the jury’s verdict, since all jury members passed the voir dire process.
· The judge can make a different judgment, notwithstanding the verdict.
· The judge may not reject the jury’s verdict, but he or she can order a new trial with the same jury.

9. Bookmark question for later

What is the fundamental philosophy of the Command school?

· Law is a function of economic forces
· Law is a product of people’s inalienable, natural rights
· Law is the means by which a ruling class maintains control
· Law is a means of redistributing wealth or promoting social justice

10. Bookmark question for later

Marcus lives in New York but regularly does business in Texas where his company has most of its business contacts. While traveling to Texas from New York, Marcus is sued by the hotel he stays at in Mississippi after he negligently destroys hotel property. Where would jurisdiction most likely fall under long-arm state statutes?

· Texas
· Federal Court
· Mississippi
· New York

11. Bookmark question for later

If the goal is to determine procedures for changing the law, which of the following is the best tool that matches that goal?

· Provide legislative processes
· Prevent discrimination
· Allow for orderly protest
· Deter crime
· Allow debate on change

12. Bookmark question for later

Which of the following is a legitimate purpose of discovery?

· To reveal which party has more leverage over the other party
· To reveal all available information about the facts of the situation
· To force agreement between parties
· To help injured parties gain maximum benefits from the guilty party

13. Bookmark question for later

What is the fundamental philosophy of the Law and Economics school?

· Law is the means by which a ruling class maintains control
· Law is a function of economic forces
· Law is a means of redistributing wealth or promoting social justice
· Law is a product of people’s inalienable, natural rights

14. Bookmark question for later

During a criminal trial where Emerly was found guilty, evidence was presented against her which Emerly and her lawyer feel was unfairly prejudicial. Emerly wants to appeal the court’s decision. Which of the following is most likely true?

· Since Emerly was already found guilty, the appeals court will not make any decision in her favor, even if evidence against her was prejudicial.
· If an appeals court finds that the evidence against Emerly should have been excluded, she can receive a new trial.
· Since new evidence is not generally accepted in appeals courts, Emerly cannot make any claims about the biased nature of the evidence used against her.
· If an appeal court finds that the evidence against Emerly should have been excluded, she will receive a new trial in the Supreme Court.

15. Bookmark question for later

The jury in a criminal case has been deliberating for a week on the decision it will make on a trial. Half of the jurors think the defendant should be acquitted, and half think the defendant is guilty. The jury is having trouble reconciling its many differing opinions. Which of the following will most likely happen?

· The jury will likely be hung.
· The jury will refrain from offering a verdict, and the judge will offer a verdict instead.
· The jury will continue to deliberate until it reaches a unanimous vote, since this is a criminal case.
· The jury will continue to deliberate until it can at least come to a consensus, if not unanimity.

16. Bookmark question for later

Which method of dispute resolution is most typically incorporated as a condition in business contracts for potential disputes?

· Arbitration
· Jury trial
· Negotiation
· Mediation

17. Bookmark question for later

Which of the following is true concerning trial venues?

· A party can receive a change of venue when it anticipates a fundamentally biased trial environment.
· A party can receive a change of venue for any logical reason.
· A party is required to hold a trial as close as possible to the location or source of a dispute.
· A party can receive a change of venue when it anticipates losing a court case in a local venue.

18. Bookmark question for later

What is the fundamental philosophy of the Sociological school?

· Law is a function of economic forces
· Law is a product of people’s inalienable, natural rights
· Law is a means of redistributing wealth or promoting social justice
· Law is the means by which a ruling class maintains control

19. Bookmark question for later

If the goal is to facilitate planning, which of the following is the best tool that matches that goal?

· Allow debate on change
· Allow for orderly protest
· Deter crime
· Prevent discrimination
· Provide legislative processes

20. Bookmark question for later

Cleo has been the victim of continuous unfair dealings with his landlord for several years. When he finds out one of his neighbors is suing his landlord for the same reasons as those to which Cleo feels harmed, Cleo wishes to join in the case. Which of the following is likely true?

· Cleo cannot join the case because of the statute of limitations.
· Cleo may be allowed to intervene in the case and gain party status, joining the plaintiff.
· Cleo cannot join the case because his problem and interests are separate from that of his neighbor.
· Cleo may be allowed to intervene in the case and gain party status, joining the defendant.

21. Bookmark question for later

If the goal is to prevent undesirable behavior, which of the following is the best tool that matches that goal?

· Provide legislative processes
· Allow debate on change
· Prevent discrimination
· Allow for orderly protest
· Deter crime

22. Bookmark question for later

The U.S. has a treaty with Mexico to not deal in historical artifacts in order to preserve the artifacts in the country they came from. An archaeologist in Mexico who has previously been selling artifacts to American buyers:

· May not sell the artifacts.
· May still sell the artifacts, as long as the state law of an American buyer permits it.
· May not sell the artifacts unless they were acquired prior to the passage of the treaty.
· May still sell the artifacts, since the treaty covers government, and not private, transactions.

23. Bookmark question for later

Nation A makes a decision that Country B disagrees with concerning capital punishments for citizens who commit serious crimes in the country. Which of the following is true?

· More than one response is correct.
· The Act of State Doctrine does not apply to this situation, and Country B may contest the decision.
· Nation B cannot meddle with Nation A’s decision under the doctrine of Comity of Nations.
· Nation B cannot meddle with Nation A’s decision under the Act of State Doctrine

24. Bookmark question for later

A classroom is trying to decide on a set of rules for the school year. The class votes and agrees on the following rules:

I) Students who steal from other students will be punished without exception.

II) Any student who punches another student may be punched back by the victim.

III) Any student is allowed to freely borrow any item from another student but must give it back.

IV) Students who say nice words to other students earn points toward earning a prize.

Which ethical philosophies are represented in these rules?

· Kantian ethics and Social Justice Theory
· Virtue ethics and Kantian ethics
· Virtue ethics, Kantian ethics, and social justice theory
· Virtue ethics only

25. Bookmark question for later

Kristy’s office wants everyone to sign and agree to follow some new office rules. The rules are as follows:

I) Employees who can’t afford lunch may take someone else’s lunch from the employee fridge.

II) Employees who walk to work may use the elevator, while those who come in cars must use the stairs.

III) Employees who have a company car must pick up someone who doesn’t have a company car on the way to work.

IV) Whenever employees vote on where to go to lunch, the minority voters may veto the voting decision.

Which ethical philosophies are represented in these rules?

· Social justice theory and utilitarianism
· Utilitarianism and Kantian ethics
· Social justice theory, utilitarianism, and Kantian ethics
· Social justice theory only

Submit Assessment

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Apply Assignment

Tips for Success:

· Read the question first, before reading the scenario.

· Read the question again and answer the question in your mind before looking at the answer choices.

· Read every answer choice option carefully. Eliminate implausible answers.

· Choose the BEST answer. You may not think any of the answer options are 100% spot on.

· Pay attention to absolutes like always, never, not, clearly, etc. Any counterexample that applies to the question would make it incorrect.

· Be alert for the use of double negatives within a question. Such questions should be read carefully to ensure you fully understand what is being asked.

· Go with your first instinct on the answer based on the knowledge you gained from reading the text.

A reminder that you have two attempts on this apply assignment. You are advised to complete the first attempt only after doing the learn smart and knowledge check activities. If, after the first attempt, you did not earn your desired score please go back and review the materials before your 2nd attempt – doing so generally leads to an overall improvement in scores on this assessment.

Points:

120

Started on Jan 12 at 15:18

Your Submission:

Top of Form

1. Bookmark question for later

Charlie is summoned for jury duty. While still in the selection process, it is discovered that one of the parties to the case used to be an old friend and neighbor of Charlie’s. Which of the following would most likely happen?

· Charlie can refuse to serve on the jury.
· Charlie would be excluded for cause.
· Charlie would be excluded through preemptory challenge.
· Charlie would be preserved on the jury since he would have inside information about one of the parties.

2. Bookmark question for later

Which of the following situations would not substantiate proper standing to sue?

· Tyler wants to sue Kevin after Kevin harms Tyler’s sister in a car crash which leaves her sister in a coma.
· Calvin wants to sue his sister after finding out she has been taking cash from the cash register at the family business.
· Aniesha wants to sue her neighbor Robert after seeing him engage in criminal animal cruelty.
· TreesForDays, an environmental activist group, wants to sue a company dumping chemicals into a river in a
different state.

3. Bookmark question for later

The government of Sharonville is deep in debt, and consequently enacts a city ordinance that requires citizens to do volunteer work for the city once per week. Such and act would be in accordance with the __________ school of jurisprudential thought.

· Law and Economics
· Legal Realism
· Sociological
· Command
· Irrational Forces

4. Bookmark question for later

Which legal school of thought is illustrated in this dialogue?

DONUT DAY AT THE OFFICE

Part 8

(Just then Calvin, the fit CEO, comes jogging into the room with a water bottle in hand. He spots the donuts and shows his disgust.) Calvin: Why do people inflict such nasty, sugar-coated poison on all of us?! A healthy workplace is a happy workplace. (He takes both boxes of donuts, puts them in a small, dirty, battered trash can and steps on them to squash them down, making them suddenly inedible. He smiles at everyone as if they all agree that he has done them a great service.) That’s my job as CEO, to help everyone realize a long and happy life! Cheers! (He runs from the room as everyone looks on in stunned silence. After a couple of seconds Bob collapses on the floor next to the garbage can, looking at the destroyed donuts as if they were a long-lost love.)

End Part 8

· Sociological school of thought.
· Legal realism school of thought.
· Command school of thought.
· Law and economics school of thought.

5. Bookmark question for later

Federico is in a financial dispute. He is trying to collect money for services rendered, but the debtor does not want to pay the money owed to Federico. Which court that would most likely address this situation?

· U.S. Tax Court
· U.S. Bankruptcy Court
· State Small Claims Court

6. Bookmark question for later

A new law is established in the town of Avery that promotes affirmative action employment for people trans-gender and homosexual individuals. This law would be in pursuance of the tenets of the __________ school of jurisprudential thought.

· Command
· Legal Realism
· Irrational Forces
· Law and Economics
· Sociological

7. Bookmark question for later

A law was recently passed in the city of Birmingdon that specifies a long list of restrictions on disposing of different kinds of waste material. The law is long, meticulous, and complicated, and many citizens do not understand all the points of the law or the purpose it is meant to fulfill. Citizens are commonly caught breaking the ordinance. Which law or principle of law which is most relevant to this situation?

· Substantive Due Process
· First Amendment
· Equal Protection Laws
· Procedural Due Process

8. Bookmark question for later

Which legal school of thought is illustrated in this dialogue?
DONUT DAY AT THE OFFICE

Part 5

Derek: We need someone we can trust who can divide up the donuts. One set of rules can’t always be applied here. If we had an impartial judge or two in the mix, someone who doesn’t like donuts perhaps, they could take into account all of the changing factors impacting our donut sphere and make up rules that will bring glazed-happiness to all who seek it.

