Solution Manual For SM Business Law Today, Comprehensive, 13th Edition Roger LeRoy Miller Text & Cas by digitaldownload87

Solution Manual For: SM Business Law Today, Comprehensive, 13th Edition Roger LeRoy Miller

Solution Manual For SM Business Law Today, Comprehensive, 13th Edition Roger LeRoy Miller Text & Cases 13e, 9780357634783; Chapter 01: Law and Legal Reasoning

Table of Contents Critical Thinking Questions in Features .................................................................................................................. 1 Managerial Strategy—Business Questions ................................................................................................ 1 Chapter Review ................................................................................................................................................................ 2 Practice and Review .................................................................................................................................. 2 Practice and Review: Debate This ............................................................................................................. 2 Issue Spotters ............................................................................................................................................ 3 Business Scenarios and Case Problems ..................................................................................................... 3 Critical Thinking and Writing Assignments ................................................................................................ 7 Appendix Exhibit........................................................................................................................................ 8

Critical Thinking Questions in Features Managerial Strategy—Business Questions 1.

―When faced with a clearly erroneous precedent, my rule is simple,‖ writes Supreme Court Justice Clarence Thomas. ―We should not follow it.‖ How do these words offer a cautionary tale for managers relying on stare decisis to make business decisions? Solution Simply put, the doctrine of stare decisis applies in all instances, except when it does not. As noted in the text, a court is able to depart from precedent if it feels that legal, social, or technological changes have rendered the previous decision untenable. In this case, just because the United State Supreme Court believes, at present, that automobile salespeople are exempt from the overtime rules of the FLSA, there is a possibility that the Court could reverse itself in the future. In this context, managers need to be aware that (1) any decision they make based on a court decision is subject to change, and (2) if they believe that a previous business law-related court decision is flawed, they can challenge it in court.

Should Roberta consider paying her salespeople overtime even though it is not required by federal law? Why or why not? Solution Just because Roberta is legally able to avoid paying the salespeople at her new used car dealership overtime, should she? As with so many managerial decisions, the answer to this question involves the tricky determination of costs and benefits. On the one hand, Roberta‘s costs will be lower if she does not have to pay overtime to the salespeople. On the other hand, the

Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 02: Constitutional Law

If Bad Frog had sought to use the offensive label to market toys instead of beer, would the court‘s ruling likely have been the same? Explain your answer. Solution Probably not. The reasoning underlying the court‘s decision in the case was, in part, that ―the State‘s prohibition of the labels . . . does not materially advance its asserted interests in insulating children from vulgarity . . . and is not narrowly tailored to the interest concerning children.‖ The court‘s reasoning was supported in part by the fact that children cannot buy beer. If the labels advertised toys, however, the court‘s reasoning might have been different.

Chapter Review Practice and Review A state legislature enacted a statute that required any motorcycle operator or passenger on the state‘s highways to wear a protective helmet. Jim Alderman, a licensed motorcycle operator, sued the state to block enforcement of the law. Alderman asserted that the statute violated the equal protection clause because it placed requirements on motorcyclists that were not imposed on other motorists. Using the information presented in the chapter, answer the following questions. 6.

Why does this statute raise equal protection issues instead of substantive due process concerns? Solution When a law or action limits the liberty of some persons but not others, it may violate the equal protection clause. Here, because the law applies only to motorcycle operators and passengers, it raises equal protection issues.

What are the three levels of scrutiny that the courts use in determining whether a law violates the equal protection clause? Solution The three levels of scrutiny that courts apply to determine whether the law or action violates equal protection are strict scrutiny (if fundamental rights are at stake), intermediate scrutiny (in cases involving discrimination based on gender or legitimacy), and the ―rational basis‖ test (in matters of economic or social welfare).

Which level of scrutiny or test would apply to this situation? Why? Solution The court would likely apply the rational basis test, because the statute regulates a matter of social welfare by requiring helmets. Similar to seat-belt laws and speed limits, a helmet statute involves the state‘s attempt to protect the welfare of its citizens. Thus, the court would consider it a matter a social welfare and require that it be rationally related to a legitimate government objective.

Under this standard or test, is the helmet statute constitutional? Why or why not? Solution The statute is probably constitutional, because requiring helmets is rationally related to a legitimate government objective (public health and safety). Under the rational basis test, courts

Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 02: Constitutional Law

rarely strike down laws as unconstitutional, and this statute will likely further the legitimate state interest of protecting the welfare of citizens and promoting safety.

Practice and Review: Debate This 10. Legislation aimed at protecting people from themselves concerns the individual as well as the public in general. Protective helmet laws are just one example of such legislation. Should individuals be allowed to engage in unsafe activities if they choose to do so? Solution Certainly many will argue in favor of individual rights. If certain people wish to engage in risky activities such as riding motorcycles without a helmet, so be it. That should be their choice. No one is going to argue that motorcycle riders believe that there is zero danger when riding a motorcycle without a helmet. In other words, individuals should be free to make their own decisions and consequently, their own mistakes. In contrast, there is a public policy issue involved. If a motorcyclist is injured in an accident because that motorcyclist was not wearing a protective helmet, society ends up paying in the form of increased medical care expenses, lost productivity, and even welfare for other family members. Thus, the state has an interest in protecting the public in general by limiting some individual rights.

