Deck 3: Ethics in Business

Question 1

Discovery Advance Technology Consultants, Inc. (ATC), contracted with RoadTrac, LLC, to provide software and client software systems for the products of global positioning satellite (GPS) technology being developed by RoadTrac. RoadTrac agreed to provide ATC with hardware with which ATC's software would interface. Problems soon arose, however. ATC claimed that RoadTrac's hardware was defective, making it difficult to develop the software. RoadTrac contended that its hardware was fully functional and that ATC had simply failed to provide supporting software. ATC told RoadTrac that it considered their contract terminated. RoadTrac filed a suit in a Georgia state court against ATC alleging breach of contract. During discovery, RoadTrac requested ATC's customer lists and marketing procedures. ATC objected to providing this information because RoadTrac and ATC had become competitors in the GPS industry. Should a party to a lawsuit have to hand over its confidential business secrets as part of a discovery request? Why or why not? What limitations might a court consider imposing before requiring ATC to produce this material?

Answer 1

Finding the limitations that court considers imposing before requiring ATC to produce material:
• A party to a lawsuit should not have to hand over its confidential business secrets as part of a discovery request when as a result of producing that information it could be irreparably harmed by doing so.
• A court might consider imposing limitations on the extent to which information is conveyed in a case during the discovery process.
• When a court enters order protecting discovery information from misuse, it must provide protection to nontechnical as well as to technical information.
• Also, it would be prudent to delineate specifically what it claimed as a secret in a party's elemental burden of identification.

Question 2

Ronald Metzgar placed his fifteen-month-old son, Matthew, awake and healthy, in his playpen. Ronald left the room for five minutes and on his return found Matthew lifeless. A toy block had lodged in the boy's throat, causing him to choke to death. Ronald called 911, but efforts to revive Matthew were to no avail. There was no warning of a choking hazard on the box containing the block. Matthew's parents hired an attorney and sued Playskool, Inc., the manufacturer of the block, alleging that the manufacturer had been negligent in failing to warn of the block's hazard. Playskool filed a motion for summary judgment, arguing that the danger of a young child choking on a small block was obvious. Using the information presented in the chapter, answer the following questions.
Suppose that the judge denied Playskool's motion and the case proceeded to trial. After hearing all the evidence, the jury found in favor of the defendant. What options do the plaintiffs have at this point if they are not satisfied with the verdict?

Answer 2

If after hearing jury orders in favor of the defendant, plaintiff is not satisfied with the verdict then they can file an appeal in higher court. However, plaintiff must have legitimate grounds to file an appeal. Plaintiff's attorney must file a notice of appeal with the clerk of trial court within a prescribed period of time.

Question 3

Discovery.
Rita Peatie filed a suit in a Connecticut state court against Wal-Mart Stores, Inc., to recover for injuries to her head, neck, and shoulder. Peatie claimed that she had been struck two years earlier by a metal cylinder falling from a store ceiling. The parties agreed to nonbinding arbitration. Ten days before the hearing, the plaintiff asked for, and was granted, four more months to conduct discovery. On the morning of the rescheduled hearing, she asked for more time, but the court denied this request. The hearing was held, and the arbitrator ruled in Wal-Mart's favor. Peatie filed a motion for a new trial, which was granted. Five months later, she sought through discovery to acquire any photos, records, and reports held by Wal-Mart regarding her alleged injury. The court issued a "protective order" against the request, stating that the time for discovery had long been over. On the day of the trial-four years after the alleged injury-the plaintiff asked the court to lift the order. Should the court do so? Why or why not? [Peatie v. Wal-Mart Stores, Inc., 112 Conn. App. 8, 961 A.2d 1016 (2009)] (See page 58.)

Answer 3

Discovery is the process of attaining information from the witnesses or opposing party prior to trial. Discovery comprises gaining access to documents, witnesses, records and other kinds of corroboration. Discovery also serves to slender the issues so that trial time is consumed on the key questions in the case. A court can impose sanctions on a party who fails to respond to discovery requests. In this case, court should not lift the orders because ample time was given to P to conduct the discovery and she failed to do so. Discovery was once reschedule, but on the rescheduled day plaintiff again failed to do so. Therefore, court can issue protective order against the request as the time for discovery has long been over.