End Part 5

· Irrational forces perspective.
· Critical legal studies school of thought.
· Legal realism school of thought.
· Sociological school of thought.

9. Bookmark question for later

Devon is accused of robbing a jewelry store and is summarily thrown in jail. Which law or principle of law which is most relevant to this situation?

· Equal Protection Laws
· Substantive Due Process
· Procedural Due Process
· First Amendment

10. Bookmark question for later

Sage files a complaint against Isabel, alleging that Isabel is responsible for damages to Sage’s property. Isabel thinks the allegations are ridiculous and doesn’t bother to respond to the complaint which she has been served. Which of the following is likely true?

· A court can judge in Sage’s favor because Isabel seems to be constructively admitting to Sage’s allegations.
· A court will not open a case or post a judgment until Isabel chooses to respond.
· A court can judge in Isabel’s favor even if she doesn’t respond if it appears Sages allegations are frivolous.
· A court can judge in Sage favor because Isabel is not bargaining in good faith.

11. Bookmark question for later

A television producer/director receives the following script designed to celebrate National Donut Day. As she reads it, it brings to her mind some principles of jurisprudence she learned in her college business law class.

Help her out: Which legal school of thought is illustrated in this dialogue?

DONUT DAY AT THE OFFICE

Part 1

(The scene is a lunchroom or break room. There are at least three round tables visible and perhaps a vending machine, microwave, or refrigerator in the background. Of the three tables, no one is sitting at the center table as the scene opens.)

Karen: (She walks in carrying two big boxes of donuts and places them on the center table.) Allied Chemical just dropped these off to thank us for our work on the “Expressly Hair” project. Have fun. (She says unenthusiastically. She shows absolutely no interest in the donuts and quickly leaves. Everyone else, except Alison, immediately stands. Alison is still showing an interest in the goodies but not moving toward them. Joyce immediately positions herself between the donuts and Bob.)

Bob: It’s a donut festival!

Joyce: (She moves to block and slow him, as if checking him in basketball.) Just wait a second! We have to first establish the rules.

Bob: Rules, in a donut festival?

Joyce: Yes rules. Last time donuts like these were brought in, Winfred got a broken nose and, once again, Alison didn’t get any. We aren’t animals. If we don’t slow down, someone is going to accidentally eat the cardboard again.

Bob: Oh, no. Here we go. Where’s the PowerPoint?

Joyce: There are guidelines in the employee handbook that have been developed over many years that detail out exactly what is to be done with these kind of employee gifts. (She opens a thick binder.) Nearly any scenario you can imagine has been detailed out in section 34 (b), including pastries from chemical companies. Practices and procedures have been set and we would be smart to follow them.

End Part 1

· Critical legal studies school of thought.
· Natural law school of thought.
· Irrational forces perspective.
· Historical perspective school of thought.

12. Bookmark question for later

Which jurisprudential school of thought relies the most upon precedent in establishing law?

· Irrational Forces
· Natural Law
· Sociological
· Legal Realism
· Historical

13. Bookmark question for later

Sally and Kirk are at odds over the details of a business contract. Neither of them wants to go to court, but they both refuse to make a compromise on the terms they expect from one another. Which of the following would most easily force them to a resolution?

· Negotiation
· Legally-binding mediation
· Legally-binding arbitration
· Non-binding arbitration

14. Bookmark question for later

Which legal school of thought is illustrated in this dialogue?
DONUT DAY AT THE OFFICE

Part 2

Bob: Listen, donuts are made to bring joy into our lives and to wake up our glazed faculties. Just let them be distributed according to unchanging moral principles of justice. The donuts will distribute themselves according to natural principles. We just take what we want and the leftovers will be appreciated by those who enjoy them most. Don’t over complicate this. Where’s the chocolate milk?

End Part 2

· Irrational forces perspective.
· Historical perspective school of thought.
· Natural law school of thought.
· Critical legal studies school of thought.

15. Bookmark question for later

Which legal school of thought is illustrated in this dialogue?
DONUT DAY AT THE OFFICE

Part 7

Alison: (She stands during David’s speech as if inspired but sits down once Bob starts talking.)

Bob: Right. Power to the people David. Anyone else hungry? (He tries to slowly move to the donuts and Joyce continues to defend them like a point guard.)

Lee: I have an idea that might address all of these issues. What if none of us have any of these donuts but instead we break up into teams and sell them to our coworkers for a profit? Instead of getting one or two donuts, we can stop on our way home and pick up a dozen of them each with our profits. In this case, we ignore the company stick-in-the-mud book regulations because, as you can see, we are obviously presented with some opportunities for a little economic development. Corporate rules here must bow to economic opportunity. If we let our rules block our prosperity, what kind of company will we become?

End Part 7

· Sociological school of thought.
· Law and economics school of thought.
· Legal realism school of thought.
· Command school of thought.

16. Bookmark question for later

Annie is an observer to a legal dispute between two of the tenants in a building she manages. She has documented information relevant to the case but prefers not to get involved in the dispute. Which of the following is true?

· Annie can refuse any attempt to involve her in the dispute between her tenants.
· Annie is required by Good Samaritan laws to put forth any information she has relevant to the case.
· Annie cannot provide any information since her position as a manager precludes her ability to be unbiased.
· Annie can be required via subpoena to provide the information she has.

17. Bookmark question for later

Claudia feels strongly against a law that was recently passed in her hometown. She proceeds to write letters to the local newspaper criticizing the effect of the law. She also marches up and down the sidewalk in front of city hall loudly publicizing her contradictory point of view. Which law or principle of law which is most relevant to this situation?

· Equal Protection Laws
· Substantive Due Process
· First Amendment
· Procedural Due Process

18. Bookmark question for later

Adelyn is in a financial dispute with her creditor. She wants to declare bankruptcy because she is finding herself unable to meet the requirements of paying off her debt. Which court that would most likely address this situation?

· U.S. Bankruptcy Court
· State Small Claims Court
· U.S. Tax Court

19. Bookmark question for later

Clara is suing David because of a property dispute. Clara and David are from different states, so it is not readily clear which state has jurisdiction over this case. Which of the following is true?

· Jurisdiction can fall in whichever state has subject matter or personal jurisdiction, likely depending on which state Clara feels will give her a more favorable outcome for her case.
· Jurisdiction falls in Clara’s state of residence, since she is the plaintiff.
· Jurisdiction depends solely on where the property – the focus of the dispute – is located.
· Jurisdiction falls in David’s state of residence, since he is the one being summoned to court.

20. Bookmark question for later

The federal government passes a law which a company, JuneCorp, feels unjustifiably discriminates against the company and harms its ability to operate. Which of the following statements is true?

· JuneCorp can contest the legality of the law if there is no evident state interest which substantiates the enforcement of the law.
· JuneCorp cannot contest the legality of the law, since the Equal Protection Clause applies to people rather than corporations.
· JuneCorp can contest the legality of the law if it passes all three scrutiny tests employed by the courts.
· JuneCorp cannot contest the legality of the law if there is anything but a financial impact on the company because of the law.

21. Bookmark question for later

An appeals court feels that a lower court has made an incorrect judgment concerning a civil law case. Which of the following would be the mostly reason to remand the case back to the lower court?

· The appellate court found a mistake of law that occurred during the initial trial.
· The appellate court wants to see more evidence before it can make an informed decision.
· The appellate court found a mistake of fact that occurred during the initial trial.
· The appellate court wants the lower court to handle the case, since it is a civil rather than criminal case.

22. Bookmark question for later

Which of the following situations would most likely receive a change of venue?

· A defendant in a case requests a change of venue because the location of the trial is inconveniently far away from the state where he lives.
· An employer who is accused of racially-discriminatory practices wants a change of venue when it finds out that the local venue judge is African-American.
· A woman wants a change of venue when it appears that all jurors to the case will be male.
· A local teacher is taken to court after a video of him beating his students goes viral.

23. Bookmark question for later

Casey is on trial under criminal allegations that she engaged in fraudulent behavior at the company she manages. She is worried when the plaintiff alleges that it has “unambiguous proof” that Casey is guilty. Which of the following is most likely true?

· If the plaintiff provides proof only up to the level of “clear and convincing,” Casey can still be acquitted.
· If the plaintiff does have unambiguous evidence that meets a “clear and convincing” burden of proof,
Casey will most likely be found guilty.
· Casey need not worry about the plaintiff’s evidence, since parties tend to boast about the level of proof they can
establish anyway.
· The plaintiff will most likely prove Casey is guilty, since criminal charges only need to meet a prima facie burden
of proof.

24. Bookmark question for later

Dixonville has had fundamentally the same demographics, economic system, and social structure for decades. In recent years these factors have begun to shift, causing many to call for new legislation and legal practices. Shifting the legal structure of Dixonville in order to account for the changes that are occurring would be in accordance with the __________ school of jurisprudential thought.

· Historical
· Natural Law
· Irrational Forces
· Legal Realism
· Sociological

25. Bookmark question for later

Which legal school of thought is illustrated in this dialogue?
DONUT DAY AT THE OFFICE

Part 6

Bob: Donut spheres? Glazed happiness? Anyone notice who is not eating donuts right now? Are we about to form a blue-ribbon commission here?

David: Bob, don’t you see what’s happening. While we fight over which one of us gets the goodies, our coworkers, who are actually working by the way, are missing out on these delicious chemical donuts. Meanwhile our friend Alison will be left out of the mix as well as Winfred, who is again in the hospital. What about our custodial and shipping people who are relegated to the basement world? Once again, they will get no goodies, and they are the ones doing the actual work. They aren’t even allowed up here in our break room because we don’t want their greasy hands on our microwave. The only good reason for rules here is to protect the donut-less among us. Donut laws are not any good unless they address the glazed inequalities that would not otherwise even be considered.

End Part 6

· Command school of thought.
· Sociological school of thought.
· Law and economics school of thought.
· Legal realism school of thought.

26. Bookmark question for later

The federal government passes a law which a company, JuneCorp, feels unjustifiably discriminates against the company and harms its ability to operate. Which law or principle of law which is most relevant to this situation?

· First Amendment
· Equal Protection Laws
· Procedural Due Process
· Substantive Due Process

27. Bookmark question for later

After a tragic event in which an armed intruder storms into a mall and fatally shoots several people, the city of Belmonte institutes a law that prohibits any form of weapon in public retail establishments. This reaction would be an example of following which school of jurisprudential thought?

· Irrational Forces
· Historical
· Sociological
· Natural Law
· Legal Realism

28. Bookmark question for later

Country A and Country B have had an informal trading arrangement for many years wherein merchants on the border of the countries may freely trade goods without the restriction of fees. Which of the following is true?

· More than one response is correct.
· Country A and Country B have a binding agreement to this arrangement under customary international law.
· Country A and Country B have no binding agreement under customary international law.
· The government of Country A may not arbitrarily begin to charge fees for items brought in from Country B.

29. Bookmark question for later

Determine which moral standard of social responsibility the business is observing.