Issue Spotters 11. South Dakota wants its citizens to conserve energy. To help reduce consumer consumption of electricity, the state passes a law that bans all advertising by power utilities within the state. What argument could the power utilities use as a defense to the enforcement of this state law? Solution Even if commercial speech is neither related to illegal activities nor misleading, it may be restricted if a state has a substantial interest that cannot be achieved by less restrictive means. In this situation, however, the interest in energy conservation is substantial, but it could be achieved by less restrictive means. That would be the utilities‘ defense against the enforcement of this state law. 12. Suppose that a state imposes a higher tax on out-of-state companies doing business in the state than it imposes on in-state companies. Is this a violation of the equal protection clause if the only reason for the tax is to protect the local firms from out-of-state competition? Explain. Solution Yes. The tax would limit the liberty of some persons (out of state businesses), so it is subject to a review under the equal protection clause. Protecting local businesses from out-of-state competition is not a legitimate government objective. Thus, such a tax would violate the equal protection clause.

Business Scenarios and Case Problems 13. The Free Exercise Clause. Thomas worked in the nonmilitary operations of a large firm that produced both military and nonmilitary goods. When the company discontinued the production of nonmilitary goods, Thomas was transferred to the plant producing military equipment. Thomas left his job, claiming that it violated his religious principles to participate in the manufacture of goods to be used in destroying life. In effect, he argued, the transfer to the military equipment

Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 02: Constitutional Law

plant forced him to quit his job. He was denied unemployment compensation by the state because he had not been effectively ―discharged‖ by the employer but had voluntarily terminated his employment. Did the state‘s denial of unemployment benefits to Thomas violate the free exercise clause of the First Amendment? Explain. (See Business and the Bill of Rights.) Solution Thomas has a constitutionally protected right to the free exercise of his religion. In denying his claim for unemployment benefits, the state violated this right. Employers are obligated to make reasonable accommodations for their employees‘ beliefs that are openly and sincerely held, as were Thomas‘s beliefs. By moving him to a department that made military goods, his employer effectively forced him to choose between his job and his religious principles. This unilateral decision on the part of the employer was the reason Thomas left his job and why the company was required to compensate Thomas for his resulting unemployment. 14. Spotlight on Plagiarism—Due Process. The Russ College of Engineering and Technology of Ohio University announced in a press conference that it had found ―rampant and flagrant plagiarism‖ in the theses of mechanical engineering graduate students. Faculty singled out for ―ignoring their ethical responsibilities‖ included Jay Gunasekera, chair of the department. Gunasekera was prohibited from advising students. He filed a suit against Dennis Irwin, the dean of Russ College, for violating his due process rights. What does due process require in these circumstances? Why? [Gunasekera v. Irwin, 551 F.3d 461 (6th Cir. 2009)] (See Due Process and Equal Protection.) Solution To adequately claim a due process violation, a plaintiff must allege that he was deprived of ―life, liberty, or property‖ without due process of law. A faculty member‘s academic reputation is a protected interest. The question is what process is due to deprive a faculty member of this interest and in this case whether Gunasekera was provided it. When an employer inflicts a public stigma on an employee, the only way that an employee can rectify the situation is through publicity. Gunasekera‘s alleged injury was his public association with the plagiarism scandal. Here, the court reasoned that ―a name-clearing hearing with no public component would not address this harm because it would not alert members of the public who read the first report that Gunasekera challenged the allegations. Similarly, if Gunasekera‘s name was cleared at an unpublicized hearing, members of the public who had seen only the stories accusing him would not know that this stigma was undeserved.‖ Thus the court held that Gunasekera was entitled to a public name-clearing hearing. 15. Business Case Problem with Sample Answer—Freedom of Speech. Mark Wooden sent an email to an alderwoman for the city of St. Louis. Attached was a nineteen-minute audio that compared her to the biblical character Jezebel—she was a ―bitch in the Sixth Ward,‖ spending too much time with the rich and powerful and too little time with the poor. In a menacing, maniacal tone, Wooden said that he was ―dusting off a sawed-off shotgun,‖ called himself a ―domestic terrorist,‖ and referred to the assassination of President John F. Kennedy, the murder of a federal judge, and the shooting of Congresswoman Gabrielle Giffords. Feeling threatened, the alderwoman called the police. Wooden was convicted of harassment under a state criminal statute. Was this conviction unconstitutional under the First Amendment? Discuss. [State of Missouri v. Wooden, 388 S.W.3d 522 (Mo. 2013)] (See Business and the Bill of Rights.) —For a sample answer to Problem 2-3, go to Appendix E.

Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 02: Constitutional Law

Solution No, Wooden‘s conviction was not unconstitutional. Certain speech is not protected under the First Amendment. Speech that violates criminal laws—threatening speech, for example—is not constitutionally protected. Other unprotected speech includes fighting words, or words that are likely to incite others to respond violently. And speech that harms the good reputation of another, or defamatory speech, is not protected under the First Amendment. In his e-mail and audio notes to the alderwoman, Wooden discussed using a sawed-off shotgun, domestic terrorism, and the assassination and murder of politicians. He compared the alderwoman to the biblical character Jezebel, referring to her as a ―bitch in the Sixth Ward.‖ These references caused the alderwoman to feel threatened. The First Amendment does not protect such threats, which in this case violated a state criminal statute. There was nothing unconstitutional about punishing Wooden for this unprotected speech. In the actual case on which this problem is based, Wooden appealed his conviction, arguing that it violated his right to freedom of speech. Under the principles set out above, the Missouri Supreme Court affirmed the conviction. 16. Equal Protection. Abbott Laboratories licensed SmithKline Beecham Corp. to market an Abbott human immunodeficiency virus (HIV) drug in conjunction with one of SmithKline‘s drugs. Abbott then increased the price of its drug fourfold, forcing SmithKline to increase its prices and thereby driving business to Abbott‘s own combination drug. SmithKline filed a suit in a federal district court against Abbott. During jury selection, Abbott struck the only self-identified gay person among the potential jurors. (The pricing of HIV drugs is of considerable concern in the gay community.) Could the equal protection clause be applied to prohibit discrimination based on sexual orientation in jury selection? Discuss. [SmithKline Beecham Corp. v. Abbott Laboratories, 740 F.3d 471 (9th Cir. 2014)] (See Due Process and Equal Protection.) Solution Yes, the equal protection clause can be applied to prohibit discrimination based on sexual orientation in jury selection. The appropriate level of scrutiny would be intermediate scrutiny. Under the equal protection clause of the Fourteenth Amendment, the government cannot enact a law or take another action that treats similarly situated individuals differently. If it does, a court examines the basis for the distinction. Intermediate scrutiny applies in cases involving discrimination based on gender. Under this test, a distinction must be substantially related to an important government objective. Gays and lesbians were long excluded from participating in our government and the privileges of citizenship. A juror strike on the basis of sexual orientation tells the individual who has been struck, as well as the trial participants and the general public, that the judicial system still treats gays and lesbians differently. This deprives these individuals of the opportunity to participate in a democratic institution on the basis of a characteristic that has nothing to do with their fitness to serve. In the actual case on which this problem is based, SmithKline challenged the strike. The judge denied the challenge. On SmithKline‘s appeal, the U.S. Court of Appeals for the Ninth Circuit held that the equal protection clause prohibits discrimination based on sexual orientation in jury selection and requires that heightened scrutiny be applied to equal protection claims involving sexual orientation. The appellate court remanded the case for a new trial.

Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 02: Constitutional Law

17. Procedural Due Process. Robert Brown applied for admission to the University of Kansas School of Law. Brown answered ―no‖ to questions on the application asking if he had a criminal history and acknowledged that a false answer constituted ―cause for . . . dismissal.‖ In fact, Brown had criminal convictions for domestic battery and driving under the influence. He was accepted for admission to the school. When school officials discovered his history, however, he was notified of their intent to dismiss him and given an opportunity to respond in writing. He demanded a hearing. The officials refused to grant Brown a hearing and then expelled him. Did the school‘s actions deny Brown due process? Discuss. [Brown v. University of Kansas, 599 Fed. Appx. 833 (10th Cir. 2015)] (See Due Process and Equal Protection.) Solution No, the school‘s actions did not deny Brown due process. Procedural due process requires that any government decision to take life, liberty, or property must be made fairly. The government must give a person proper notice and an opportunity to be heard. The government must use fair procedures—the person must have at least an opportunity to object to a proposed action before a fair, neutral decision maker. In this problem, Robert Brown applied for admission to the University of Kansas School of Law. He answered ―no‖ to the questions on the application about criminal history and acknowledged that a false answer constituted cause for dismissal. He was accepted for admission to the school. But Brown had previous criminal convictions for domestic battery and driving under the influence. When school officials discovered this history, Brown was notified of their intent to dismiss him and given an opportunity to respond in writing. He demanded a hearing. The officials refused, and expelled him. As for due process, Brown knew he could be dismissed for false answers on his application. The school gave Brown notice of its intent to expel him and gave him an opportunity to be heard (in writing). Due process does not require that any specific set of detailed procedures be followed as long as the procedures are fair. In the actual case on which this problem is based, Brown filed a suit in a federal district court against the school, alleging denial of due process. From a judgment in the school‘s favor, Brown appealed. The U.S. Court of Appeals for the Tenth Circuit affirmed, concluding that ―the procedures afforded to Mr. Brown were fair.‖ 18. The Commerce Clause. Regency Transportation, Inc., operates a freight business throughout the eastern United States. Regency maintains its corporate headquarters, four warehouses, and a maintenance facility and terminal location for repairing and storing vehicles in Massachusetts. All of the vehicles in Regency‘s fleet were bought in other states. Massachusetts imposes a use tax on all taxpayers subject to its jurisdiction, including those that do business in interstate commerce, as Regency does. When Massachusetts imposed the tax on the purchase price of each tractor and trailer in Regency‘s fleet, the trucking firm challenged the assessment as discriminatory under the commerce clause. What is the chief consideration under the commerce clause when a state law affects interstate commerce? Is Massachusetts‘s use tax valid? Explain. [Regency Transportation, Inc. v. Commissioner of Revenue, 473 Mass. 459, 42 N.E.3d 1133 (2016)] (See The Constitutional Powers of Government.) Solution Yes, Massachusetts‘s use tax is valid under the commerce clause. When a state regulation that affects interstate commerce is challenged under the commerce clause, the court weighs the state‘s interest in regulating the matter against the burden that the regulation places on interstate

Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 02: Constitutional Law

commerce. Because a court balances the interests involved, it is difficult to predict the outcome in a particular case. State laws that alter conditions of competition to favor in-state interests over out-of-state competitors in a market are considered discriminatory and usually invalidated. In this problem, Regency Transportation, Inc., operates a freight business throughout the eastern United States. Regency maintains a headquarters, warehouses, and other facilities in Massachusetts. All of the vehicles in Regency‘s fleet were bought in other states. When Massachusetts imposed a use tax on the purchase price of each tractor and trailer in Regency‘s fleet, the trucking firm challenged the assessment as discriminatory under the commerce clause. But Massachusetts imposes the tax on all taxpayers subject to its jurisdiction, not only those that, like Regency, do business in interstate commerce. Hence, the tax is not discriminatory. As for the balancing test, Massachusetts presumably imposes the tax based on the benefits derived from a company‘s using and storing vehicles in the state. The burden that the regulation places on interstate commerce seems slight weighed against the state‘s interest in regulating this matter. In the actual case on which this problem is based, Nichols filed a suit in a federal district court against TNI, alleging discrimination on the basis of sex. TNI filed a motion for summary judgment, which the court granted. But the U.S. Court of Appeals for the Eighth Circuit reversed. ―Genuine issues of material fact remain.‖ 19. Freedom of Speech. Wandering Dago, Inc. (WD) operates a food truck in Albany, New York. WD brands itself and the food it sells with language generally viewed as ethnic slurs. Owners Andrea Loguidice and Brandon Snooks, however, view the branding as giving a ―nod to their Italian heritage‖ and ―weakening the derogatory force of the slur.‖ Twice, WD applied to participate as a vendor in a summer lunch program in a stateowned plaza. Both times, the New York State Office of General Services (OGS) denied the application because of WD‘s branding. WD filed a suit in a federal district court against RoAnn Destito, the commissioner of OGS, contending that the agency had violated WD‘s right to free speech. What principles apply to the government‘s regulation of the content of speech? How do those principles apply in WD‘s case? Explain. [Wandering Dago, Inc. v. Destito, 879 F.3d 20 (2d Cir. 2018)] (See Business and the Bill of Rights.) Solution The First Amendment to the U.S. Constitution protects the freedom of speech. Government regulation of speech is presumed to be unconstitutional. To ―pass muster‖ under the free-speech clause, a law or government action that regulates the content of speech must serve a compelling state interest and must be narrowly tailored to achieve that interest. In this problem, the government, through OGS, disfavored WD‘s speech because of its branding. The agency may have labeled the branding offensive because of its perceived effect on the members of a certain ethnic group. The interest that the government sought to serve might have been a mandate of positive expression. But denying the business application of any vendor whose branding might demean or offend could silence dissent in the ―marketplace of ideas.‖ In some contexts, an ethnic slur might be hostile and involve conduct. A regulation of that conduct would arguably serve the interest of preventing immediate harm. For example, the government can regulate threats of violence, harassment, and fighting words. But WD‘s speech did not fall into any of these categories.

Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 09: Criminal Law and Cyber Crime

thought to the possible consequences of her ill-conceived actions on her family and her reputation, as well as within the healthcare community generally.

Case 9.2 169. Why was Sisuphan convicted of embezzlement instead of larceny? What is the difference between these two crimes? Solution One of the key differences between embezzlement and larceny has to do with the element of possession. Larceny involves the wrongful taking of property in the possession of another, as does robbery (the latter crime involves the violent taking of the property). Embezzlement, in contrast, involves the wrongful appropriation of property that has been entrusted to the person appropriating it, typically an employee. In other words, the property is already in the perpetrator‘s possession. Thus, Sisuphan was convicted of embezzlement instead of larceny because, as a dealership employee, he was in legitimate possession of the money until he took the added step of keeping it.

Chapter Review Practice and Review Edward Hanousek worked for Pacific & Arctic Railway and Navigation Company (P&A) as a roadmaster of the White Pass & Yukon Railroad in Alaska. As an officer of the corporation, Hanousek was responsible ―for every detail of the safe and efficient maintenance and construction of track, structures, and marine facilities of the entire railroad,‖ including special projects. One project was a rock quarry, known as ―6-mile,‖ above the Skagway River. Next to the quarry, and just beneath the surface, ran a high-pressure oil pipeline owned by Pacific & Arctic Pipeline, Inc., P&A‘s sister company. When the quarry‘s backhoe operator punctured the pipeline, an estimated one thousand to five thousand gallons of oil were discharged into the river. Hanousek was charged with negligently discharging a harmful quantity of oil into a navigable water of the United States in violation of the criminal provisions of the Clean Water Act (CWA). Using the information presented in the chapter, answer the following questions. 170. Did Hanousek have the required mental state (mens rea) to be convicted of a crime? Why or why not? Solution Yes, because he was the corporate officer responsible for the project and had the power to prevent the criminal violation. Corporate directors and officers are personally liable for the crimes they commit, and can also be held liable for the crimes of employees under their supervision. Because Hanousek was the corporate officer responsible for every detail of the ―6-mile‖ quarry, he had the power to prevent the criminal violation. Therefore, Hanousek can be held criminally negligent for the backhoe operator puncturing the pipeline. 171. Which theory discussed in the chapter would enable a court to hold Hanousek criminally liable for violating the statute regardless of whether he participated in, directed, or even knew about the specific violation? Solution

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Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 09: Criminal Law and Cyber Crime

Under the responsible corporate officer doctrine, a corporate officer can be held liable for a crime because he was in a responsible relationship to the corporation and could have prevented the violation. The corporate officer does not have to intend the crime or even know about it, to incur liability under this doctrine. 172. Could the backhoe operator who punctured the pipeline also be charged with a crime in this situation? Explain. Solution No, because he did not have the required mental state (mens rea) and was not a corporate officer in a responsible position to prevent the criminal violation. Criminal liability requires a guilty act at the same time as the defendant had a wrongful mental state. In this situation, the backhoe operator did pierce the pipeline (the guilty act), but he did not have a wrongful mental state because he was unaware that the pipeline was there. As an employee, a court would not use the same standard as if he were a responsible corporate officer who ―knew or should have known‖ of the existence of the pipeline. Because both elements of criminal liability (guilty act and wrongful mental state) did not occur, the backhoe operator could not be charged with a crime. 173. Suppose that, at trial, Hanousek argued that he could not be convicted because he was not aware of the requirements of the CWA. Would this defense be successful? Why or why not? Solution No, because Hanousek was the corporate officer responsible for the project and should have known the requirements of the law. Because Hanousek was in a responsible position at the corporation and specifically in charge of the 6-mile quarry, a court would find that he ―should have known‖ of the requirements of the law. Therefore, lack of knowledge of the requirements of the Clean Water Act would not operate as a defense in his case.

