Rachel Holcombe - business law milestone 1 PDF

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Rachel Holcombe BUS 206 July 19, 2020 Milestone One: Case study one

Three important considerations include the following: Personal Jurisdiction, Subject Matter Jurisdiction, and Minimum Contacts. Personal Jurisdiction is a court's jurisdiction over the parties to a lawsuit. In regard to this case, Chris, Matt, and Ian, and their business Funny Face are based in California. They have chosen to sell their product online, while making their product available nationwide. Mr. Margolin filed a lawsuit in the state of New York. Even though they may have not traveled to the state of New York to sell their product, Mr. Margolin did purchase it via the internet while in New York, therefore the state of New York could hold Jurisdiction over this case. Subject Matter Jurisdiction is the authority of a court to hear cases of a particular type or cases relating to a specific subject matter. This case lacks jurisdiction to federal court authority. Federal jurisdiction is commonly given in cases of bankruptcy, violations of the Constitution or federal law, and crimes on federal land. According to Lawshelf.com, “Federal courts have original subject matter jurisdiction over cases in which the parties have diverse citizenships (i.e., no plaintiff and defendant are citizens of the same state) and in which the amount in controversy exceeds $75,000.” With little, to no evidence that either of these qualifications are at play, it is not necessary to give Federal Jurisdiction to this case and would be better held within state jurisdiction.

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Minimum Contacts is a term used in the United States law of civil procedure to determine when it is appropriate for a court in one state to assert personal jurisdiction over a defendant from another state. In order for the court to gain Personal jurisdiction, Minimum Contact would need to be addressed, and the courts would need to determine if either of the owners of Funny Face have done business, lived in, or visited New York, if this can be proven, then they would need to defend themselves in the state of New York. Alternative dispute resolution (ADR) may be an option to resolve this dispute. Alternative dispute resolution (ADR) refers to a variety of processes that help parties resolve disputes without a trial. Two options of an ADR negotiation are arbitration and mediation. Arbitration is a private process where disputing parties agree that one or several individuals can make a decision about the dispute after receiving evidence and hearing arguments. Mediation is a private process where a neutral third person called a mediator helps the parties discuss and try to resolve the dispute. These two forms of ADR commonly are a cheaper and faster route than litigation (americanbar.org).

Arbitration is helpful in regard that the arbitrator makes the legally binding final decision. This avoids the risk that the parties won't agree and will ultimately end up in court anyway. Cons of Arbitration is that either one or both parties involved may be more dissatisfied with the result, and the while the cost is commonly lower than litigation, the cost of using an arbitrator can fluctuate due to region, experience and time spent working on the case (adr.org). Mediation is similar to Arbitration because of the benefit of lower cost and time spent in the process. In Mediation, the parties can appoint who the mediator will be and come to a resolution on their own, while having the mediator provide suggestions to help come to a conclusion. In this case, Funny Face, Chris, Ian, Matt, and Novelty Now, Inc may want to choose Mediation or Arbitration to resolve this issue. Choosing either form would

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benefit in keeping confidentiality for all parties. Since Funny Face is a new business, choosing a more affordable and confidential process could avoid future backlash from consumers. Margolin may want to go with this process of arbitration. To avoid possible miscommunication of the agreement, or the other party not following through with the decision that was made, arbitration provides legally binding decisions and could bring him the best outcome.

Chris, Matt and Ian could be subject to corporate criminal liability. The primary crime that exists in this case is that of fraud. Fraud is the “Wrongful or criminal deception intended to result in financial or personal gain.” (oig.usaid.gov). Corporations as a whole cannot be prosecuted as a criminal, although in recent years, courts have begun to issue responsibility on “the employee or agent acted, or acquired knowledge, within the scope of his or her corporation’s benefit.” (fas.org). With the intentions to lower costs, Chris asked Novelty Now, Inc to substitute PYR, a non-FDA approved, chemical emulsifier. The use of the PYR was ultimately the factor to Mr. Margolin’s discoloration. Because the owners of Funny Face and Novelty Now, Inc were negligent in providing an honest list of ingredients, which resulted in Mr. Margolin suffering physical all three owners and Novelty Now, Inc could be held responsible and convicted of fraud.

The ethical process of decision-making involves consideration of three key elements, one process many businesses use is the WPH process, W stands for Who (The stakeholders), P stands for Purpose (Values), and H for how (Guidelines). I found a similar process from the Josephson Institute of Ethics ,which is the three C’s process: Commitment, Consciousness, and Competency. The owners of Funny Face and Novelty, Inc completely disregarded the negative and unethical effects of substituting PYR in their product. This act shows that both businesses were negligent and did not stay committed to ethical decision making. Consciousness: The awareness to act consistently and apply moral convictions

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to daily behavior. Matt, Ian and Novelty, Inc did not show any evidence that there was disagreement with Chris’ request to switch the formula, even though it was known PYR was not FDA approved, and could potentially cause harm to their consumers. Competency: The ability to collect and evaluate information, develop alternatives, and foresee potential consequences and risks. While disregarding the knowledge that the PYR was not FDA approved, no individuals in the party seemed to offer to research the potential harm of using PYR, or evaluating other, safer alternatives to PYR.

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Work cited:

1. Arbitration. (n.d.). Retrieved July 19, 2020, from https://www.americanbar.org/groups/dispute_resolution/resources/DisputeResolutionProc esses/arbitration/ 2. Cost of Arbitration. (n.d.) Retrieved July 19, 2020, from https://www.adr.org/sites/default/files/document_repository/AAA228_Costs_of_Arbitrati on.pdf

3. Jurisdiction over the Subject Matter of the Action (Subject Matter Jurisdiction). (n.d.). Retrieved July 19, 2020, from https://lawshelf.com/coursewarecontentview/jurisdictionover-the-subject-matter-of-the-action-subject-matter-jurisdiction/ 4. J. (Ed.). (2002). Making ethical decisions: Process. Retrieved July 19, 2020, from https://blink.ucsd.edu/finance/accountability/ethics/process.html

5. Mediation. (n.d.). Retrieved July 19, 2020, from https://www.americanbar.org/groups/dispute_resolution/resources/DisputeResolutionProc esses/mediation/

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6. Nolo. (2020, June 30). What are Mediation and Arbitration? Retrieved July 19, 2020, from https://www.alllaw.com/articles/legal/article9.asp...