Genie’s company is considering building an annex to its main factory. While deciding on the project, the board of directors discusses the impact the the annex would have on the local community, shareholders, company profits, and nearby landowners.

· Moral Minimum Standard
· Profit-Maximizing Moral Standard
· Indeterminable
· Stakeholder Theory Moral Standard
· Corporate Citizenship Moral Standard

30. Bookmark question for later

NoraCorp wants to meet a moral minimum of ethical behavior in its operations. It is planning a merger with another company which would cause any or all of the following:

I) Stock price will go up, positively impacting shareholders

II) The company could build a new central headquarters, negatively impacting landowners and community members by decreasing property values

III) The company could fire 200 employees

IV) The company could afford a new production facility, which would negatively impact the environment and landowners’ property

V) The company could offer more, higher-quality products to customers for lower cost, positively impacting them.

NoreCorp decides to move forward with the merger. All of the above events occur, but NoraCorp offers severance packages to the employees it fires and plans to compensate landowners for damages caused by the new production facility. Which of the following is true?

· It is impossible to determine whether the company has met a moral minimum standard of ethical behavior.
· NoraCorp has exceeded its moral minimum requirements, meeting g a corporate citizenship standard.
· NoraCorp has met its moral minimum requirements.
· NoraCorp has not met its moral minimum requirements.

31. Bookmark question for later

Nation A builds a new highway next to citizens’ properties. In the months following, littering as well as several highway accidents result in damage to the properties. The property owners want to sue the government for damages, but are restrained by:

· Comity of Nations
· Sovereign Immunity
· Act of State Doctrine

32. Bookmark question for later

Determine which moral standard of social responsibility the business is observing.

Meg’s company decided to build an additional factory in a small community. When the community started a protest because of the negative impact it feels a factory will have on the community, Meg’s company promises to prevent and pay for any negative impact to the community. It also offers to build a community park to balance out the negative impact the factory will have.

· Moral Minimum Standard
· Corporate Citizenship Moral Standard
· Profit-Maximizing Moral Standard
· Stakeholder Theory Moral Standard
· Indeterminable

33. Bookmark question for later

Determine which moral standard of social responsibility the business is observing.

Brad’s company has a smokestack that pollutes the air in a nearby community. When people begin complaining about the pollution, the company pays to have a stack scrubber installed on the smokestack to limit the pollution but does not respond to the community’s complaints.

· Moral Minimum Standard
· Corporate Citizenship Moral Standard
· Profit-Maximizing Moral Standard
· Indeterminable
· Stakeholder Theory Moral Standard

34. Bookmark question for later

Determine which moral standard of social responsibility the business is observing.

Earl’s company wants to change the material it uses for its products to a cheaper, less-durable material. Processing the material causes more waste and the final products will not be as safe for customers.

· Profit-Maximizing Moral Standard
· Moral Minimum Standard
· Corporate Citizenship Moral Standard
· Indeterminable
· Stakeholder Theory Moral Standard

35. Bookmark question for later

Lula thinks that people who discipline their children by spanking should be sent to jail and says she would be glad to go to jail if she was caught spanking her child. Which philosophy of ethics is applicable?

· Utilitarianism
· Social Justice Theory
· Virtue Ethics
· Kantianism

36. Bookmark question for later

Radcliffe is a college business professor with little education but extensive experience in business. A treaty negotiating the free trade of educational opportunities was just passed between Canada and the U.S., and it includes a condition that all university professors must have at least a master’s degree in order to teach. Which of the following is true?

· Radcliffe may not be restricted from teaching if his university has no rule concerning the need for a master’s degree.
· The treaty is only enforceable if it doesn’t conflict with state law in Radcliffe’s state.
· Radcliffe no longer meets the qualifications to teach.
· Radcliffe may still teach as long as he only teaches in the U.S.

37. Bookmark question for later

Nation A is neighbors with Nation B. When an international crime lord who operates in both countries is captured by Nation A, it sentences him to a lifetime of heavy labor. Nation B wants to have the criminal executed, but it defers to Nation A’s judgment. Which principle of International Law is at play?

· Sovereign Immunity
· Comity of Nations
· Act of State Doctrine

38. Bookmark question for later

Determine which moral standard of social responsibility the business is observing.

Vivian’s company is considering building a huge new department store in a small town. The community argues that the store will disrupt local commerce and harm local business owners. Vivian argues that the store will save money for customers and bring more jobs to the community. Assume both arguments are true.

· Moral Minimum Standard
· Stakeholder Theory Moral Standard
· Profit-Maximizing Moral Standard
· Indeterminable
· Corporate Citizenship Moral Standard

39. Bookmark question for later

Nation A makes is illegal for its citizens to own more than one vehicle in order to reduce emissions. Nation A’s neighbor Nation B disagrees with the decision and refuses to enforce it in its own borders but refrains from contesting the decision in court. Which principle of International Law is at play?

· Sovereign Immunity
· Comity of Nations
· Act of State Doctrine

40. Bookmark question for later

Anthony votes in favor of a bill which would prevent people above a certain level of income from being able to purchase subsidized housing. Which philosophy of ethics is applies here?

· Social Justice Theory
· Virtue Ethics
· Utilitarianism
· Kantianism

Topic 1: The Fundamentals of Law in America

1.1Learning Objectives

Learning Objectives

1. Relate the basic purposes of the law and the sources from which U.S. law stems.

2. Identify different schools of jurisprudential thought and describe the basic tenets of each.

3. Describe the role and function of the U.S. Constitution, especially as it relates to business.

4. List and categorize the different courts that operate in America.

5. Distinguish between different types of jurisdiction of courts and where different courts are allowed jurisdiction.

6. Identify the role of standing, ripeness, and venue in substantiating a lawsuit.

7. Relate who the parties to a lawsuit are and the proceedings they follow in preparing for a lawsuit.

8. Describe the role of discovery in a lawsuit and what it entails.

9. Describe the process by which a jury in a lawsuit is selected.

10. Summarize the steps of a typical court trial and what happens in each step.

11. Explain the process by which court decisions may be appealed to a higher court and describe the possible outcomes of an appeal.

12. Identify and compare methods of dispute resolution which may be used to avoid the trial process.

1.2Introduction to Law

David Parker discussing the Fundamentals of Law

Purpose and Function of Law

Law in a democratic society is a set of rules for human behavior established by a legitimate legislative authority which has binding force upon citizens. The purpose and function of law is to:

1. Prevent undesirable behavior – deter crime;

2. Facilitate private arrangements between individuals – allow for contracts;

3. Settle private and public disputes – establish dispute resolution systems;

4. Determine procedures for changing the law – provide legislative processes;

5. Regulate the institutions of state to protect individual freedom – create constitutions;

6. Keep the peace – allow for orderly protest;

7. Remedy social injustice – prevent discrimination;

8. Facilitate planning – allow debate on change; and

9. Provide for orderly change in government – establish democratic electoral systems.

To be effective and legitimate, law must be seen as fundamentally fair, flexible, and applied equally to all persons or entities. A set of enforceable rules – law – is specific for each jurisdiction. For example, law may consist of a nomadic tribe’s unwritten code of behavior, a U.S. state’s seatbelt law, a European nation’s code, or a U.S. court decision. United States law is a combination of international treaties, the Constitution, federal law, state law, local law, common law, traditional civil law, and published court decisions.

Common Law

U.S. law is based primarily on the English and American common law. Common law, sometimes called “judge-made” law, is the compilation of hundreds of years of judges’ decisions determining the outcome of cases. Over time, these opinions formed a body of law which established a framework for determining the elements, and associated remedies, for various causes of action from contract disputes to crimes to family law cases.

Precedent and Stare Decisis
The term precedent refers to a rule or principle of law which has been established in a ruling by a court of higher authority, such as an appeals court or the Supreme Court. Lower courts are bound to adhere to the decisions made by a higher court on a similar legal matter. This promotes uniformity, fairness, and some measure of predictability. This principle is known as “stare decisis,” which is Latin for “to stand by things decided.” Because a judge is bound by these previously-made decisions, this is referred to as binding precedent. For example, in a recent case from Indiana, Walgreens allowed one of its pharmacists to have improper access to his former girlfriend’s prescription records. The jury found that Walgreens had violated the Health Insurance Portability and Accountability Act (HIPAA). The court of appeals affirmed the decision (http://www.in.gov/judiciary/opinions/pdf/01151503jgb ). Consequently, the case set a binding precedent in Indiana that an employer can be held liable for HIPAA violations by its employees. It also established a persuasive, but not binding, precedent for other state and also federal courts to make the same decision.

However, decisions made by a low-level court do not become binding precedent on courts of higher authority, like a court of appeal or Supreme Court. For example, suppose a state court in Utah rules in a civil case that a hairdresser must refund the price of a haircut to a consumer if the consumer is not happy with the haircut. If the hairdresser appeals the matter to a higher court, the appeals court has no obligation to defer to the lower court’s decision. In other words, the lower court’s decision is not binding precedent for the higher court.

Civil Law

In addition to the common law, U.S. law is also influenced by the civil law of Europe. In civil law jurisdictions, like Louisiana – which is based on French civil law – legal principles and rules derive from enacted statutes, not case law.

Res Judicata
Another fundamental principle of law is the concept of res judicata (Latin for “a matter judged”). Res judicata is the doctrine that a court’s final judgment on the merits of a case is conclusive, and the disputed matter cannot be raised again in court. The res judicata doctrine allows a party to litigate a civil lawsuit for money damages only once. In other words, the final judgment of the court means the matter has been finally decided.

1.3Jurisprudential Thought

The development of U.S. law can be accounted for by experience, but also by reference to several philosophical or scientific theories. The study and theory of law is known as jurisprudence. Below are several schools of jurisprudential thought which shape our understanding of the law.

Schools of Jurisprudential Thought

Natural Law

The view that all persons have inalienable, natural rights is found in the natural law school of thought. Inalienable rights are those inherently possessed by all persons and which may never be taken away. Under this view, there exists a higher or supreme universal law, which governs all mankind, and its overarching and immutable principles must be reflected in legislation – created statutory law. For example, U.S. businesses with operations abroad often hire foreign employees. Under the natural law school of thought, the same laws that protect U.S. employees should apply to foreign employees as well. This broad view of human rights is reflected in the U.S. Constitution, the Magna Carta, and the U.S. Nations Charter.

Historical Perspective

Under a historical perspective school of thought, law is seen as the summation of the rules governing social customs and human experience over time. Law changes in relation to society’s changing rules and customs. A subscriber of the historical school is more likely than those of other schools to follow precedent to solve contemporary issues.

Irrational Forces

The irrational forces perspective school of thought provides that law is sometimes the result of societal reactions to unique events and is not founded upon reason. In other words, the law is a “knee-jerk” response by a legislative body to some stimuli. For example, some have argued that because many of the protections articulated in the Sarbanes-Oxley Act – which was designed to remedy accounting and other fraud in the corporate world – were already in place under pre-existing statutes, it was the product of political forces rather than reason. Those forces demanded that Congress “do something.”

