.494px;=”” block;=”” 6px;=”” 0px=””>Part II—Legal and Ethical Challenges in Business Organizations
Read the scenarios and the questions that follow. Identify and analyze the legal issue(s). Apply
legal concepts and make potential arguments as directed using laws, cases, examples, and/or
other relevant materials. Consider using short headings (consult APA materials) to separate the
topics. Summarize the facts; do not copy the scenarios into the paper. After you have answered
the questions and before the conclusion, propose recommendations to help the organization avoid
at least five of the issues identified in the scenarios in the future. Support your answers with
information from the textbook and at least five scholarly sources other than the text and course
lectures. By Week 5, Day 6, prepare an 8- to 12-page paper that identifies the legal issues and
potential solutions and answers all questions presented, supported by relevant legal authority. Do
not exceed the page length by more than two pages, as the instructor is not required to read
excess pages. Properly cite all sources using APA format.
Compile your response to Part II in a Microsoft Word document and name it as
SU_MBA5005_W5_A2_Part2_LastName_FirstInitial.doc.
Overview
Famous Subs and Pizza Company (FSPC) is a publicly traded corporation headquartered in
Tallahassee, Florida, operating restaurants in ten states. The company also owns a food
processing and distribution facility in Jackson, Mississippi. Approximately 20% of the
employees work full time; however, FSPC primarily hires part-time employees as delivery
drivers, cooks, and sandwich makers. FSPC leases space for most of its restaurants in shopping
centers, but the company owns a few of the properties as well as its headquarters office and the
distribution facility. The company experienced explosive growth over the last three years, but
with the growth came increased legal issues. The CEO, Chip Stone, seeks your advice on the
following legal and ethical issues.
S1: Business Organizations
Charmaine, Delia, and Mary met while working for FSPC in Atlanta, Georgia. Charmaine was
attending college to earn a degree in management. Delia was attending culinary school to
become a chef, and Mary was a recent graduate in sales and marketing. The three ladies decided
to open their own sandwich restaurant on wheels, also known as a food truck. They planned to
start small with one truck but had big dreams to own a whole fleet of trucks that served a variety
of foods.
Charmaine took a business law class and remembers there are several forms for organizing
businesses. The ladies have come to you for advice about the various forms of business
organizations. Analyze three forms of business organizations including advantages and disadvantages
related to the business the ladies plan to operate. Defend selection of one of the three types of business form for the new business,
including the requirements for starting that form of business in your state. S2: Intellectual Property
In addition to the confidentiality and noncompete provisions, the employee handbook also
contained a section about intellectual property. Employees are required to disclose any
inventions made during the period of employment that are related to the company’s business.
Devlin created a new app that will make it easier for customers to order food for delivery or
takeout. The app provides additional access for blind and deaf customers so that they can also
place orders by using the app. Devlin searched the patent applications and did not find any other
patent that was similar to his new food-ordering app and intends to file for protection of his
patent as soon as possible. Evaluate the arguments for FSPC and Devlin concerning ownership of the invention
under the following assumptions:
o Devlin did not use any company resources, including time, to create the app.
o Devlin used some company time and a computer to develop the app. S3: Securities
On June 30, 2015, FSPC predicted first-quarter earnings of $0.25 per share. On July 13, 2015,
FSPC received an e-mail from their in-house attorney related to a $2.5 million claim for personal
injury of a three-year-old child who was allegedly injured when choking on a toy contained in a
kid’s meal sold by one of the FSPC restaurants. Chip Stone, the CEO of FSPC, instructed the
attorney to prepare a press release describing the claim. Before the press release was sent to the
copy center at FSPC’s executive office, the vice president of sales sold his FSPC shares at the
prevailing market price of $35.25 per share.
Charlene Copier, who ran the photocopying machine at FSPC’s executive office, saw the draft
press release. She called her broker, Bradley Broker; told him about the press release; and
ordered him to sell the 250 shares of FSPC that she had acquired in FSPC’s initial public
offering. Broker then called his best client, Calvin Client, and suggested that he sell his 10,000
shares of FSPC’s stock but did not tell him why. Client agreed, and Broker sold Copier’s and
Client’s stock at $35.25 a share right before the market closed on July 15.
The press release was publicly announced and was reported on the Business Wire after the
market closed on July 15. The next day, FSPC’s stock opened at $27.75 per share. Plaintiffs have
brought a private class action suit, and the SEC has commenced enforcement proceedings.
