d2 3
Reflect on the assigned readings for the week. Identify what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding.
Also, provide a graduate-level response to each of the following questions:
- Mike Millionaire is the CEO of Murky Mining, Inc. Mike is not involved in the day-to-day operations of Murky Mining, Inc., and the company has incurred multiple violations under 33 U.S.C. § 1319. Could Mike Millionaire be charged or fined as an officer of the company? Would the fact that Mike Millionaire was not involved in the day-to-day operations of Murky Mining, Inc. be considered?
- Explain each of the elements of the tort of negligence, providing examples of each in a business setting.
Respond to the post of at least two peers, using 100 words minimum each.
[Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion].
[Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review]
[Your post must be substantive and demonstrate insight gained from the course material. A peer response such as “I agree with her,” or “I liked what he said about that” is not considered substantive and will not be counted for course credit. A blank post just to review other submissions will not be tolerated]
Chapter 9
Business Torts
Its Legal, Ethical, and
Global Environment
Marianne M. Jennings
Business
11th Ed.
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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9-1
Latin Word Tortus: Means “Crooked, Dubious, Twisted”
A Tort is a Civil Wrong That is an Interference With Someone’s Person or Property Such That Injury Results
What Is a Tort?
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Tort is a Private Wrong
Injured party seeks remedy
Recovers damages from the one who commits the tort
Crime is a Public Wrong
Wrongdoer is prosecuted
Pays fine to government or is jailed to pay debt to society
Torts vs. Crimes
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Intentional Torts
More than an accidental wrong
Tort of Negligence
Accidental harms that result from the failure to think through the consequences
Still have liability but there are defenses
Strict Tort Liability
Absolute standard of liability
Used in product liability cases
Types of Torts
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9-4
Untrue Statement By One Party That is Published To a Third Party
Slander is Oral or Spoken Defamation
Libel is Written, and in Some States Broadcast, Defamation
Defamation
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Elements
Statement about a business’ or person’s reputation or honesty that is untrue
Statement is directed at business and made with malice and intent to injure
Publication − someone heard and understood the statement
Damages − economic losses such as damage to reputation
Defamation
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9-6
Defenses
Truth is a complete defense
Privileged speech: three types
Absolute privilege
Opinion privilege
Qualified privilege
Defamation
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9-7
Defense of Privilege
Absolute: Testimony under oath and legislative debate (so long as related to the matter at hand)
Opinion: Analysis and op-ed articles; choice of words and thoughts on conduct or actions (calling someone a “deadbeat” who has, in fact, not paid his bills) are not defamation and enjoy First Amendment protection
Qualified: Media (so long as item published without malice, which is knowing information is false or with reckless disregard for whether it is true or false)
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9-8
Manager’s Desk: Randi W. v. Muroc Joint Unified School District (1997)
What concerns are raised about imposing liability on those who provide letters of recommendation?
What was the proximate cause of Randi W’s injury?
Defamation & Privilege
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9-9
Randi W Case: Employment History
Mendota District
Tranquility District
Golden Plains District
Muroc District
Livingstone District
“Sexual remarks”; “sexual situations”
“Panty raid”; “sexual remarks”; “sexual overtures”
“Parent complaints”
“Sexual touching” allegations
“Molested and touched Randi W”
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Defamation
Malice required if the person claiming defamation is a public figure
Malice is knowledge that the statement is true or false
Malice is publishing a false statement with reckless regard as to whether it was true or false
9-10
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9-11
Case 9.1 Trump v. O’Brien (2011)
Was malice established in the case?
Why was it necessary to establish malice?
Is the author entitled to the protection of the privilege?
Defamation
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9-12
Elements
Third party knew of existing contract between two primary parties
Third party intended to interfere with or cause a breach contract
Original party to the contract is injured by breach of contract induced by the third party
Contract Interference
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9-13
Macy’s v. Martha Stewart Living Omnipedia, Inc. (2015)
Martha Stewart, Penney’s, and Macy’s
The court found for Macy’s, but case continues its litigation
Martha Stewart was dismissed from the litigation as the two retail stores battled whether there had been interference
Contract Interference
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9-14
Custody of Someone Else for any Period of Time Against Their Will
Need Not Establish Physical Damages; Just the Fact That They are Detained Establishes Sufficient Damages
Defense of Shopkeeper’s Privilege
Can detain for reasonable time
Must have basis for detaining the individual
False Imprisonment
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9-15
Liability for Conduct That Exceeds All Bounds of Decency
Difficult for Plaintiff to Establish Emotional Distress
Has Been Used By Debtors Against Collectors
Intentional Infliction of Emotional Distress
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9-16
Public Disclosure of Private Facts
Appropriation of Another’s Name For Commercial Advantage
Intrusion Into Private Affairs of Another – The First Paparazzi Case
Galella v. Onassis (1972)
The court ruled Galella had invaded Jacqueline Kennedy Onassis’ privacy
HIPAA Protects Health/Patient Privacy
Invasion of Privacy
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Unauthorized Use of Someone’s Name, Voice, Image, or Likeness For Commercial Advantage
Even if Manner of Use is Accurate, it is a Tort Because of the Use Without Authorization
Appropriation
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9-18
Case 9.2 Bullard v. MRA Holding LLC (2013)
Did MRA have permission to use the photos?