Legal Realism

Another view of law is the legal realism school of thought. Legal realists hold that judges should consider social and economic factors in interpreting the law and not necessarily be bound by precedent. This school of thought holds that laws may never be enforced uniformly because of the differing personal characteristics and backgrounds of judges, and that the law must reflect society’s current circumstances. The reasoning goes that a female judge, for example, might be more inclined than a male judge to consider a legal decision’s impact on women.

Sociological

An outgrowth of legal realism is the sociological school of thought which advocates for the use of a law as a means of redistributing wealth or promoting social justice. Law developed to prohibit discrimination – based upon race, gender, religion, or nation of origin – in housing and employment is a good example of this view.

Command

Some view laws as the means by which a ruling class maintains control of society. This is known as the command school of thought. Under this view, the law is not influenced by social forces, but by the needs of the ruling elites, political or otherwise. For example, during times of war, the federal government has enacted draft laws that required men of a certain age to serve in the military if they met certain requirements.

Critical Legal Studies

Related to the command theory is the critical legal studies school of thought, which suggests that laws are a reflection of the sum of injustices of society and are used to maintain the power status quo by elites over the needs of the people. This school of thought advocates dismantling the scaffolding of hierarchical rules and replacing them with general concepts of fundamental fairness and environmental and social justice. For example, women often have difficulty legally proving that they have been raped because rape laws have mostly been written from a male perspective. Therefore, according to this school, a judge should overlook those laws and use his or her subjective decision-making powers to determine whether an assault occurred.

Law and Economics

The law and economics school of thought provides that laws are a function of economic forces. Adherents to this view suggest that law should be designed to promote “market efficiencies.” An efficient, productive and wealthy society is based on rules designed to promote that effect. For example, advocates of this theory suggest that our society should put an end to the practice of appointing free counsel to prisoners who bring civil suits. They believe that the case is probably not worth bringing if a prisoner cannot find a lawyer who will take the case pro bono or on a contingency-fee basis.

1.4The Constitution and Business

The U.S. Constitution is the supreme law of the land.

The Role of the U.S. Constitution

The supreme law of the land is the

United States Constitution

. Every law in the country must comply with the provisions of the Constitution or that law is void. The Constitution has two main functions: First, it establishes the three branches of the federal government and allocates the division of powers among them. Second, the Constitution enumerates the fundamental liberty rights of citizens and protects them from the government’s ability to restrict those rights. These enumerated rights, known as the

Bill of Rights

, are the first ten amendments of the Constitution.

The First Amendment

Perhaps the most revered of the fundamental rights guaranteed by the Bill of Rights is the First Amendment guarantee of freedom of speech, which prevents a governmental actor from prohibiting a citizen’s oral, written, or symbolic (e.g., arm band) expression. Speech that has a commercial purpose is less protected than political speech. Therefore, commercial speech may be subject to time, place, and manner restrictions which might not apply to public policy or political speech. For example, a city sign ordinance may lawfully prohibit a business advertisement sign on a residence, but may not prohibit a political poster in the same place.

Supremacy Clause

In addition to the Bill of Rights, the Constitution also contains a Supremacy Clause, which mandates that the Constitution and federal law, treaties, and regulations are the highest laws of the land and have priority over state law. This is known as the preemption doctrine.

Commerce Clause

The Commerce Clause of the Constitution gives Congress the power to regulate commerce among the states, among the Indian tribes, and with foreign nations. Traditionally, the Commerce Clause was interpreted narrowly, but under the affectation doctrine, virtually all commerce conducted in the United States comes under the purview of federal law. The affectation doctrine is the notion that any commerce that has a substantial effect upon commerce between states will come under Congressional authority. It is important for business entities to recognize that even when a business activity is local, it may be governed by federal law. However, through the police powers reserved to the states by the Constitution, a state also has the power to regulate commerce within its borders, subject to the preemption doctrine.

Due Process Clause

Another Constitutional provision that has implication for business is the Due Process Clause. The government cannot deprive a citizen of life, liberty, or property without giving him or her notice and an opportunity to be heard before a neutral arbiter. This is known as procedural due process. For example, before a state government can terminate a person’s driver’s license, it must provide an opportunity for the driver to object or defend him or herself. The concept relates to the fundamental fairness of any government or legal proceeding involving the rights of a citizen.

The second component of due process is substantive due process. This is the notion that government statutes must be clear and understandable to the reasonable person, limited in their scope, and designed to further a legitimate governmental purpose. A law will violate substantive due process if it is arbitrary. Usually laws governing business practices are reasonably related to a legitimate governmental purpose.

Equal Protection Clause

Finally, the Fourteenth Amendment provides that the laws of the U.S. must be applied equally to all its citizens. This is known as the Equal Protection Clause. Importantly, the courts have concluded that corporations are protected by it too.

Three Constitutional Tests

When laws, promulgated by a governmental actor, treat citizens differently, the courts employ three tests to determine if the law is legitimate:

1. Strict scrutiny test

2. Intermediate scrutiny test

3. Rational basis test

Strict Scrutiny Test

First, if a law distinguishes between citizens based on a class of persons, it will be constitutional only if designed to achieve a compelling state interest. This is known as the strict scrutiny test. For example, a state’s interests in having inmates cut their hair—such as prison security, identification of inmates, the impact of long hair on industrial safety, and general concerns about hygiene—are compelling governmental interests

Intermediate Scrutiny Test

Second, when a law curtails a citizen’s exercise of rights based upon protected classifications such as gender or age, it must be substantially related to important objectives to be valid under what is called the intermediate scrutiny test. For example, in the federal government’s effort to lower the number of illegitimate teen pregnancies, it is justified in creating a law that punishes men but not women for statutory rape, since only females can become pregnant.

Rational Basis Test

Finally, the rational basis test will allow for treatment of citizens in a disparate way in matters of economic or social welfare, if there is a justifiable reason or a rational basis for the government action. For example, the federal government is justified in granting government subsidies to farmers but not to those in other occupations. As written, the tests for determining if a law complies with the Equal Protection Clause seem straightforward, but in application can be very complicated.

1.5Courts in America

Figure 1.1: Lady Justice symbolizes the fair and equal administration of the law. (Image courtesy of

Rae Allen

)

Legal controversies in the United States often result in litigation in the courts. Under the U.S. court system, there are two different court frameworks where disputes may be resolved: the federal and the state courts.

Federal Courts

Under the federal system, the highest court in the land is the United States Supreme Court, which sits in Washington, D.C. The Supreme Court is comprised of nine justices who are appointed by the President and confirmed by the Senate and who serve for life. One justice is appointed to serve as the Chief Justice. The Chief Justice plays a critical role in assigning which justice will draft the controlling opinion—decision—of the court in a case. The Supreme Court is an appellate court, which hears cases that have already been heard in the lower federal appellate courts and state supreme courts. Under the doctrine of judicial review, the Supreme Court has the power to declare any law unconstitutional, or in other words, not consistent with the rules established by the Constitution. Because its decisions are final, the Supreme Court holds great power to shape both law and society.

The federal courts also include the “inferior” courts as established by Congress. These inferior courts include the federal appellate courts, known as Circuit Courts, local U.S. district courts, and courts that hear special cases like admiralty and bankruptcy issues. Below is a chart that shows the structure of the U.S. federal court system:

Figure 1.2: Structure of the U.S. Federal Court System

State Courts

State courts are usually set up in similar manner as the federal court system. Each state has a supreme court that is the final arbiter of state law. Most states have one or more intermediate appellate courts that review decisions arising out of the local district courts. California has six intermediate appellate courts, with 105 justices serving, while the state of Wyoming has none. The local state district courts include courts of general jurisdiction, but also courts which have a special purpose, like courts which exclusively handle family law or small claims matters.

The power of these courts to hear cases will be discussed in the next section.

1.6Court Jurisdiction

Before a court may hear a case, it must be established that the court has authority over the matter in dispute. This authority is known as jurisdiction. There are courts of general jurisdiction; for example, state district courts may hear many different types of cases, ranging from contract disputes to tort claims. Courts of limited jurisdiction, on the other hand, are empowered only to hear controversies of a specific nature. For example, as noted above, federal bankruptcy courts are the only courts authorized to hear bankruptcy cases, and at the state level, only probate courts may hear wills and trust disputes.

Types of Court Jurisdiction

Generally, there are two types of court jurisdiction: 1) subject matter jurisdiction and 2) personal jurisdiction. Jurisdiction over the subject matter, sometimes called in rem jurisdiction, means the court has authority to hear the case because it has jurisdiction over the property involved in the controversy. For example, a dispute arises over the ownership of a boat docked in San Diego, California, and both parties in the dispute are residents of Nevada. In this case, the California state court has jurisdiction to hear the dispute because the property is located in California.

Personal jurisdiction, or in personam jurisdiction, refers to the power of the court to exercise authority over the parties in the lawsuit. For example, a state supreme court has jurisdictional authority over all the residents and businesses within the state.

When a party submits a complaint to a court, he or she agrees to be subject to a court’s jurisdiction. A defendant becomes subject to a court’s jurisdiction by way of a summons—a legal notice of the complaint, usually delivered in person or to the place of the defendant’s residence. The power of courts to exercise personal jurisdiction over persons not living within its jurisdiction has expanded over time. Most states have so-called long-arm statutes, which allow a court to exercise jurisdiction over a non-resident person who has developed “minimum contacts” with the state by way of business interests, travel, or other factors, as long as principles of fundamental fairness are not violated. For example, the state of Oregon has personal jurisdiction over a Utah resident who caused a car accident in Oregon.

Jurisdiction Limits

In the federal courts, jurisdiction is limited to two situations: First, there must be a federal question present in the case. That is, the plaintiff’s case must include some reliance on interpretation of the Constitution, federal law, or international treaty. For example, the state of Oregon has personal jurisdiction over a Utah resident who caused a car accident in Oregon. Second, a case may also be heard by a federal court if there is diversity of citizenship among the parties to the dispute. This usually requires that the parties live in different states and the case has over $75,000 at issue. For example, George, an Alabama resident, is driving his car in Alabama when he negligently hits and totals an $85,000 car driven by Michelle, a Tennessee resident. Because the parties reside in different states, Michelle can sue George and bring her case in federal court in Alabama. Unlike federal courts, states courts are not limited to federal question or diversity of citizenship disputes and have broad jurisdiction to hear many different types of cases.

Under the principles of jurisdiction, several different courts could hear a particular case. This is known as concurrent jurisdiction. For example, a case with parties in West Virginia and Utah could be brought in a state district court in West Virginia, a state court in Utah, or in a federal court in either jurisdiction. This can lead to what is known as forum shopping—searching for a court of jurisdiction that will most likely render the best result. For example, if two states have jurisdiction, a plaintiff may choose to bring litigation in the state that has law most favorable to his or her cause, or where courts have a reputation for acting in a way the plaintiff favors.