Practice and Review: Debate This 174. Because of overcriminalization, particularly by the federal government, Americans may be breaking the law regularly without knowing it. Should Congress rescind many of the more than four thousand federal crimes now on the books? Solution Drastic times require drastic measures. This nation now has more than three hundred million residents who move frequently. Moreover, the pervasiveness of the Internet means that business fraud is increasing at a rapid rate. Consequently, the federal government must step in to make sure that criminal actions do not go unpunished. That‘s why so many new federal crimes have been added to the body of criminal statutes. The Constitution reserves for the states police powers for activities within state boarders. Crimes have always been defined by state and local governments. Just because we have a larger population that has access to the Internet does not mean that Congress should be in the business of creating so many federal crimes. Moreover, many new federal criminal statutes do not require intent—a cornerstone of the prosecution of most crimes for ages.

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Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 09: Criminal Law and Cyber Crime

Issue Spotters 175. Dana takes her roommate‘s credit card, intending to charge expenses that she incurs on a vacation. Her first stop is a gas station, where she uses the card to pay for gas. With respect to the gas station, has she committed a crime? If so, what is it? Solution Yes. With respect to the gas station, she has obtained goods by false pretenses. She might also be charged with larceny and forgery, and most states have special statutes covering illegal use of credit cards. 176. Without permission, Ben downloads consumer credit files from a computer belonging to Consumer Credit Agency. He then sells the data to Dawn. Has Ben committed a crime? If so, what is it? Solution Yes. The Counterfeit Access Device and Computer Fraud and Abuse Act provides that a person who accesses a computer online, without permission, to obtain classified data—such as consumer credit files in a credit agency‘s database—is subject to criminal prosecution. The crime has two elements: (1) accessing the computer without permission and (2) taking data. It is a felony if done for private financial gain. Penalties include fines and imprisonment for up to twenty years. The victim of the theft can also bring a civil suit against the criminal to obtain damages and other relief.

Business Scenarios and Case Problems 1.

Types of Cyber Crimes. The following situations are similar, but each represents a variation of a particular crime. Identify the crime and point out the differences in the variations. (See Cyber Crime.) 1. Chen, posing fraudulently as Diamond Credit Card Co., sends an e-mail to Emily, stating that the company has observed suspicious activity in her account and has frozen the account. The e-mail asks her to reregister her credit card number and password to reopen the account. Solution This is a form of identity theft. The traditional crimes of theft (robbery, burglary, larceny, and other) consist of wrongfully taking and carrying away another‘s personal property with the intent of depriving the owner permanently of it. Unique to crimes of identity theft is that they involve taking another‘s identity, and unique to cyber variations of the offense is that the criminal acts are committed with computers, often online. A stolen identity is typically used to commit more crimes. 2.

Claiming falsely to be Big Buy Retail Finance Co., Conner sends an e-mail to Dino, asking him to confirm or update his personal security information to prevent his Big Buy account from being discontinued.

Solution As in the previous problem, this is a form of identity theft. This problem describes a factual situation referred to as phishing. In such a set of circumstances, once an unsuspecting individual responds by entering the requested information, the phisher can use it to pose as that person or to steal the funds in the victim‘s bank or other account.

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Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 09: Criminal Law and Cyber Crime

Cyber Scam. Kayla, a student at Learnwell University, owes $20,000 in unpaid tuition. If Kayla does not pay the tuition, Learnwell will not allow her to graduate. To obtain the funds to pay the debt, she sends e-mails to people that she does not know asking them for financial help to send her child, who has a disability, to a special school. In reality, Kayla has no children. Is this a crime? If so, which one? (See Cyber Crime.) Solution Kayla has committed fraud in an e-mail sent via the Internet. The elements of the tort of fraud are as follows: 1. The misrepresentation of material facts or conditions was made with knowledge that they were false or with reckless disregard for the truth. 2. There was an intent to induce another to rely on the misrepresentation. 3. There was justifiable reliance on the misrepresentation by the deceived party. 4. Damages were suffered as a result of the reliance. 5. There was a causal connection between the misrepresentation and the injury. If any of Kayla‘s recipients reply to her false plea with cash, it is likely that all of these requirements for fraud will have been met.

Business Case Problem with Sample Answer—White-Collar Crime. Matthew Simpson and others created and operated a series of corporate entities to defraud telecommunications companies, creditors, credit reporting agencies, and others. Through these entities, Simpson and his confederates used routing codes and spoofing services to make long-distance calls appear to be local. They stole other firms‘ network capacity and diverted payments to themselves. They leased goods and services without paying for them. To hide their association with their corporate entities and with each other, they used false identities, addresses, and credit histories, and issued false bills, invoices, financial statements, and credit references. Did these acts constitute mail and wire fraud? Discuss. [United States v. Simpson, 741 F.3d 539 (5th Cir. 2014)] (See Types of Crimes.) Solution Yes, the acts committed by Matthew Simpson and the others, and described in this problem, constitute wire and mail fraud. Federal law makes it a crime to devise any scheme that uses the U.S. mail, commercial carriers (FedEx, UPS), or wire (telegraph, telephone, television, the Internet, e-mail) with the intent to defraud the public. Here, as stated in the facts, Simpson and his cohorts created and operated a series of corporate entities to defraud telecommunications companies, creditors, credit reporting agencies, and others. Through these entities, Simpson and the others used routing codes and spoofing services to make long distance calls appear to be local. They stole other firms‘ network capacity and diverted payments to themselves. They leased goods and services without paying for them. And they assumed false identities, addresses, and credit histories, and issued false bills, invoices, financial statements, and credit references, in order to hide their association with their entities and with each other. The ―scheme‖ was to defraud telecommunications companies and other members of the public to the perpetrators‘ gain of a variety of goods and services. Wire services—the Internet, and presumably phones and other qualifying services—were used to further the scheme. In the actual case on which this problem is based, a federal district court convicted Simpson of participating in a wire and mail fraud conspiracy (and other crimes). On appeal, the U.S. Court of Appeals for the Fifth Circuit affirmed the conviction.