Was the use of Bullard’s photos appropriation?
Appropriation
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9-19
Duty − Element One
All persons are expected to behave as ordinary and reasonably prudent persons do
Standard of the law is not always used
Example: The speed limit of 45 is not appropriate in ice and snow
Negligence
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9-20
Case 9.3 Van Horn v. Watson (2008)
Breach of Duty − Element Two
Failure to comply with established standard of conduct
Often connected with element one as courts struggle to determine whether a duty even exists
Negligence
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Negligence
Case 9.4 Chaney v. Starbucks (2015)
Issue of liability for actions of third parties
Duty to watch who’s plugging what and where?
Duty of customer to watch for plug?
9-21
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9-22
Premises Liability Tips
Good lighting
Access to public phones
Security patrols
Locked gates to parking lots; gate or security access
Escorts provided for customers and employees to their vehicles after closing hours
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9-23
Premises Liability Tips
Camera security
Assigned parking spaces for tenants and employees
Warning signs to use caution and be alert
Many hotels change key access codes with each guest and post security personnel near guest elevators at night so that there is no access to the elevators unless you can show your room key. Some hotels have floors for women who are traveling alone, and extra security is provided on those floors.
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9-24
Causation − Element Three
Breach of duty caused the plaintiff’s injuries
“But/for” causation test
Restricted by the zone of danger rule = Duty
Negligence
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Proximate Cause (Foreseeability) − Element Four
Some courts hold the cut-off line must be drawn between the “but/for” causation and events contributing to plaintiff’s injuries
Case 9.5 Palsgraf v. Long Island Ry. Co. (1928)
There is a legal limit to what is foreseeable
Negligence
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9-26
Damages − Element Five
Medical bills
Lost wages
Pain and suffering
Loss of consortium (as between spouses)
Negligence
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9-27
Contributory Negligence
Plaintiff is also negligent
Operates as a complete bar to recovery
Comparative Negligence
Compare acts of plaintiff and defendant and assess blame for accident
Reduces plaintiff’s recovery by amount of fault
Defenses to Negligence
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9-28
Assumption of Risk − Plaintiff Knew of Inherent Risk and Went Forward Anyway
Case 9.6 The Landings Assoc. Inc. v. Williams (2012)
Is the risk of being attacked by an alligator inherent in a neighborhood such as this one?
Had there been any previous attacks?
Defenses to Negligence
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9-29
Current Attempts at Reform
Limits on verdicts
Standards for recovery
Limits on Punitives
Eighth Amendment excessive punitive damages is cruel and unusual punishment
Due Process violated with excessive punitives – State Farm v. Campbell (2003)
Exxon case and other statutory limitations
Tort Reform
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9-30
Strict Liability
Absolute Liability for Injury
Can Result From Violation of Statute (Improper Disposal of Toxic Waste)
Public Policy Reason – Manufacturers Take Appropriate Steps to Design and Manufacture Products
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Chapter 8
Business Crime
Its Legal, Ethical, and
Global Environment
Marianne M. Jennings
Business
11th Ed.
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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8-1
What Is Business Crime?
Corporate Crime, Also Called “White Collar Crime”
Includes Medicare Fraud
Public Corruption Crimes
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8-2
The Crimes Within a Corporation
Financial fraud: manipulating earnings
Occurs when managers feel pressures to meet earnings goals
Enron and Andrew Fastow
Forensic accounting (“the most secure job in America”)
What Is Business Crime?
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8-3
The Crimes Corporations Commit
Marketing missteps
Pharmaceutical industry and the failure to comply with FDA regulations on sales
The Crimes Employees Commit
Embezzlement
Internal controls issues
What Is Business Crime?
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8-4
The Intercorporation Crimes
Kickbacks
Antitrust violations
Securities fraud
Obstruction
What Is Business Crime?
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8-5
Liability for Crimes
Officers and Directors are Liable
If they authorized the conduct, or
If they knew about the conduct and did nothing
Case 8.1 United States v. Park (1975)
What standard of liability did the instruction given by the judge impose?
Is Mr. Park guilty of a criminal violation?
What does this case say about a manager’s responsibility?