Question 4

Jury Misconduct. Michelle Fleshner worked for Pepose Vision Institute (PVI), a surgical practice. She was fired after she provided information to the U.S. Department of Labor about PVI's overtime pay policy. She sued for wrongful termination, and the jury awarded her $125,000. After the trial, a juror told PVI's attorneys that another juror had made anti-Semitic statements during jury deliberations. The comments concerned a witness who testified on PVI's behalf. According to the juror, the other juror said, about the witness: "She is a Jewish witch." "She is a penny-pinching Jew." "She was such a cheap Jew that she did not want to pay Plaintiff unemployment compensation." Another juror confirmed the remarks. PVI filed a motion for a new trial on the basis of juror misconduct. The trial judge held that the comments did not prevent a fair trial from occurring. PVI appealed. Do you think such comments are sufficient to require a new trial, or must a juror's bias be discovered during voir dire for it to matter? Explain. [Fleshner v. Pepose Vision Institute, 304 S.W.3d 81 (Mo. 2010)]

Question 5

Service of Process
Dr. Kevin Bardwell owns Northfield Urgent Care, LLC, a Minnesota medical clinic. Northfield ordered flu vaccine from Clint Pharmaceuticals, a licensed distributer of flu vaccine located in Tennessee. The parties signed a credit agreement that specified that any disputes would be litigated in the Tennessee state courts. When Northfield failed to pay what it owed for the vaccine, Clint Pharmaceuticals filed a lawsuit in Tennessee and served process on the clinic via registered mail to Dr. Bardwell, the registered agent of Northfield. Bardwell's wife, who worked as a receptionist at the clinic and handled inquiries on the clinic's Facebook site, signed for the letter. Bardwell did not appear on the trial date, however, and the Tennessee court entered a default judgment against Northfield. When Clint Pharmaceuticals attempted to collect on the judgment in Minnesota, Bardwell claimed that the judgment was unenforceable. He asserted that he had not been properly served because his wife was not a registered agent. Should the Minnesota court invalidate the Tennessee judgment? Was service of process proper when it was mailed to the defendant medical clinic and the wife of the physician who owned the clinic opened the letter? Explain. [Clint Pharmaceuticals v. Northfield Urgent Care, LLC, 2012 WL 3792546 (Minn.App. 2012).] (See page 52.)

Question 6

Discovery Rules In the past, the rules of discovery were very restrictive, and trials often turned on elements of surprise. For example, a plaintiff would not necessarily know until the trial what the defendant's defense was going to be. In the last several decades, however, new rules of discovery have substantially changed this situation. Now each attorney can access practically all of the evidence that the other side intends to present at trial, with the exception of certain information-namely, the opposing attorney's work product. Work product is not a precise concept. Basically, it includes all of the attorney's thoughts on the case. Can you see any reason why such information should not be made available to the opposing attorney? Discuss fully.

Question 7

Business Ca se Problem with Sample Answer: Discovery.

Jessica Lester died from injuries suffered in an auto accident caused by the driver of a truck owned by Allied Concrete Co. Jessica's widower, Isaiah, filed a suit against Allied for damages. The defendant requested copies of all of Isaiah's Facebook photos and other postings. Before responding, Isaiah "cleaned up" his Facebook page. Allied suspected that some items had been deleted, including a photo of Isaiah holding a beer can while wearing a T-shirt that declared "I [heart] hotmoms." Can this material be recovered? If so, how? What effect might Isaiah's "postings" have on the result in this case? Discuss. [Allied Concrete Co. v. Lester, 736 S.E.2d 699 (2013)] (See page 58.)