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Solution and Answer Guide: Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 09: Criminal Law and Cyber Crime

Defenses to Criminal Liability. George Castro told Ambrosio Medrano that a bribe to a certain corrupt Los Angeles County official would buy a contract with the county hospitals. To share in the deal, Medrano recruited Gustavo Buenrostro. In turn, Buenrostro contacted his friend James Barta, the owner of Sav–Rx, which provides prescription benefit management services. Barta was asked to pay a ―finder‘s fee‖ to Castro. He did not pay, even after frequent e-mails and calls with deadlines and ultimatums delivered over a period of months. Eventually, Barta wrote Castro a Sav–Rx check for $6,500, saying that it was to help his friend Buenrostro. Castro was an FBI agent, and the county official and contract were fictional. Barta was charged with conspiracy to commit bribery. At trial, the government conceded that Barta was not predisposed to commit the crime. Could he be absolved of the charge on a defense of entrapment? Explain. [United States v. Barta, 776 F.3d 931 (7th Cir. 2015)] (See Defenses to Criminal Liability.) Solution Yes, Barta could be absolved of the charge of conspiracy to commit bribery on a defense of entrapment. This defense is designed to prevent police officers and other government agents from enticing persons to commit crimes so that they can later be prosecuted for criminal acts. For entrapment to succeed as a defense, both the suggestion and the inducement to commit the crime must take place. The critical question is whether the person who is charged with the commission of a crime was predisposed to commit it or did so only because the officer induced it. In this problem, the government, through its agent George Castro, entrapped Barta into participating in a conspiracy to bribe a fictional county official. The government conceded at Barta‘s trial that he was not predisposed to conspire to commit bribery. Castro frequently emailed and called Barta over a period of months, with no response from him, even when the messages included deadlines and ultimatums. And Barta‘s statement, when he eventually did write a check on his company‘s account to Castro, that it was to help his friend gave the government reason to believe that Barta was making a deal only to benefit his friend. In the actual case on which this problem is based, Barta was arrested, charged, and tried for conspiracy to commit bribery. He pleaded entrapment but was convicted. The U.S. Court of Appeals for the Seventh Circuit reversed his conviction, on the reasoning stated above.

Fourth Amendment Protections. Federal officers obtained a warrant to arrest Kateena Norman on charges of credit card fraud and identity theft. Evidence of the crime included videos, photos, and a fingerprint on a fraudulent check. A previous search of Norman‘s house had uncovered credit cards, new merchandise, and identifying information for other persons. An Internet account registered to the address had been used to apply for fraudulent credit cards, and a fraudulently obtained rental car was parked on the property. As the officers arrested Norman outside her house, they saw another woman and a caged pit bull inside. They further believed that Norman‘s boyfriend, who had a criminal record and was also suspected of identify theft, could be there. In less than a minute, the officers searched only those areas within the house in which a person could hide. Would it be reasonable to admit evidence revealed in this ―protective sweep‖ during Norman‘s trial on the arrest charges? Discuss. [United States v. Norman, 637 Fed. Appx. 934 (11th Cir. 2016)] (See Constitutional Safeguards.) Solution Yes, it would be reasonable to admit evidence revealed in the ―protective sweep‖ of the defendant‘s house in this problem during Norman‘s trial on the arrest charges.

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The Fourth Amendment to the U.S. Constitution protects the ―right of the people to be secure in their persons, houses, papers, and effects.‖ Under this amendment, before searching private property, law enforcement officers must obtain a search warrant. Evidence obtained in violation of this requirement is not admissible at trial. But a warrantless search can be reasonable when probable cause and exigent circumstances exist. Thus, when an officer possesses a reasonable belief based on specific facts that an individual posing a danger is hidden inside a certain location, a search for the individual—a ―protective sweep‖— confined to those places on site in which a person might be hiding would be reasonable. In this problem, from outside a house belonging to Kateena Norman, during the execution of a warrant for the arrest of Norman on charges of credit-card fraud and identity theft, federal officers saw another woman and a caged pit bull inside. The officers further believed that Norman‘s boyfriend, who had a criminal record and was also suspected of identify theft, could be inside. In less than a minute, the officers searched only those areas within the house in which a person could hide. Under these circumstances, the warrantless search was reasonable and therefore any evidence discovered in the search would be admissible during her trial on the arrest charges. In the actual case on which this problem is based, Norman filed a motion to suppress this evidence, which the court denied. The U.S. Court of Appeals for the Eleventh Circuit affirmed. ―The protective sweep was reasonable.‖ 6.

Types of Crimes. In Texas, Chigger Ridge Ranch, L.P., operated a 700-acre commercial hunting area called Coyote Crossing Ranch (CCR). Chigger Ridge leased CCR and its assets for twelve months to George Briscoe‘s company, VPW Management, LLC. The lease identified all of the vehicles and equipment that belonged to Chigger Ridge, which VPW could use in the course of business, but the lease did not convey any ownership interest. During the lease term, however, Briscoe told his employees to sell some of the vehicles and equipment. Briscoe did nothing to correct the buyers‘ false impression that he owned the property and was authorized to sell it. The buyers paid with checks, which were deposited into an account to which only Briscoe and his spouse had access. Which crime, if any, did Briscoe commit? Explain. [Briscoe v. State of Texas, 2018 WL 792255 (Tex.App.—Texarkana 2018)] (See Types of Crimes.) Solution Briscoe committed the crime of obtaining property by false pretense. This is a crime in which the goal is economic gain through the acquisition of another‘s money, services, or property. This type of theft is accomplished by trickery or fraud. In the Briscoe case, Briscoe leased Chigger Ridge Ranch for twelve months. The lease delineated the vehicles and equipment that belonged to the ranch, and which VPW could use for the term, but the lease did not convey any ownership interest. Despite the lack of ownership rights, Briscoe had his employees sell some of the vehicles and equipment. The buyers had the impression that Briscoe either owned the property or was authorized to sell it, and he did nothing to correct their false impression of this pretense. The buyers paid with checks, which Briscoe deposited in his own account. The goal of this scheme was to acquire the buyers‘ money. The theft was accomplished by fraud.