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5
Federal Laws
Boesky and Milken: The Insider Trading and Securities Fraud Enforcement Act of 1988 (ITSFEA)
Savings and Loan Crisis: The “white-collar kingpin” law
Enron et al.: Sarbanes-Oxley
Sarbanes-Oxley Act (2002)
Criminal penalties increased
Personal accountability enhanced
8-6
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8-7
Federal Laws
White-Collar Kingpin Act
Federal Law imposes minimum federal mandatory sentences on corporate officers
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Federal Laws
Honest Services Fraud
Action by an officer that deprives the shareholders of that officer’s honest services
Following Skilling v. U.S., require proof of bribery, conflicts, or corruption to be a charge for a corporate officer
8-8
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8-9
Federal Laws
Dodd-Frank – Wall Street Reform and Consumer Protection Act
Creates a Consumer Financial Services Bureau
Mortgage lenders, brokers, investment bankers, insurers, and investment firms are covered by provisions in this law
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Other Business Crimes
OSHA Rules
Failure to comply with safety laws
8-10
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8-11
Penalties for Business Crime
ACT
Internal Revenue Code
26 U.S.C. § 7201
Sherman Act (antitrust)
15 U.S.C. § 1
Sarbanes-Oxley
15 U.S.C. §1512
(document destruction, concealment, alteration, mutilation during pending civil or criminal investigation)
PENALTIES
$100,000 ($500,000 for corporations) and/or 5 years
For evasion (plus costs of prosecution as well as penalties and assessments: 5-50%)
$350,000 and/or 3 years
$10,000,000 for corporations
Injunctions
Divestiture
20 years plus fines
(25 years for perjury)
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8-12
Penalties for Business Crime
Sarbanes-Oxley
(certification of financial statements)
1933 Securities Act
15 U.S.C. § 77x (as amended by Sarbanes-Oxley)
Securities and Exchange Act of 1934
15 U.S.C. § 78ff
Clean Air Act
42 U.S.C. § 7413
$1,000,000 and/or 10 years
If willful: $5,000,000 and 20 years
Officers who earn bonuses based on falsified financial statements must forfeit them
$100,000 and/or 10 years
$5,000,000 and/or 20 years
$25,000,000 for corporations
Civil penalties in addition of up to three times profit made or $1,000,000, whichever is greater
$1,000,000 and/or 5 years
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8-13
Penalties for Business Crime
Clean Water Act
33 U.S.C. § 1319
Occupational Health Safety Act
29 U.S.C. § 666
Consumer Product Safety Act
15 U.S.C. § 2070
For negligent violations: $25,000/day and/or 1 year
For knowing violations: $50,000/day and/or 3 years
For second violations: $100,000/day and/or 6 years
For false statements in reports, plans, or records: $10,000/day and/or 2 years
Willful violation causing death: $70,000 and/or 1 year; minimum of $5,000 per willful violation
Giving advance notice of inspection: $1,000 and/or 6 months
False statements or representations: $10,000 and/or 6 months
$50,000 and/or 1 year
Tampering: up to $500,000 and/or 10 years
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Penalties
Corporate Integrity Agreements (CIA)
Presence of monitors
Criminal indictments of corporations for common law crimes
Shame Punishment
Community Service
Designated Felon
Officer and Executive Banishment
8-14
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Penalties
Deferred Prosecution Agreements
Responsible Corporate Officer (health care field)
New and higher penalties: Percentage of profits fine
8-15
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8-16
Penalties
Federal Sentencing Guidelines
A type of mandatory sentence regulation
When certain elements are present, there must be prison time
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8-17
Penalties
Corporate Sentencing Guidelines
Developed by U.S. Sentencing Commission
Sentences for officers increase if crime prevention methods are not in place at the corporation
Avoiding penalties
Written crime prevention program
Officers assigned responsibility for enforcement
Screen employees
Training programs and written materials
Prevention and detection of crime processes
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8-18
Much More Than Compliance
Businesses that do the following have reduced sentences under the guidelines:
Have a code of ethics in place
Conduct training on the code of ethics
Have a company hot line and ombudsperson for employees to utilize anonymously in reporting violations
Protect employees who report violations
Investigate all allegations regardless of their sources
Report all violations immediately and voluntarily
Offer restitution to affected parties
Cooperate and negotiate with regulators
Admit your mistakes and shortcomings
Be forthright and public with your code of ethics
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18
Corporate Board Responsibility
Directors can be held personally liable for fraud
Must show responsibility for management of the compliance program
Also possible personal liability to shareholders for fraud
8-19
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8-20
Business Crime Elements
Mens Rea, Scienter, or Criminal Intent
State of mind required to commit a crime
For corporations − prove intention on behalf of directors
To prosecute, must show individual intent
Can establish by showing their knowledge of actions and failure to object
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8-21
Business Crime Elements
Case 8.2 People v. M & H Used Auto Parts & Cars, Inc. (2005)
What is the difference between knowledge of the law and knowledge of the conduct?