Question 8

IN THE LANGUAGE OF THE COURT CORTIÑAS, J. [Judge]
Espresso Disposition Corporation 1 and Rowland Coffee Roasters, Inc. (collectively "Appellants") seek review of the trial court's order denying their motions to dismiss [Santana Sales Marketing Group, Inc.'s ("Appellee's")] third amended complaint. Appellants claim that the trial court erred in denying their motions to dismiss because the plain and unambiguous language in the parties' * * * agreement contains a mandatory forum selection clause [a provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract] requiring that all lawsuits brought under the agreement shall be in Illinois.
Espresso Disposition Corporation 1 and Santana and Associates entered into the * * * agreement in 2002. The agreement provides for a mandatory forum selection clause in paragraph 8. The provision states:
The venue with respect to any action pertaining to this Agreement shall be the State of Illinois. The laws of the State of Illinois shall govern the application and interpretation of this Agreement.
However, Appellee filed a lawsuit against Appellants alleging a breach of the agreement in Miami-Dade County, Florida. In fact, Appellee filed four subsequent complaints-an initial complaint, amended complaint, second amended complaint, and third amended complaint-after each and every previous pleading's dismissal was based upon venue as provided for in the agreement's mandatory forum selection clause. Appellee's third amended complaint alleges the forum selection clause was a mistake that was made at the time the agreement was drafted. Additionally, Appellee attached an affidavit [a sworn statement] which states that, in drafting the agreement, Appellee * * * copied a form version of an agreement between different parties, and by mistake, forgot to change the venue provision from Illinois to Florida. In response, Appellants filed their motions to dismiss the third amended complaint, which the trial court denied.
Florida appellate courts interpret a contractual forum selection clause under a de novo standard of review. [The courts review the issue anew, as if the lower courts had not ruled on the issue.] Likewise, as the trial court's order denying appellant's motion to dismiss is based on the interpretation of the contractual forum selection clause, this court's standard of review is de novo. Therefore, the narrow issue before this court is whether the * * * agreement provides for a mandatory forum selection clause that is enforceable under Florida law. Florida courts have long recognized that forum selection clauses such as the one at issue here are presumptively valid. This is because forum selection clauses provide a degree of certainty to business contracts by obviating [preventing] jurisdictional struggles and by allowing parties to tailor the dispute resolution mechanism to their particular situation. Moreover, forum selection clauses reduce litigation over venue, thereby conserving judicial resources, reducing business expenses, and lowering consumer prices. [Emphasis added.]
Because Florida law presumes that forum selection clauses are valid and enforceable, the party seeking to avoid enforcement of such a clause must establish that enforcement would be unjust or unreasonable. Under Florida law, the clause is only considered unjust or unreasonable if the party seeking avoidance establishes that enforcement would result in no forum at all. There is absolutely no set of facts that Appellee could plead and prove to demonstrate that Illinois state courts do not exist. Illinois became the twenty-first state in 1818, and has since established an extensive system of state trial and appellate courts. Clearly, Appellee failed to establish that enforcement would be unreasonable since the designated forum-Illinois-does not result in Appellee's having "no forum at all."
Further, as we have said on a number of occasions, if a forum selection clause unambiguously mandates that litigation be subject to an agreed upon forum, then it is [an] error for the trial court to ignore the clause. Generally, the clause is mandatory where the plain language used by the parties indicates exclusivity. Importantly, if the forum selection clause states or clearly indicates that any litigation must or shall be initiated in a specified forum, then it is mandatory. Here, the agreement's plain language provides that the venue for any action relating to a controversy under the agreement any litigation "shall be the State ofIllinois." The clear language unequivocally renders the forum selection clause mandatory
Appellee would have us create an exception to our jurisprudence on mandatory forum selection clauses based on their error in cutting and pasting the clause from another agreement. Of course, the origin of "cutting and pasting" comes from the traditional practice of manuscript-editing whereby writers used to cut paragraphs from a page with editing scissors, that had blades long enough to cut an 8½ inch-wide page, and then physically pasted them onto another page. Today, the cut, copy, and paste functions contained in word processing software render unnecessary the use of scissors or glue. However, what has not been eliminated is the need to actually read and analyze the text being pasted, especially where it is to have legal significance. Thus, in reviewing the mandatory selection clause which Appellant seeks to enforce, we apply the legal maxim "be careful what you ask for" and enforce the pasted forum.
Accordingly, we reverse [the] trial court's denial of the motions to dismiss Appellee's third amended complaint on the basis of improper venue, and remand for entry of an order of dismissal.
Legal Reasoning Questions
1. Compare and contrast a motion to dismiss with other pretrial motions. Identify their chief differences.
2. Why did the appellants in this case file a motion to dismiss?
3. What is the effect of granting a motion to dismiss?
4. Did the court grant or deny the appellants' motion? Why did the court take this action?