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In the actual case on which this problem is based, Briscoe was convicted in a Texas state court of giving a false statement to obtain property. A state intermediate appellate court affirmed. ―Briscoe obtained the checks by deception—that is, by failing to correct [the buyers‘] impression that he . . . owned the equipment or was authorized to sell it.‖ 7.

A Question of Ethics—The IDDR Approach and Identity Theft. Heesham Broussard obtained counterfeit money instruments. To distribute them, he used account information and numbers on compromised FedEx accounts procured from hackers. Text messages from Broussard indicated that he had participated previously in a similar scam and that he knew the packages would be delivered only if the FedEx accounts were ―good.‖ For his use of the accounts, Broussard was charged with identity theft. In defense, he argued that the government could not prove he knew the misappropriated accounts belonged to real persons or businesses. [United States v. Broussard, 675 Fed.Appx. 454 (5th Cir. 2017)] (See Cyber Crime.) 1. Does the evidence support Broussard‘s assertion? From an ethical perspective, does it matter whether he knew that the accounts belonged to real customers? Why or why not? Solution No, the evidence does not support Broussard‘s assertion. In fact, it suggests the opposite—that Broussard knew what was going on. In this problem, Heesham Broussard obtained counterfeit money instruments. To distribute the items, he used FedEx account information and numbers misappropriated by hackers. Broussard‘s text messages indicated that he had participated in an earlier, similar scam. Further, the messages showed that he knew the packages would be delivered only if the FedEx accounts were ―good.‖ Charged with identity theft, he argued that the government could not prove he knew the FedEx accounts belonged to real persons or businesses. His text messages, however, indicated the contrary. A judge or juror could infer from these statements that he knew the packages would not be delivered successfully unless the account information and numbers belonged to real customers. From an ethical perspective, it does not matter whether Broussard knew that the accounts belonged to real customers. And it does not matter whether he knew the owners of the accounts, whether they knew him, or whether the accounts belonged to persons or businesses. Broussard committed a crime. An accompanying violation of any standard of ethics is certain. Here, he acted dishonestly, with fraudulent intent, misrepresenting himself as the authorized sender of FedEx packages filled with counterfeit money instruments. In the actual case on which this problem is based, the court convicted Broussard of the charge of identity theft. The U.S. Court of Appeals for the Fifth Circuit affirmed the conviction, responding to his argument on appeal according to the reasoning stated above. 2.

Assuming that FedEx knew its customers‘ account information had been compromised, use the IDDR approach to consider whether the company had an ethical obligation to take steps to protect those customers from theft.

Solution The conclusion seems foregone—if FedEx knew that its customers‘ account information had been compromised, the company had an ethical obligation to take steps to protect those customers from theft.

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The first step of the IDDR approach is an Inquiry—identify the issue, the stakeholders, and ethical standards. In the facts of this question, hackers stole the account information of FedEx customers. Was FedEx obligated to act to protect those customers from theft? Besides those customers and FedEx, the stakeholders could include the owners and employees of the company, as well as the society as a whole. Relevant ethical standards could derive from the company‘s policies, or from religious, philosophical, or other standards. These would include such general principles as acting for the benefit of the most people. The second step of the approach is a Discussion to analyze actions that might address the issue. Factors include the strengths and weaknesses of those actions, considering their consequences and the effects on stakeholders. To protect against theft through the use of stolen account information, FedEx might have to do as little as assign its customers new account names, numbers, or passwords. If the information could be used for illicit purposes other than fraudulent delivery charges, FedEx could notify its customers, publicize the theft, and alert law enforcement. The company might offer to pay to monitor victimized customers‘ credit information. None of these actions would seem to be weak or costly, and their results and effects could be almost entirely beneficial—customers might feel protected, society‘s interest in the reliability of FedEx accounts could be reassured, and the owners and employees of the company might believe more strongly in its continued success. The third step of the IDDR approach is to make a Decision and state the reasons. The decision is clear—FedEx should act to protect its customers and the other stakeholders. The actions the company should take include those discussed above. The reasons for this conclusion are also stated above—to benefit those customers, the owners and employees of the company, and the public generally. This would further assure these stakeholders of the commitment of the firm to the continuing viability of its business. The final step of this approach is a Review to weigh the success or failure of the action to resolve the issue, and satisfy the stakeholders. According to the facts, FedEx policy is to deliver packages only if an account is ―good.‖ Thus, if FedEx were to take the steps indicated above, its actions would likely prove successful. The stolen data would not be able to initiate FedEx deliveries, and would become potentially useless for almost any other purpose. These results could satisfy all of the stakeholders.

Critical Thinking and Writing Assignments 3.

Critical Legal Thinking. Ray steals a purse from an unattended car at a gas station. Because the purse contains money and a handgun, Ray is convicted of grand theft of property (cash) and grand theft of a firearm. On appeal, Ray claims that he is not guilty of grand theft of a firearm because he did not know that the purse contained a gun. Can Ray be convicted of grand theft of a firearm even though he did not know that the gun was in the purse? Explain. (See Types of Crimes.) Solution No. A separate crime occurs only when there are separate distinct acts of seizing the property of another. In the circumstances described in the question, Ray committed the crime of grand theft because of the value of property in the purse, including the value of the gun. Only one crime of

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theft occurred, however. Ray saw the purse and took it without knowing what it contained: there was one intent and one act. 4.