What knowledge did the state prove the defendants had?
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21
Business Crime Elements
Mens rea, Conscious Avoidance, and Corporate Officers
Liability cannot be avoided by distancing themselves from the preparation of financial statements
Communication and contact with those who prepare the statements is sufficient to establish knowledge
8-22
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8-23
Business Crime Elements
Actus Reus − The Act of the Crime
Intent alone is not a crime; the act must be committed
The required conduct described for each crime
Sometimes a failure to act may constitute a crime − for example, failure to pay taxes
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Theft
Intent to take property
Actual taking of property for permanent use
No authorization to take the property
Embezzlement
Intent to take property
Actual taking of property for use, temporary use is still crime
By person entrusted with property
Examples of Crimes
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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Examples of Crimes
Obstruction of Justice
Intent to impede, obstruct, or influence investigation
Auditors must retain work papers for five years
Felony − 10 years
8-25
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Internet Crime
Unauthorized Access to Computer Crimes
Electronic Communications Privacy Act
Stored Communications Act
Case 8.3 New Jersey v. Riley (2009)
– What was the type of misuse?
– Why does the court have concerns about applying criminal statutes to workplace excesses on computer use?
8-26
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Internet Crime
Unauthorized Use of Computer Resources
Economic Espionage Act: Use, downloading, copying, duplicating, uploading, transmitting trade secrets
Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM)
8-27
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
8-28
Criminal Fraud
Obtaining money, goods, services, or property through false on misleading statements
Requires intent to defraud
Counterfeit Access Device and Computer Fraud and Abuse Act
Examples of Crimes
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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Internet Crime
Cyberbullying, Cyberstalking, and Privacy
State and federal regulation
Statutory definitions of conduct for criminal prosecution
8-29
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Internet Crime
Copyright Crimes Online (Chapter 15)
Drug dealing and pornography are still crimes online
8-30
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Other Crimes
Criminal fraud
Commercial Bribery
8-31
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
RICO
Pattern of racketeering activity
Must have at least two consecutive violations
Offenses that qualify as predicate offenses include pornography, murder, kidnapping, bribery, extortion, fraud, etc.
8-32
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
8-33
USA Patriot Act
Business Crimes and USA Patriot Act
Prior to 2001: Money Laundering Control Act
Post 2001: USA Patriot Act amended Money Laundering Control Act and Bank Secrecy Act
Cannot contract with terrorist groups or funnel cash to them for services (Chiquita Consider)
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Additional Crimes
OSHA violations
Antitrust violations
Consumer Product Safety violations
State crimes
8-34
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
8-35
Procedural Rights
Fourth Amendment Rights
Privacy amendment
Search warrant procedures
Must be based on probable cause
Must be issued by a disinterested magistrate
If searches are done improperly, evidence is inadmissible at trial
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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8-36
Fourth Amendment Rights
Exceptions to warrant requirement
Records are being destroyed
“Plain view” exception
Warrants and Technology: Texts, E-Mails, and ISPs
Case 8.4 U.S. v. King (2007)
Is there a reasonable expectation of privacy in a shared drive?
Procedural Rights
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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Procedural Rights
Records in possession of a third party
Can recover them
Third party cannot assert Fourth Amendment rights − must be record owners
8-37
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
Procedural Rights
8-38
Privileged Documents and the Fourth Amendment
Notes on trial strategy, audit procedures, and communications between lawyers and clients are protected
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
8-39
Fifth Amendment Rights
Protection against self-incrimination
Given to natural persons − not to corporations
Corporate officers can assert it to protect themselves but not corporate records
Procedural Rights
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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8-40
Fifth Amendment Rights
Miranda warnings
Given when individual is in “custody”
“Custody” means inability to leave − not necessarily jail
Right to attorney; right to silence − notice of evidentiary use of statements
No coaxing of confessions prior to warnings
Procedural Rights
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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8-41
Criminal Proceedings
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
8-42
Due Process Protections of Fifth Amendment
Warrant or warrantless arrest begins process
Warrant − you have committed crime and they look for you
Warrantless − you are arrested at the scene
Initial appearance
Required within short period (24 hours)
Charges explained
Bail terms set; amount; or released on own recognizance
Procedural Rights
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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8-43
Due Process Protections of Fifth Amendment
Preliminary hearing or grand jury
Hearing − information issued; defendant is present and can cross-examine witnesses
Grand jury − indictment; secret proceedings
Arraignment
Plea is entered
Trial date is set
Procedural Rights
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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8-44
Due Process Protections of Fifth Amendment
Discovery: Mandatory disclosure of witnesses and evidence
Pretrial conference: Try to settle some issues if possible
Omnibus hearing: Challenge evidence admissibility
Trial
Appeal
Procedural Rights
©2017 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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