Question 9

A QUESTION OF ETHICS: Service of Process.
Narnia Investments, Ltd., filed a suit in a Texas state court against several defendants, including Harvestons Securities, Inc., a securities dealer. (Securities are documents evidencing the ownership of a corporation, in the form of stock, or debts owed by it, in the form of bonds.) Harvestons is registered with the state of Texas, and thus a party may serve a summons and a copy of a complaint on Harvestons by serving the Texas Securities Commissioner. In this case, the return of service indicated that process was served on the commissioner "by delivering to JoAnn Kocerek defendant, in person, a true copy of this [summons] together with the accompanying copy(ies) of the [complaint]." Harvestons did not file an answer, and Narnia obtained a default judgment against the defendant for $365,000, plus attorneys' fees and interest. Five months after this judgment, Harvestons filed a motion for a new trial, which the court denied. Harvestons appealed to a state intermediate appellate court., claiming that it had not been served in strict compliance with the rules governing service of process. [ Harvestons Securities, Inc. v. Narnia Investments, Ltd., 218 S. W.3d 126 (TexApp.-Houston 2007 )]
(a) Harvestons asserted that Narnia's service was invalid, in part, because "the return of service states that process was delivered to 'JoAnn Kocerek'" and did not show that she "had the authority to accept process on behalf of Harvestons or the Texas Securities Commissioner." Should such a detail, if it is required, be strictly construed and applied? Should it apply in this case? Explain.
(b) Whose responsibility is it to see that service of process is accomplished properly? Was it accomplished properly in this case? Why or why not?

Question 10

Issue Spotters
At the trial, after Sue calls her witnesses, offers her evidence, and otherwise presents her side of the case, Tom has at least two choices between courses of actions. Tom can call his first witness. What else might he do? (See page 65.)
Before the Test
Go to www.cengagebrain.com, enter the ISBN 9781285185248, and click on "Find" to locate this textbook's Web site. Then, click on "Access Now" under "Study Tools," and select Chapter 3 at the top. There, you will find a Practice Quiz that you can take to assess your mastery of the concepts in this chapter, as well as Flashcards and a Glossary of important terms.

Question 11

Court Procedures. Bento Cuisine is a lunch-cart business. It occupies a street corner in Texarkana, a city that straddles the border of Arkansas and Texas. Across the street-and across the state line, which runs down the middle of the street-is Rico's Tacos. The two businesses compete for customers. Recently, Bento has begun to suspect that Rico's is engaging in competitive behavior that is illegal. Bento's manager overheard several of Rico's employees discussing these competitive tactics while on a break at a nearby Starbucks. Bento files a lawsuit against Rico's in a federal court based on diversity jurisdiction. (See page 55.)
(a) The first group will discuss whether Rico's could file a motion claiming that the federal court lacks jurisdiction over this dispute.
(b) The second group will assume that the case goes to trial. Bento believes that it has both the law and the facts on its side. Nevertheless, at the end of the trial, the jury decides against Bento, and the judge issues a ruling in favor of Rico's. If Bento is unwilling to accept this result, what are its options?
(c) As discussed in this chapter, hearsay is literally what a witness says he or she heard another person say. A third group will decide whether Bento's manager can testify about what he heard some of Rico's employees say to one another while at a coffee shop. This group will also discuss what makes the admissibility of hearsay evidence potentially unethical.

Question 12

Ronald Metzgar placed his fifteen-month-old son, Matthew, awake and healthy, in his playpen. Ronald left the room for five minutes and on his return found Matthew lifeless. A toy block had lodged in the boy's throat, causing him to choke to death. Ronald called 911, but efforts to revive Matthew were to no avail. There was no warning of a choking hazard on the box containing the block. Matthew's parents hired an attorney and sued Playskool, Inc., the manufacturer of the block, alleging that the manufacturer had been negligent in failing to warn of the block's hazard. Playskool filed a motion for summary judgment, arguing that the danger of a young child choking on a small block was obvious. Using the information presented in the chapter, answer the following questions.
Suppose that the attorney the Metzgars hired agreed to represent them on a contingency-fee basis. What does that mean?

Question 13

QUESTION WITH SAMPLE ANSWER: Motions.
When and for what purpose is each of the following motions made? Which of them would be appropriate if a defendant claimed that the only issue between the parties was a question of law and that the law was favorable to the defendant's position?
(a) A motion for judgment on the pleadings.
(b) A motion for a directed verdict.
(c) A motion for summary judgment.
(d) A motion for judgment n.o.v.