1.7Legal Concepts:

Standing

Ripeness

, and

Venue

Konrad Lee, J.D. discussing Standing

Standing

A party may bring a suit in court only if he or she has a personal stake in the outcome of the controversy. This is known as standing. In other words, the party must be “aggrieved” by some threatened or actual harm and may not file a suit in which he or she has suffered no injury. For example, Susan, John’s friend, may not file a lawsuit to enforce a contract between John and Tim, as she is not a party to the contract. There are exceptions, as in the case of environmental groups, which are granted standing to challenge harms to the environment, not on a claim of specific damage to any ascertained person, but on the notion of general public harm.

Ripeness

Konrad Lee, J.D. discussing Ripeness

Under the doctrine of ripeness, courts in the U.S. will not offer advisory opinions on supposed controversies which have not yet occurred. In other words, the facts of a case must have developed into an existing controversy warranting judicial resolution before a court may hear it. The court systems of some countries allow for the “what if” lawsuit; the idea being that knowing how a court intends to rule on a matter may allow the parties to avoid conflict in the first instance. This is not the case in the U.S., as an actual controversy must exist before a court will hear legal claims.

Venue

Konrad Lee, J.D. discussing Venue

Where a trial takes place is called the venue. Notwithstanding forum shopping, cases usually are heard as near to the location of the parties as possible for reasons of judicial economy and common sense. However, sometimes circumstances will dictate that a trial will occur outside of a normal venue. For example, if a party feels a judge is biased against her or that no impartial jurors can be found in the community, a fair trial may be impossible. In such cases, a motion for a change of venue may be granted. This was the case of police officers accused of beating Rodney King in Los Angeles in 1992. The officers were successful in a change of venue motion in their criminal trial. The case was shifted to Ventura County on the theory that no jury in Los Angeles could be impartial to the officers because of the widespread publication of a video tape showing the beating. Interestingly, the officers’ acquittal in Ventura County sparked the now-famous riots in south central Los Angeles and prompted a debate over venue rules.

In the next topic we will discuss the trial process.

1.8Initiating a Lawsuit

Under the U.S. legal system, parties who are in dispute may bring cases before a judge or jury for resolution. The person who files a complaint in a civil case—a case which involves a dispute between private parties—is called the plaintiff, while the person at whom the complaint is directed is known as the defendant. In a criminal case, where a defendant is accused by the state of violating criminal law, the complaining party is called a prosecutor. The U.S. court system is an adversarial system, whereby the trial court sets the parties against each other in order to find the truth. This process is started by a plaintiff who files a complaint in the court. A complaint contains the cause of action: the recitation of facts and law under which the plaintiff requests relief. Most claims have a statute of limitation, which requires a complaint be filed within a specific time period from the date of harm or else a plaintiff loses the right to file a claim.

Upon the filing of the complaint, the clerk of the court notifies the defendant of the lawsuit and provides a timeline for the defendant to respond. The defendant may then file a request for dismissal, whereby he or she asserts that, even if all alleged facts are true, the law does not support a cause of action. It is at this point that frivolous lawsuits are terminated by the judge through dismissal. If that motion to dismiss is denied, the defendant files an answer—a document whereby the defendant either admits or denies the allegations of the complaint. Many courts require that the request for dismissal and answer be filed in one document to save time and resources. A defendant may, in the answer, challenge a court’s jurisdiction or assert what is called an affirmative defense. Affirmative defenses are those that will excuse a defendant from unlawful behavior, such as permission, self-defense, or lapse of time. Sometimes the answer will contain a counterclaim or a cross-complaint, wherein the defendant raises his or her own allegations against the plaintiff, who now becomes a defendant as well.

If the defendant fails to file an answer, he or she will be in default and the court, on the theory the defendant has constructively admitted the allegations of the complaint, may enter a judgment in favor of the plaintiff. A defendant’s failure to answer may usually be remedied in some manner based upon a showing of a sound reason for the omission. A plaintiff must also file a reply to the defendant’s answer/cross-complaint or risk default.

Sometimes, a third party may have an interest in a case to which it is not a party—as in the case of a Native American tribe claiming interest in a custody suit involving an Indian child. In those types of cases, the court may allow a third party to have an intervention in the case and achieve party status.

1.9Discovery

The Discovery Phase

Once the complaint and answer have been filed, the case moves to the discovery phase. Discovery is the process whereby each side is required to surrender information they have about the subject matter of the case. Discovery information may include written questions called interrogatories, depositions —oral statements—taken under oath, documents, exhibits, physical examinations, and so on. A trial court may order a party to provide information it does not wish to reveal by way of a subpoena—a court order directed at a person to appear in trial or produce a document or thing. Discovery is limited to information related to the controversy and prevents the disclosure of trade secrets, unless those secrets are central to the issue at trial.

Rationale of Discovery

The rationale behind discovery is threefold. First, it eliminates surprise. Second, it attenuates any advantage one party may have over another by way of financial resources or lawyer expertise and focuses the case on the facts. Third, it promotes settlement. The rationale for discovery rules is that with the majority of relevant facts available to all parties, including the judge, the merits of the complaint will be readily ascertainable, resulting in compromise and settlement in most cases. After discovery, most states require the parties to meet in a pretrial settlement conference or pretrial hearing, to determine if a compromise may be reached before the case goes to trial.

Motion for Judgment on the Pleadings

Almost all state and federal courts allow that if no settlement is reached, one or both parties can make a motion for judgment on the pleadings, whereby the judge is asked, based on the pleadings alone, to decide the case. The idea is that from the pleadings, a judge can determine that no legitimate claim exists. For example, Lisa alleges that John breached a contract and owes her damages. Their state’s statute of limitations requires that a lawsuit be brought within two years from the date that a contract was breached, and the pleadings show that Lisa’s complaint was filed after the two-year period expired. John may make a motion to have Lisa’s lawsuit dismissed based on the facts presented in the pleadings.

Motion for Summary Judgment

A party might also make a motion for summary judgment. In that case, a party contends that, based upon the pleadings and other facts revealed in the discovery process, there is no factual controversy and the judge can decide the case in its favor without a full trial. Like discovery, the availability of these motions promotes timely resolution of cases. One case example involving the issue of summary judgment is Murphy v. McDonald’s Restaurants of Ohio (2010), in which Elijah Murphy parked his car and chose to cross a snow-covered median rather than walk around it to get to the restaurant. The median was covered with snow that had been plowed from the drive-through lane and the parking area. He slipped on the ice, fell, and dislocated his ankle. Murphy sued McDonald’s to recover damages for negligence, alleging that the restaurant did not provide a walking path. McDonald’s moved for summary judgment. The court found that no factual issue existed and granted summary judgment to McDonald’s.

1.10Jury Selection

When the parties cannot settle a case, it will proceed to trial and jury selection. In a process known as venire, the clerk of the court issues a summons to potential jurors to appear before the court for jury duty. Jurors who are otherwise not excused are subject to a voir dire examination by the judge and the lawyers for the parties, to determine potential juror impartiality or qualification for jury duty. Jurors may be excluded for cause when it is obvious they cannot serve due to a relationship with one of the parties or an interest in the proceedings. Jurors may also be released from service due to a preemptory challenge. A preemptory is where a party may, without giving a reason, remove a juror from jury service. The idea is to give each side power to excuse jurors who may say the right thing during voir dire, but privately harbor a bias. The number of preemptory challenges is limited by statute. Race and gender may not be used as the basis for juror exclusion for either cause or preemptory challenge. The idea behind voir dire and juror challenges is that, if the parties participate in the configuration of the jury, each will find the ultimate verdict more acceptable.

Juries are generally comprised of six or twelve jurors, with alternates, depending on the nature of the case. Once the jury has been selected, it is said to be impaneled. Sometimes, if the case is very important or controversial, a jury may be sequestered, wherein each juror is separated from family, jobs, and the community for the duration of the trial. Sometimes jurors are even prevented from reading newspapers or watching the news on television. One of the longest sequestrations of a jury was for 54 weeks in a 1973 defense contractor case in California.

1.11The Trial

Opening Statements

Once the jury is impaneled, the parties begin the trial with opening statements, which are usually straightforward recitations of the facts and legal issues that are central to the case.

The Plaintiff’s Case

After opening statements, the plaintiff begins to present his or her version of the case, called the case-in-chief. It is the plaintiff’s responsibility to establish the facts sufficient to meet the burden of proof required by the law related to the claims.

Burden of Proof

In legal matters, four burdens of proof are applied in different contexts.

Prima Facie

First is the prima facie case. This means that, at first sight, the facts establish some truth of sufficient weight as to require a defendant to be called to answer for it. It is the lowest standard of proof. If there are enough facts to meet this standard, then the judge rules that the defendant must respond to his or her accusers.

Preponderance of Evidence

The second burden of proof is preponderance of evidence, meaning, in the vernacular, more likely than not. In other words, the evidence is of sufficient weight to likely be found true.

Clear and Convincing Evidence

The third, clear and convincing evidence, is yet a higher burden. It mandates that the evidence must be so clear that it requires the assent of every reasonable mind. In other words the proof is unambiguous.

Beyond a Reasonable Doubt

Fourth, the beyond a reasonable doubt standard, which applies only in the criminal law context, is where the evidence establishes that no other logical explanation can be derived from the facts.

Meeting the Burden of Proof

At trial, the plaintiff attempts to meet the relevant burden of proof by questioning witnesses through direct examination and submitting documents related to the examination. If the plaintiff’s case-in-chief does not establish the facts and law to support the claim, the defendant may make a motion for directed verdict, wherein he or she asks the court to decide in his or her favor without the presentation of a defense. If this motion is granted, the case is over. If the motion is denied, the defense may then conduct a questioning cross-examination of the witnesses in order to impeach them through showing they were misinformed, untruthful, biased, or incompetent. A plaintiff may then rehabilitate a witness’s credibility through re-direct examination.

The Defendant’s Case

After the plaintiff has finished his or her case, the matter then shifts to the defendant to show the facts alleged by the plaintiff are not true, that the law does not support the claim, or that the defendent’s behavior was excused. Like the plaintiff, the defense may present witness testimony and documentary evidence. The matter then shifts back to the plaintiff to challenge the defense claims in what is called the rebuttal, and then back again to the defendant for a rejoinder.

Closing Statements

At the end of each party’s case, the judge closes the case to new evidence and gives the parties time to make a closing statement, wherein each party attempts to debunk the theory of the others’ case and urge the jury to rule in its favor. The judge then instructs the jury on the law and the case goes to the jury for deliberation. Deliberation is the jurors’ careful discussion about the facts, as presented at trial, and about the law, as instructed by the judge.

Deliberation, Verdict, and Judgment

The process of deliberation may be a few minutes or may take several days. Upon reaching a decision, the jury issues a verdict—a complete finding and conclusion on the issues presented. The court then enters a judgment, the official decision, in accordance with the jury verdict. In extremely rare cases, if a judge discovers bias or jury misconduct he or she may reject or amend the verdict, under the procedure known as judgment notwithstanding the verdict. Additionally, upon motion by either party, a judge, if he or she believes the manifest weight of evidence did not support the jury verdict, may order a new trial. In a criminal case, a jury may not reach the requisite number of votes to either convict or acquit a defendant. This is known as a hung jury, and will result in a new trial.