Criminal prosecution is threatened by the US Attorney’s Office: Evaluate the potential claims by the plaintiffs in the class action lawsuit and the basis for
the criminal action by the US Attorney’s Office. Assess the potential liability for securities violations of Stone, the vice president, Copier,
Broker, and Client. S4: Bankruptcy and Secured Transactions
Coastal Property Restoration (CPR) periodically purchased used restaurant equipment from
Famous Subs and Pizza Company. CPR refurbishes and sells restaurant equipment to small
restaurants. In December 2014, CPR purchased five used pizza ovens for $50,000. Because of
the good relationship between the companies, FSPC financed the ovens for two years; however,
FSPC did not obtain a perfected security interest in the ovens. In July 2015, CPR sold four of the
ovens to another refurbishing company for $4,000 two days before filing bankruptcy. CPR still
owes approximately $35,000 to FSPC for the ovens. Evaluate the legal and ethical issues associated with CPR’s sale of the pizza ovens before
filing bankruptcy. What recourse does FSPC have in recovering the monies still owed on
the equipment or the remaining oven? S5: Physical Access and Public Accommodation
Individuals may place orders for pizza by phone or fax or through the FSPC website. The FSPC
website does not contain features that allow a blind person full access, such as the ability to order
online. The National Federation of the Blind has filed suit on behalf of a group of blind
individuals. Evaluate the basis on which lawsuits might be filed on behalf of blind individuals and
propose a potential outcome supported by cases or scholarly sources. S6: Bribery and Facilitation Fees
FSPC purchased two packaging machines for the distribution center and ten pizza ovens from a
supplier in Italy. Between the shipping costs, delays, and unanticipated duties, the purchasing
manager was worried that his boss would be upset about the total costs. In an effort to reduce
costs, the manager offered a US Customs officer $500 in cash to re-classify the imported goods
to reduce the amount of duties owed. Analyze the legal and ethical ramifications of the purchasing manager’s offer to the
customs official? Would it make a difference if the purchasing manager offered to donate $500 to St. Jude
Children’s Research Hospital if the officer expedited the paperwork necessary to release
the goods from custom’s custody? S7: Recommendations As the new Director of Compliance, you have reviewed each of the issues presented. The CEO,
Chip Stone, requested that you propose specific recommendations on how to avoid both legal
and ethical issues in the future related to a minimum of five areas that need improvement. Be
specific and detailed and be sure to base recommendations on relevant legal and ethical
principles. Do not provide generic resolutions such as "the company should provide training and
implement procedures to avoid future problems."
Submission Details
Name Part II, SU_MBA5005_W5_A2_Part2_LastName_FirstInitial.doc.
Submit your responses to both the parts to the W5 Assignment 2 Dropbox by Week 5, Day 6.
Assignment 2 Grading Criteria Maximum
Points Part II—Legal and Ethical Challenges in Business
Organizations
S1: Business Organizations Analyzed three types of businesses, including
advantages and disadvantages related to the
business the ladies plan to operate. 30 Defended selection of one of the three types of
business form for the new business, including the
requirements for starting that form of business in
your state. S2: Intellectual Property Evaluated the arguments for FSPC and Devlin
concerning ownership of the invention. 20 30
S3: Securities Evaluated the potential claims by the plaintiffs in
the class action lawsuit and the basis for the
criminal action by the US Attorney’s Office. Assessed the potential liability for securities
violations of Stone, the vice president, Copier, Broker, and Client.
S4: Bankruptcy and Secured Transactions Evaluated the legal and ethical issues associated
with CPR’s sales of the pizza ovens before filing
bankruptcy, including options FSPC had in
recovering the monies still owed on the equipment. 20 S5: Physical Access and Public Accommodation Evaluated the basis on which lawsuits might be
filed on behalf of the blind and proposed a
potential outcome. 20 S6: Bribes and Facilitation Fees Analyzed the legal and ethical ramifications of the
purchasing manager’s offer to the customs official
and difference of the offer being made to a charity
in order to expedite the officer’s services. 30 S7: Recommendations Proposed specific recommendations on how to
avoid both legal and ethical issues in the future. Report was clear, concise, and organized; demonstrated
ethical scholarship in accurate representation and
attribution of sources; and displayed accurate spelling,
grammar, and punctuation.
Total: 20 40
210
ScholarMatic: Explanation & Answer
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