Question 14

IN THE LANGUAGE OF THE COURT
Opinion of the court by Justice ABRAMSON.
* * *
* * * * Although a defendant is permitted to move for a summary judgment at any time, this Court has cautioned trial courts not to take up these motions prematurely and to consider summary judgment motions "only after the opposing party has been given ample opportunity to complete discovery." Thus, even though an appellate court always reviews the substance of a trial court's summary judgment ruling de novo [anew] * * * to determine whether the record reflects a genuine issue of material fact, a reviewing court must also consider whether the trial court gave the party opposing the motion an ample opportunity to respond and complete discovery before the court entered its ruling. In a medical malpractice action, where a sufficient amount of time has expired and the plaintiff has still "failed to introduce evidence sufficient to establish the respective applicable standard of care," then the defendants are entitled to summary judgment as a matter of law. The trial court's determination that a sufficient amount of time has passed and that it can properly take up the summary judgment motion for a ruling is reviewed for an abuse of discretion. [Emphasis added.]
In this case, the issue before this Court is not simply whether Collier had failed to establish a genuine issue of material fact at the time Dr. Blankenship and Caritas filed their summary judgment motions-without a doubt, there is no genuine issue of material fact in the record because Collier has no expert to support his claim of medical negligence. Rather, the more specific issue is whether the trial court was correct to take up the defendants' summary judgment motions and enter a ruling when it did and, secondarily, whether the court was required first either to enter a separate order requiring Collier to obtain expert testimony or to enter an order sanctioning Collier for failing to meet the court's expert disclosure deadline.
Having carefully reviewed the record, we conclude that the defendants' summary judgment motions were properly before the trial court and it did not abuse its discretion in taking them up and deciding to rule on the motions approximately four months after they were filed and seventeen months after the lawsuit was initiated. Collier had completely failed to identify any expert witnesses and could not sustain his burden of proof without expert testimony and, thus, no material issue of fact existed in the record and the defendants were entitled to summary judgment as a matter of law. Because Collier never disputed that a medical expert was necessary to prove his claim of medical negligence and continually represented to the trial court that he would obtain an expert witness, no separate ruling stating the obvious-the need for an expert witness-was required before the court ruled on the defendants' summary judgment motions. Further, * * * the trial court was not required to enter a sanctions order prior to granting the defendants' summary judgment motions.
DECISION AND REMEDY The Supreme Court of Kentucky reversed the decision of the lower appellate court and reinstated the trial court's decision. The trial court had not abused its discretion by granting summary judgment for the defendants.
The ETHICAL DIMENSION?Collier contended that there was a "serious question" as to whether he would even need experts to prove his medical malpractice claim. Is it fair to Collier to prevent the trial from proceeding, even though the lack of expert testimony might have made it difficult-if not impossible-for him to win the case? Explain.
MANAGERIAL IMPLICATIONS Business owners and managers should be aware that initiating discovery procedures and responding to discovery requests in a timely fashion are important in any litigation. Although the court in this case claimed that summary judgment was not a sanction imposed on the plaintiff for delays during discovery, one could argue (as a dissenting judge did) that it was indeed a sanction-and a very harsh one. Courts have also dismissed cases when the plaintiffs have caused undue delay by not meeting procedural deadlines.

Question 15

Issue Spotters
After the trial, the judge issues a judgment that includes a grant of relief for Sue, but the relief is less than Sue wanted. Neither Sue nor Tom is satisfied with this result. Who can appeal to a higher court? (See page 68.)
Before the Test
Go to www.cengagebrain.com, enter the ISBN 9781285185248, and click on "Find" to locate this textbook's Web site. Then, click on "Access Now" under "Study Tools," and select Chapter 3 at the top. There, you will find a Practice Quiz that you can take to assess your mastery of the concepts in this chapter, as well as Flashcards and a Glossary of important terms.

Question 16

Ronald Metzgar placed his fifteen-month-old son, Matthew, awake and healthy, in his playpen. Ronald left the room for five minutes and on his return found Matthew lifeless. A toy block had lodged in the boy's throat, causing him to choke to death. Ronald called 911, but efforts to revive Matthew were to no avail. There was no warning of a choking hazard on the box containing the block. Matthew's parents hired an attorney and sued Playskool, Inc., the manufacturer of the block, alleging that the manufacturer had been negligent in failing to warn of the block's hazard. Playskool filed a motion for summary judgment, arguing that the danger of a young child choking on a small block was obvious. Using the information presented in the chapter, answer the following questions.
How would the Metzgars' attorney likely have served process (the summons and complaint) on Playskool, Inc.?