1.12The Appeal

Most states have a statutory scheme that allows for a party who believes a mistake of law occurred at trial to seek review of the case by a higher court. This is known as an appeal. Errors of law may occur if prejudicial evidence was presented at a trial when it should have been excluded, evidence submitted at a trial was obtained through an illegal search and seizure, or a jury was not properly instructed by a judge, for example. An appeal is not a chance for the parties to re-try the case before a higher court. Indeed, the appellate court will not generally take any new evidence during the appeal, does not question the findings of fact made by a judge or jury, and confines its analysis to whether or not a legal error occurred. If the court finds no legal error, it will affirm the trial court judgment. If it does find legal error, it may reverse the ruling. The appellate court may also order the case returned to the trial court to be fixed. This is known as a remand, and can include an order for a new trial. The appellate courts have broad discretion in making these decisions.

1.13Non-Judicial Dispute Resolution Alternatives

The trial process and appeal described above can be very expensive and time consuming for the parties involved. The access to legal remedies has become the province of the rich, and the average person is foreclosed from the legal system due to those high costs. To avoid this expense and delay, many persons in dispute with each other employ alternatives to trial, which include negotiation, mediation, and arbitration.

Negotiation

Negotiation is the process in which the parties attempt to settle disputes through compromise. This often happens before a lawsuit is even contemplated, but may occur during the pretrial and discovery phases of a trial, during the trial, or even immediately preceding a decision by a court of appeal. Compromise and settlement through negotiation are the cheapest and most efficient ways to resolve disputes. Sometimes, if a negotiated settlement is reached during litigation, the settlement agreement—the formal document which outlines the terms of the compromise—will be approved by the trial judge and constitute the judgment.

Mediation

At times it is helpful for a neutral third party to assist combatants in resolving disputes because that person can be objective and has no personal interest in the outcome of the matter. This is called mediation. In mediation, the disinterested mediator, who is often an expert in the law in dispute, meets with the parties separately and then together, and offers compromise solutions that the parties may accept or reject. The mediator has no power to bind the parties. Just as in negotiation, if the parties reach compromise, a binding settlement agreement is prepared and executed.

Arbitration

In arbitration, the parties hire an arbitrator, often a retired judge or legal expert, to hear the matter and impose a resolution upon them. Arbitration decisions may be legally binding if agreed to by the parties or required by law. In such a case, the arbitrator’s decision is final and may have the effect of a trial court judgment. If the arbitration decision is a non-binding one, either party may pursue a lawsuit if it does not agree with the decision. To reduce litigation costs, many business contracts require arbitration, either binding or non-binding, as a first step in the event of a dispute.

Topic 11: International Law and Ethics

11.1Learning Objectives

Learning Objectives

1. Summarize the fundamental principles which govern international law.

2. Describe different arrangements of international laws which affect international trade and relationships.

3. Illustrate the basic organization of the United Nations and explain the UN’s purpose.

4. Describe the political organization of the European Union.

5. Compare the purposes and organization of the three main world banking institutions.

6. Identify different methods or tools by which international disputes are typically resolved.

7. Describe the regulations imposed by the Foreign Corrupt Practices Act.

8. Compare different standpoints on businesses’ obligation to fulfill social responsibility requirements.

9. Summarize the basic tenets of the foundational ethical philosophies that are commonly applied to business practices.

10. List and describe the five areas which govern the consensus view of good corporate citizenship.

11.2General Principles of International Law

International law describes the set of rules and sanctions which govern the relationships between sovereign states. It is a consent-based system where nation-states bind themselves to international rules to achieve some economic or political goal: trade, technology transfer, peace, and so on. International law is very successful in establishing uniform standards for such things as codifying construction rules for fire prevention, setting standards for weights and measures, and establishing international protocols for airplane safety. In terms of regulating issues of war and peace, and even trade, it is much less so. International law is guided by several principles, including Comity of Nations, Act of State Doctrine, and Sovereign Immunity

Comity of Nations

A fundamental principle of international law is the notion of Comity of Nations. Comity is the doctrine that a sovereign nation’s legal system will adopt or implement the law of another sovereign nation out of deference, mutuality, and respect. For example, in the interpretation of an international contract, a court in Nation A will give deference to that contract’s interpretation under the laws of Nation B, where it was created, as long as the laws of Nation B are consistent with the public policy and law of Nation A. More specifically, a court in Nation A may uphold the ruling of a court in Nation B in a particular case, even if the case may have been decided differently in Nation A. Factors that a court in Nation A would consider in granting comity for a decision in Nation B would be Nation B’s apparent fairness and impartiality of its legal system, jurisdiction over the defendant and subject matter, and the absence or presence of fraud or excess politicization of the legal system.

Act of State Doctrine

Another principle of international law is that each state has the power to regulate its internal affairs unfettered by the legal rulings in another nation. Under the Act of State Doctrine, the United States holds to the principle that every sovereign state must respect the independence of every other sovereign state and that courts in one country may not pass legal judgments upon the acts of national governments done within their borders. For example, suppose the People’s Republic of China outlaws the practice of all religions in the country. Saul, a Jewish U.S. citizen living in California, disagrees with China’s new law. Saul brings a lawsuit against China in a U.S. district court located in the state of California, arguing to the court that China’s law should be illegal. The U.S. district court will apply the Act of State Doctrine and rule that China’s law is an act of that state and that a U.S. court has no authority to hear and decide Saul’s case. The court will dismiss Saul’s lawsuit against China.

Sovereign Immunity

The third fundamental principle of international law is the doctrine of Sovereign Immunity. Sovereign immunity is a long-standing principle of international law and a legal doctrine which holds that a sovereign nation is immune from civil suit or criminal prosecution. It comes from the traditional notion that “a king can do no wrong.” The US recognizes this concept under the Foreign Sovereign Immunities Act (1976). The immunity is not absolute and may be forfeited if a state has waived it or has engaged in a primarily economic activity which has affected the United States. In those cases, a foreign nation may have to defend a lawsuit against it arising in a state or federal court in the United States. An example of sovereign immunity is found in the 2012 North Carolina case Bullard v. Wake County. Dennis and Wendy Bullard sued Wake County for negligent inspection of their new home, which had significant structural defects within only a few months. Their builder went into bankruptcy, so suing the county was the Bullards’ only option. When the case went to the Court of Appeals, the court found that Wake County had not waived its sovereign immunity; thus, the Bullards were unable to recover anything against Wake County.

11.3Sources of International Law

The U.S. businessperson is governed by both domestic and international sources. Trade between a firm in the United States and a foreign business are first and foremost regulated by the United States Constitution by way of both the Treaty Clause and the Foreign Commerce Clause.

The President of the United States is empowered by Article II, Section 2, Clause 2 of the Constitution, the so-called Treaty Clause, to negotiate agreements between the United States and other countries, subject to a two- thirds approval vote by the Senate. A treaty is an agreement between sovereign states to act in a certain manner, usually on trade matters. Akin to contracts, a treaty is binding on the nations involved and subject to enforcement under the principles of international law. Once approved, the treaty has the full force and effect of law. This means, using a hypothetical situation, that a small wallet manufacturer in Kemmerer, Wyoming, is subject to an international treaty governing the use of snake skin in the manufacture of wallets. Moreover, in an area of law which is the domain of the states, an international treaty could become the law of the land, even if Congress and the President traditionally have little authority over such matters. For example, education law is a domain of the states, but an international treaty which sets standards for the qualifications of elementary school teachers would become the law. This could be true even though Congress and the President traditionally have little authority over education.

A treaty must meet the standards of the U.S. Constitution or it is void, or at least the violating provision is a nullity. Because the treaty becomes U.S. law, Congress retains the power to amend it without reference to the international party with whom the treaty is made. The scope of the authority of the President to unilaterally withdraw from a treaty remains uncertain.

Many treaties are bilateral treaties, which are agreements between two nations. Some trade agreements are between several or more nations, as in the North American Free Trade Agreement (NAFTA), which is between Canada, the United States, and Mexico. Perhaps the most important of any of these multinational agreements is the creation of the United Nations.

Related to the Treaty Clause, which can include many non-business related issues like missile defense, is the Foreign Commerce Clause. Here, the Constitution in Article I, Section 8, Clause 3, gives Congress the power to regulate commerce with foreign nations. This gives Congress the power to regulate international trade. Business must look then at federal trade law to understand which rules apply to a particular international transaction.

In addition to U.S. law governing international trade, business must also comply with what is called customary international law. When a consistent recurring practice develops between nations in the course of their relationship, that practice becomes a binding principle between the nations whether it is accepted into a treaty or not. Most often, customary law is codified into a treaty. An example would be the immunity from criminal prosecution for a visiting Head of State.

11.4The United Nations

It would be impossible to discuss international business without touching on the increasingly important role the United Nations (UN) plays in world affairs. Founded in 1945 as a venue for the resolution of nation-state conflicts leading to war, the UN is comprised of 193 member nations and is headquartered in New York City. It is financed by voluntary contributions from member states, of which the United States is a leading contributor, and its goals now include the maintenance of peace, the fostering of human rights, the promotion of economic development, and the provision of humanitarian aid. The UN is comprised of various subset organizations. The Secretariat is the executive arm of the UN and is comprised of the Secretary General, currently Ban Ki-Moon of South Korea, and staff. The Secretariat provides a forum for member states to discuss and resolve issues, conducts research, and carries out the administrative duties of the UN.

The General Assembly is the main deliberative body of the UN, comprising a representative from each member state. Out of the General Assembly comes the Security Council, which is tasked with keeping international peace. The Security Council is comprised of fifteen member states, five of which are permanent members – The United States, Russia, China, France, and the United Kingdom. Other nations serve in two-year term rotations based upon a regional allocation. The Security Council is a very important body because it can establish international sanction rules and issue binding resolutions to member states. Moreover, the permanent members of the Security Council may veto nominations for Secretary General or member nations serving on the Council itself. Perhaps the most important power the Security Council holds is the ability to authorize and execute military action through UN security forces, called UN peacekeepers. Despite the name, UN peacekeepers are military forces voluntarily provided by member states and have recently totaled a force of 116,837 soldiers.

The matrix of UN operations includes the World Bank Group, which consists of the World Bank and the IMF; the World Health Organization, dedicated to disease prevention and cure, primarily in the developing world; and aid programs such as the World Food Programme, UNESCO, and UNICEF. Finally, the UN sponsors the International Court of Justice to mediate disputes between member nations. It is to this area of international law to which we now turn.

11.5The European Community

Perhaps the largest international agreement between nations is the European Union (EU). With the recent addition of Croatia, the EU is a unification of 28 states creating a political and economic community spanning much of modern-day Western Europe. Following in the footsteps of earlier agreements regarding coal, steel, and atomic energy production after World War II among the nations of Belgium, France, Germany, Italy, Luxembourg, and the Netherlands, the European Union was designed to create a “single market” for trade to compete favorably against America and Asia for commerce.