Question 17

Motion for a New Trial Washoe Medical Center, Inc., admitted Shirley Swisher for the treatment of a fractured pelvis. During her stay, Swisher suffered a fatal fall from her hospital bed. Gerald Parodi, the administrator of her estate, and others filed an action against Washoe seeking damages for the alleged lack of care in treating Swisher. During voir dire, when the plaintiffs' attorney returned a few minutes late from a break, the trial judge led the prospective jurors in a standing ovation. The judge joked with one of the prospective jurors, whom he had known in college, about his fitness to serve as a judge and personally endorsed another prospective juror's business. After the trial, the jury returned a verdict in favor of Washoe. The plaintiffs moved for a new trial, but the judge denied the motion. The plaintiffs then appealed, arguing that the tone set by the judge during voir dire prejudiced their right to a fair trial. Should the appellate court agree? Why or why not?

Question 18

IN THE LANGUAGE OF THE COURT
SELYA, Circuit Judge.
* * * * * * * Rule 26 "is an integral part of the machinery devised to facilitate the management of pretrial discovery." Among other things, the rule provides for wide-ranging pretrial disclosures in connection with anticipated expert testimony. At its most basic level, the rule obligates a party who wishes to offer expert testimony to disclose "the identity of any witness it may use at trial to present evidence under Federal Rule of Evidence 702, 703, or 705." In the case at hand, the plaintiffs seasonably [within a reasonable time period] complied with this identification requirement, naming Gordinier as a potential expert witness regarding causation. [Emphasis added.]
Other, more stringent disclosure requirements pertain to a witness who is "retained or specially employed to provide expert testimony in the case or... whose duties as the party's employee regularly involve giving expert testimony." The proponent of a witness falling into this subset must submit to the opposing party "a written report containing, [among other things,] detailed information as to the qualifications and intended testimony of the witness."
* * * *
As the text of Rule 26(a)(2)(B) makes plain, the rule covers two types of experts: (i) "retained or specially employed" experts who meet certain criteria and (ii) employees of a party who meet certain criteria. Because there is no suggestion that Gordinier was regularly employed by the plaintiffs, the lens of our inquiry narrows to whether he was "retained or specially employed."
The circumstances suggest that he was not. For one thing, there is no evidence that Gordinier was a person who held himself out for hire as a purveyor of expert testimony. For another thing, there is no evidence that he was charging a fee for his testimony.
Interpreting the words "retained or specially employed" in a common-sense manner, consistent with their plain meaning, we conclude that as long as an expert was not retained or specially employed in connection with the litigation, and his opinion about causation is premised on personal knowledge and observations made in the course of treatment, no report is required under the terms of Rule 26(a)(2)(B).
DECISION AND REMEDY The U.S. Court of Appeals for the First Circuit held that Gordinier was not the type of expert witness for whom a report was required. Therefore, the court reversed the district court's judgment and remanded the case for a new trial.
THE LEGAL ENVIRONMENT DIMENSION?Why can only an expert testify about the source of a bedbug infestation?
THE ETHICAL DIMENSION?Is it fair to require plaintiffs who hire expert witnesses to pay for and submit written reports that specify what the experts will say at trial? Why or why not?

Question 19

Ronald Metzgar placed his fifteen-month-old son, Matthew, awake and healthy, in his playpen. Ronald left the room for five minutes and on his return found Matthew lifeless. A toy block had lodged in the boy's throat, causing him to choke to death. Ronald called 911, but efforts to revive Matthew were to no avail. There was no warning of a choking hazard on the box containing the block. Matthew's parents hired an attorney and sued Playskool, Inc., the manufacturer of the block, alleging that the manufacturer had been negligent in failing to warn of the block's hazard. Playskool filed a motion for summary judgment, arguing that the danger of a young child choking on a small block was obvious. Using the information presented in the chapter, answer the following questions.
Should Playskool's request for summary judgment be granted? Why or why not?