Aims of the European Union

Officially established by the Treaty of Maastricht on February 7, 1992, the EU has five aims:

1. To strengthen the democratic governing among nations;

2. To improve the efficiency of nations;

3. To establish economic and financial unification;

4. To develop the Community social dimension; and

5. To establish a security policy.

To achieve these goals, the EU has established wide-ranging policies regarding business, education, and social issues. The EU has come under criticism for its unwieldy governing structure, which involves an “institutional triangle” composed of 1) the Council – representing nations; 2) the European Parliament – representing citizens; and 3) the European Commission – responsible for holding up Europe’s main interests. The European Council is, essentially, the meeting of the heads of state of member nations. Originally an informal body, it now is officially recognized as an official organ of the EU with authority for directing the EU’s general political priorities. It has no power to pass laws. The European Parliament is the primary legislative arm of the EU and its members are directly elected by member nations. The European Commission acts as the executive arm of the EU, and its members – one for each member state – are to look to the interest of Europe as a whole, not just a self-interested member state when making decisions. Because its members are appointed, not elected, and have tax free income, the Commission has come under criticism as an elitist body.

Many of the EU countries have adopted a unified currency known as the Euro. The area in which the Euro is used is known as the Eurozone.

11.6World Financial Institutions

There are three main world banking institutions which deserve the attention of an international business person: the World Bank, the International Monetary Fund, and the Bank for International Settlement.

Established in 1944, primarily under the sponsorship of the United States and the United Kingdom, the World Bank is a financial institution designed to provide loans to developing nations for capital improvements such as roads, dams, and telecommunications facilities, and it loans approximately $25 billion annually. Its Articles state that the purpose of the Bank is “to assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes” and “to promote the long-range balanced growth of international trade and the maintenance of equilibrium in balances of payments by encouraging international investment … thereby assisting in raising the productivity, the standard of living, and conditions of labour in their territories.”

The Bank makes loans at a rate of 0.5 percent above its own operating costs. Loans were originally made only for specific structural improvements, but in 1980 the World Bank began providing loans for the promotion of social reforms.

The World Bank has been criticized as promoting the goals of western nations over those it was ostensibly designed to promote. For example, the United States, a single nation, has one director, while the 47 sub-Saharan African nations who are member nations have only two.

The World Bank also attaches conditions to its loans which give it broad authority to ensure a nation structures its internal economy so as to repay the loan. Every president of the World Bank since its creation has been a U.S. citizen.

Created at the same time as the World Bank is the International Monetary Fund (IMF) International Monetary Fund (IMF). Member countries of the IMF contribute money to a pool through a quota system from which countries with payment imbalances can borrow funds temporarily. The balance of payments includes a country’s exports and imports of goods, services, financial capital, and financial transfers. When added together, they must sum to zero, with no overall surplus or deficit. For example, if a country is importing more than it exports, its trade balance will be in deficit. If a nation has a deficit shortfall, it will have to counterbalance it in some way – such as by funds earned from its foreign investments, by running down central bank reserves, or by receiving loans. This is where the IMF seeks to help.

The Bank for International Settlements (BIS) is the central banker to the world and is located in Basel, Switzerland. It serves member state’s central banks in their pursuit of monetary and financial stability by providing research, promoting cooperation, and acting as a bank for central banks.

11.7International Dispute Resolution

International disputes may be resolved informally between nations through diplomacy and negotiation. However, when that fails, nations may submit complaints to the International Court of Justice (ICJ) in The Hague, Netherlands. The ICJ’s main function is to hear and settle legal disputes among UN member states and to provide advisory opinions—something that we discussed earlier that U.S. courts do not do—on legal questions submitted to it by international agencies and the UN General Assembly. When deciding cases, the ICJ relies for authority upon international conventions, international custom, and the “general principles of law recognized by civilized nations.” It may also rely upon “the teachings of the most highly qualified publicists of the various nations” and its previous judicial decisions to help interpret the law. Interestingly, the Court expressly states that it is not bound by the common law principle of precedent or stare decisis. The decisions of the Court are therefore binding only on the parties in a specific dispute.

Another way international disputes are resolved is through the World Trade Organization (WTO). Signed in 1947, the General Agreement on Tariffs and Trade (GATT) is a multilateral agreement regulating trade among 153 countries, and its purpose is to effect the “substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.” Over a series of negotiations lasting years, member nations fine-tuned the agreement and eventually, in 1994, created a permanent institutional structure for regulating the massive trade agreement called the World Trade Organization.

The WTO’s goals include creating a trade system free of discrimination, barriers, uncertainty, and anti-competitive practices. Under WTO rules, all agreements on reducing tariffs and barriers to trade must be passed by all 150 members, on the theory that if all can agree on a rule it must be a fundamentally fair precept. Most nations of the world, at least those of any consequence, have signed on to the GATT and are members of WTO. Of course, as we saw earlier, international law and agreements are consent-based, and nations often ignore WTO rulings if national interest prevents following the rulings. For example, the U.S. has been called out, but continues to ignore, WTO rules in the so-called “Irish music” case. The U.S. allows restaurants and store owners to play Irish music without compensating the owners of the material, a violation of WTO rules. The WTO has in place a dispute resolution mechanism where nation states may bring complaints. When a member nation enacts a policy or takes action which another state considers as breach of the WTO agreed rules, it may seek resolution through the Dispute Settlement Body. The WTO procedures are perhaps the most active international dispute resolution mechanisms in the world.

11.9Social Responsibility of Business

The foregoing discussion about the Foreign Corrupt Practices Act (FCPA), leads us to a general discussion of what constitutes the general ethical obligations of business. With respect to appropriate business behavior—exercising our duty to act as morals and customs demand—the law sets only a minimum standard. Conduct in the business world is measured for its morality, or its ethics; indeed, both for its adherence to social constructs of right and wrong and for its social responsibility to the citizens in the countries in which it operates. Virtually all agree that an action may be legally permissible while being unethical. An example is a marketing tactic employed by a credit card company to sell certain products to people who aren’t eligible for any of the product benefits. While this marketing tactic may not qualify as deceptive advertising under the law, it is unethical because it takes advantage of an unsophisticated consumer.

Beyond a duty to obey the law and act morally, does a business owe a greater duty to society? Some, like economist Milton Friedman, maintain that business has only one responsibility and that is to maximize profits for shareholders. He said: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” Friedman also stated: “So that the record of history is absolutely crystal clear. That there is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.” A case example of maximizing profits occurred in the 1919 Dodge v. Ford Motor Company, in which founder Henry Ford sought to reduce prices on his cars which would increase vehicle production and allow more people to buy cars. The Dodge brothers, two shareholders, sued Ford and claimed that his plan would not increase shareholder dividends. The court sided with the shareholders, saying that Ford’s plan benefitted the public more than the shareholders.

Others vigorously disagree with Friedman and argue that business, by having the privilege of being organized under law, bears a social responsibility to the citizens of the country in which it operates. Moreover, they argue that corporate citizenship requires a firm to actively do good in the communities in which it operates and that the bottom line includes profits, plus a social responsibility factor. This is especially the case for so-called “green” environmental policies. For example, a manufacturing plant that dumps its hazardous waste into a nearby lake is negatively affecting the community and not being socially responsible.

Yet others argue that a firm is ethical if it meets the moral minimum of behavior. That is to say that the ethical duty a business owes to a community and other businesess is to “do no harm.” For example, an oil company that pollutes a body of water and then compensates those whom the pollution has negatively impacted has met its moral minimum of social responsibility.

Finally, stakeholder theory argues that in the calculation of ethical business behavior, a firm is unethical if it does not consider the parties impacted by its decisions. For example, a corporation that viewed its employees simply as means of expanding shareholder wealth would be in violation of the stakeholder theory. As the theory goes, persons or entities who have taken no risk in developing the business, but who may suffer some negative consequence of the firm behavior, should have a say in business decisions or should have their views considered. The definition of who is actually a stakeholder and how broad the stakeholder definition should be applied has not yet been fully agreed upon. Certainly under the theory, employees, customers, suppliers, financiers, communities, governmental bodies, political groups, trade associations, and trade unions and others are considered stakeholders.

11.10Foundational Ethical Philosophies Guiding Business

Business ethics is informed by different ethical philosophies such as utilitarianism, Kantianism, social justice theory, and virtue ethics.

Utilitarianism

Under the ethical theory of Utilitarianism, an action is ethical if it maximizes the greatest happiness for society. For example, if a citywide poll is taken that 85 percent of its population would be happier with a new central park, the park should be built. This theory holds to the notion that results govern what is ethical and society would be best served by the legislature considering which proposed law would benefit the most in society. A few of this theory’s weaknesses are the difficulty of measurement, the lack of sufficient information to make choices, and the very notion of what is beneficial. The principles of utilitarianism may be seen in administrative actions, cost-benefit analyses, and the balancing provisions we discussed in environmental impact statements.

Kantian Ethics

Kantian ethics, named after its originator, German philosopher Immanuel Kant, hold that ethical action arises from executing a duty and that duties arise from rational thought. Kantianism holds that any action must be able to be universalized–applied to all persons equally–in order to be ethical. If the action can be consistent–applied in all circumstances, and reversible–returning in kind to the doer without harm, it is ethical. For example, if you rationalize that it is acceptable for you to not fulfill contract terms to your utmost ability, it is acceptable for competitors to do the same. Kant espoused the notion of one categorical imperative–one rule from which all moral action could derive–which is: “Act only according to that maxim by which you can, at the same time, will that it should become a universal law.” It most closely aligns with the “golden rule” which is present in many ethical systems.

Social Justice Theory

Twentieth century thinker John Rawls espoused a social justice theory wherein he argues the greater good compels the loss of some freedom for individuals. In other words, social justice or fairness is the measurement of whether an action is ethical. Rawls’ work was founded on the philosophy of John Locke and Jean-Jacques Rousseau who argued under so-called social contract theory that a person’s moral obligations are founded on a social contract with others to live in an ordered society. Rawls wrote that “Each person possesses an inviolability founded on justice that even the welfare of society as a whole cannot override. For this reason, justice denies that the loss of freedom for some is made right by a greater good shared by others.” Very simply, he argued that each individual must surrender some rights to a legislative trustee who acts in good faith for the greater good and that the least advantaged in society should be afforded special treatment. Social justice theory has been criticized because fairness and justice are subjective terms which can never be quantified. For example, state seatbelt laws compel people to forgo the choice of wearing a seatbelt, but the laws have an overall good effect on society.

Virtue Ethics

Virtue ethics is a theory developed by the Greek philosopher Aristotle which emphasizes the value of virtuous qualities rather than rules or results. Aristotle argued that the individual should choose personal inward behavior to be ethical rather than relying solely on external law and customs. The idea is that if a person’s character is virtuous, his or her choices and actions will be also. For example, regarding lying, a virtuous ethicist will focus less on the lying and more on what telling a lie says about one’s character and moral behavior.

11.11Corporate Governance

Recent corporate misconduct has resulted in a renewed focus by regulators, shareholders, and business thought leaders on the concept of corporate governance. Corporate governance is defined as the systems of control, both external and internal, which monitor the actions of directors and management in an effort to mitigate risk and prevent misdeeds.

External Controls

External controls include law, customs, and reporting requirements. In recent years, corporate reporting requirements have become more onerous for firms as legislatures around the world have sought to protect investors from corporate malfeasance. Additionally, the rules governing disclosure of misconduct by those providing services to a firm, like accountants and lawyers, have become more demanding. As noted earlier, the passage of Sarbanes-Oxley is just such a response.

Internal Controls

Internal controls are measures that regulate a corporation’s actions, auditing, and authorizations and accounting to major creditors. It consists of monitoring of board and management action, auditing internal procedures and finances, reviewing remuneration rubrics, reporting to shareholders, maintaining a balance of power over financial decisions, and authorizations and accounting to major creditors.

Areas of Corporate Citizenship

There are five areas which govern the consensus view of good corporate citizenship.

Disclosure and Transparency

First is the requirement of disclosure and transparency. Organizations must make known the roles and responsibilities of key players in the business and maintain best practices procedures for financial recording and reporting.

Safeguarding the Rights and Interests of Shareholders

Second, a firm must safeguard the rights and interests of shareholders. A modern organization has the duty to inform shareholders of corporate actions, encourage shareholders to exercise their rights and responsibilities, and promote participation of shareholders in the annual meeting.

Strong Board of Directors

Third, a firm must have a strong board of directors. Much of the criticism of recent years about corporations has been the lackadaisical approach of the board of directors to executive manager oversight. Many boards were only too happy to hear the good news of high profits, without delving into the details of how some of those extraordinarily high results were achieved. The modern view is that a board of directors must be skilled, active, and vigilant in protecting the interests of shareholders with oversight.

Considering the Interests of Stakeholders

Fourth, a modern firm must account for the interests of stakeholders. As we saw earlier, it is often difficult to identify who is a stakeholder to which a corporation owes a duty, as many persons wholly unconnected with a company may be impacted by a corporate decision. Nevertheless, with every major action, a firm should take into consideration the interests of employees, customers, local communities, and policymakers, as well as environmental interests. These stakeholders may not have formal legal or contractual rights, but the modern view is that corporate social responsibility compels their inclusion into the decision-making process.

Integrity and Ethical Conduct

Finally, and perhaps most importantly, integrity and ethical behavior must permeate the culture of an organization. The possession of high ethical and moral conduct should be the highest priority in selecting board and executive officers of the firm. Every firm must have a code of ethics that is taught and modeled by senior executives.

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

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Back to my LMS

Points: 50

Started on Jan 12 at 15:10Your Submission:

1 

Restoring credibility to a witness’ claim

Plainti�’s challenge to defendant’s claim

No other explanation can be derived from the facts—evidence

Reducing the integrity of a witness’ claim

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FEEDBACK

0 / 2 (0.0%)

Answer: No other explanation can be derived from the facts—
evidence

2 

More likely than not evidence

A jury is separated from the community during a trial

Evidence assuming assent of the reasonable person

First-sight evidence



FEEDBACK

2 / 2 (100.0%)

Answer: A jury is separated from the community during a trial

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1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

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3 

Return a case to a trial court for resolution

Rati�cation of a trial court’s decision

Changing a trial court’s decision

Using compromise to settle a dispute

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FEEDBACK

2 / 2 (100.0%)

Answer: Ratification of a trial court’s decision

4 

Filer of a complaint

Failure of the defendant to ful�ll an obligation

The target of a complaint

Court order to appear in trial

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FEEDBACK
2 / 2 (100.0%)

Answer: Failure of the defendant to fulfill an obligation

5 

Determination of jurors’ �tness for jury duty

A jury is enlisted

Testimony out of court during pre-trial investigation

Summoning of potential jurors

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FEEDBACK
2 / 2 (100.0%)

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

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Answer: Testimony out of court during pre-trial investigation

6 

More likely than not evidence
Court order to appear in trial

Use of a third party to resolve a dispute, often legally binding

Using a third party (speci�cally) to resolve a dispute

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FEEDBACK
2 / 2 (100.0%)

Answer: Using a third party (specifically) to resolve a dispute

7 

Law is a means of redistributing wealth or promoting social
justice

Law is a function of economic forces

Law is a product of people’s inalienable, natural rights

Law is the means by which a ruling class maintains control

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FEEDBACK
2 / 2 (100.0%)

Answer: Law is a product of people’s inalienable, natural rights

8 

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

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The judge may reject the jury’s verdict, but must �rst confer
with a panel of three other judges.

The judge must enter judgment based on the jury’s verdict,
since all jury members passed the voir dire process.

The judge can make a di�erent judgment, notwithstanding the
verdict.

The judge may not reject the jury’s verdict, but he or she can
order a new trial with the same jury.

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FEEDBACK
0 / 2 (0.0%)

Answer: The judge can make a different judgment, notwithstanding
the verdict.

9 

Law is a function of economic forces
Law is a product of people’s inalienable, natural rights
Law is the means by which a ruling class maintains control
Law is a means of redistributing wealth or promoting social
justice
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FEEDBACK
2 / 2 (100.0%)

Answer: Law is the means by which a ruling class maintains
control

10 

Texas

Federal Court

Mississippi

New York

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

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
FEEDBACK
2 / 2 (100.0%)

Answer: Mississippi

11 

Provide legislative processes

Prevent discrimination

Allow for orderly protest

Deter crime

Allow debate on change

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FEEDBACK
0 / 2 (0.0%)

Answer: Provide legislative processes

12 

To reveal which party has more leverage over the other party

To reveal all available information about the facts of the
situation

To force agreement between parties

To help injured parties gain maximum bene�ts from the guilty
party


FEEDBACK
2 / 2 (100.0%)

Answer: To reveal all available information about the facts of the
situation

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

https://app.myeducator.com/course/activity.lti/760ahe/2224812094687412225/ 6/11

13 

Law is the means by which a ruling class maintains control
Law is a function of economic forces
Law is a means of redistributing wealth or promoting social
justice
Law is a product of people’s inalienable, natural rights

FEEDBACK
2 / 2 (100.0%)

Answer: Law is a function of economic forces

14 

Since Emerly was already found guilty, the appeals court will
not make any decision in her favor, even if evidence against her
was prejudicial.

If an appeals court �nds that the evidence against Emerly
should have been excluded, she can receive a new trial.

Since new evidence is not generally accepted in appeals courts,
Emerly cannot make any claims about the biased nature of the
evidence used against her.

If an appeal court �nds that the evidence against Emerly should
have been excluded, she will receive a new trial in the Supreme
Court.


FEEDBACK
0 / 2 (0.0%)

Answer: If an appeals court finds that the evidence against Emerly
should have been excluded, she can receive a new trial.

15 

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

https://app.myeducator.com/course/activity.lti/760ahe/2224812094687412225/ 7/11

The jury will likely be hung.

The jury will refrain from o�ering a verdict, and the judge will
o�er a verdict instead.

The jury will continue to deliberate until it reaches a unanimous
vote, since this is a criminal case.

The jury will continue to deliberate until it can at least come to a
consensus, if not unanimity.


FEEDBACK
0 / 2 (0.0%)

Answer: The jury will likely be hung.

16 

Arbitration

Jury trial

Negotiation

Mediation


FEEDBACK
0 / 2 (0.0%)

Answer: Arbitration

17 

A party can receive a change of venue when it anticipates a
fundamentally biased trial environment.

A party can receive a change of venue for any logical reason.

A party is required to hold a trial as close as possible to the
location or source of a dispute.

A party can receive a change of venue when it anticipates losing
a court case in a local venue.

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

https://app.myeducator.com/course/activity.lti/760ahe/2224812094687412225/ 8/11


FEEDBACK
2 / 2 (100.0%)

Answer: A party can receive a change of venue when it anticipates
a fundamentally biased trial environment.

18 

Law is a function of economic forces
Law is a product of people’s inalienable, natural rights
Law is a means of redistributing wealth or promoting social
justice
Law is the means by which a ruling class maintains control

FEEDBACK
0 / 2 (0.0%)

Answer: Law is a means of redistributing wealth or promoting social
justice

19 

Allow debate on change
Allow for orderly protest
Deter crime
Prevent discrimination
Provide legislative processes

FEEDBACK
0 / 2 (0.0%)

Answer: Allow debate on change

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

https://app.myeducator.com/course/activity.lti/760ahe/2224812094687412225/ 9/11

20 

Cleo cannot join the case because of the statute of limitations.

Cleo may be allowed to intervene in the case and gain party
status, joining the plainti�.

Cleo cannot join the case because his problem and interests are
separate from that of his neighbor.

Cleo may be allowed to intervene in the case and gain party
status, joining the defendant.


FEEDBACK
2 / 2 (100.0%)

Answer: Cleo may be allowed to intervene in the case and gain
party status, joining the plaintiff.

21 

Provide legislative processes
Allow debate on change
Prevent discrimination
Allow for orderly protest
Deter crime

FEEDBACK
0 / 2 (0.0%)

Answer: Deter crime

22 

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

https://app.myeducator.com/course/activity.lti/760ahe/2224812094687412225/ 10/11

May not sell the artifacts.

May still sell the artifacts, as long as the state law of an
American buyer permits it.

May not sell the artifacts unless they were acquired prior to the
passage of the treaty.

May still sell the artifacts, since the treaty covers government,
and not private, transactions.


FEEDBACK
0 / 2 (0.0%)

Answer: May not sell the artifacts.

23 

More than one response is correct.

The Act of State Doctrine does not apply to this situation, and
Country B may contest the decision.

Nation B cannot meddle with Nation A’s decision under the
doctrine of Comity of Nations.

Nation B cannot meddle with Nation A’s decision under the Act
of State Doctrine


FEEDBACK
2 / 2 (100.0%)

Answer: Nation B cannot meddle with Nation A’s decision under
the Act of State Doctrine

24 

1/17/2020 Week 1 Practice Assignment — ETH 321 – DL

https://app.myeducator.com/course/activity.lti/760ahe/2224812094687412225/ 11/11

Do you have feedback on this page?

Submit Assessment

Kantian ethics and Social Justice Theory

Virtue ethics and Kantian ethics

Virtue ethics, Kantian ethics, and social justice theory

Virtue ethics only


FEEDBACK
2 / 2 (100.0%)

Answer: Virtue ethics and Kantian ethics

25 

Social justice theory and utilitarianism

Utilitarianism and Kantian ethics

Social justice theory, utilitarianism, and Kantian ethics

Social justice theory only


FEEDBACK
0 / 2 (0.0%)

Answer: Social justice theory only

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