Time-Limited Group Assignment—Cyber Crime. Cyber crime costs consumers millions of dollars every year. It costs businesses, including banks and other credit card issuers, even more. Nonetheless, when cyber criminals are caught and convicted, they are rarely ordered to pay restitution or sentenced to long prison terms. (See Cyber Crime.) 1. One group should formulate an argument that stiffer sentences would reduce the amount of cyber crime. Solution It goes without saying that the higher the anticipated cost of engaging in cyber crime activity, the lower will be the amount demanded. In other words, heavy fines and long jail sentences would have some deterrent effect. The real question is by how much. Many hackers who bring down corporate and government computer systems are teenagers. They cost businesses billions of dollars yet gain no monetary reward for their hacking—they do it to prove that they are as good or better than other hackers. If caught, they could not engage in much meaningful restitution to their corporate victims. In contrast, adult cyber criminals who engage in identity theft, credit-card fraud, and online auction fraud often make large sums of money from this criminal activity. They could be forced to engage in meaningful restitution to their victims. They could be sentenced to long jail terms, just as we routinely do for traditional thieves. Restitution and long jail terms might serve as a deterrent to such cyber criminal activities. U.S. authorities, though, cannot easily arrest, try, convict, and sentence cyber criminals living and operating in, say, Russia. 2.

A second group should determine how businesspersons can best protect themselves from cyber crime and avoid the associated costs.

Solution Protection against cyber crime starts with the awareness at management and staff levels of the potential harm that could result. Even the temporary loss of a system‘s functions while its software is replaced due to a virus‘s infection or other destructive event could prove costly. Thus, management should make appropriate funds available to pay for security, impose procedures to identify the system‘s vulnerability, require the use of security hardware and software, and conduct security audits on an ongoing basis. The use of passwords among those with access to the system is also an important step when used correctly. Backed-up data can be key, and storing the backed-up data off-site can be even more effective. 3.

A third group should decide how and when a court should order cyber criminals to pay restitution to their victims. Should victims whose computers have been infected with worms or viruses be entitled to restitution, or only victims of theft who have experienced financial loss? What should the measure of restitution be? Should large companies that are victims of cyber crime be entitled to the same restitution as individuals?

Solution Cyber criminals could and should arguably be ordered to pay restitution to their victims whenever those persons or businesses suffer a financial loss. The victims whose computers are infected with worms or viruses most likely must pay for cleansing software or a security sweep, or more, to clear their data of the infections. Victims of theft of course experience financial loss.

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The measure of the restitution might include the value of what was taken, the cost to recover it, the expense of repair, and the price of the investigation that it may have taken to discover the illegal breach. There is no reason why large companies—such as Facebook, Apple, Netflix, or Alphabet—should not be entitled to the same restitution as other victims.

Solution and Answer Guide Miller, Business Law Today, Comprehensive Edition: Text & Cases 13e, 9780357634783; Chapter 10: Nature and Classification

Table of Contents Critical Thinking Questions in Cases ................................................................................................................... 111 Case 10.1 ............................................................................................................................................... 111 Case 10.2 ............................................................................................................................................... 112 Case 10.3 ............................................................................................................................................... 113 Chapter Review ........................................................................................................................................................... 113 Practice and Review .............................................................................................................................. 113 Practice and Review: Debate This ......................................................................................................... 114 Issue Spotters ........................................................................................................................................ 115 Business Scenarios and Case Problems ................................................................................................. 115 Critical Thinking and Writing Assignments ............................................................................................ 122

Critical Thinking Questions in Cases Case 10.1 177. As a principle of contract interpretation, courts consistently strive to interpret contracts in accord with common sense. Does the application of this principle to the facts in this case support or undercut the decision of the Maryland Court of Appeals? Explain. Solution Applying the principle that a contract should accord with common sense supports the decision of the Maryland Court of Appeals in the Credible case. Interpreting the promissory note to require repayment only if an employee quits, as the lower courts did, defies common sense. The lower courts‘ interpretation of the repayment term of the note, making its repayment dependent on whether an employee was fired or quit, would result in disparate treatment. In those courts‘ view, an employee fired by Credible would not be required to repay the loan, while an employee who quits would be required to repay. There is no reason why, with respect to repayment of the loan, an employee who is fired should be treated more favorably than one who

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quits. In the words of the Maryland Court of Appeals, this interpretation ―strains credulity, * * * is untenable and runs contrary to common sense.‖ In addition to according with common sense, the interpretation of the state‘s highest court of the two provisions referred to in the ―Reason‖ section of the case brief aligns the meaning and substance of those provisions, showing clearly that the parties intended the loan to be repaid regardless of whether an employee quits or is fired. 178. What consequences might Credible have suffered if the Maryland Court of Appeals had interpreted the terms of the note to require repayment only when an employee quit employment, not when that employee was fired? Discuss. Solution In the Credible case, Credible argues that the terms of the promissory note memorializing an agreement between the employer and its employee, as part of the employer‘s tuition loan program, requires repayment regardless of whether the employee quits or is fired. According to the note, this is the intent of the parties—Credible and the employee—who agree to those terms. The Maryland Court of Appeals holds that this contention is a reasonable interpretation, in contrast to the argument of Credible‘s employee-borrower, Emmanuel Johnson, who posits that the terms of the note requires repayment only if an employee quits the job. If the court had agreed with Johnson, however, the consequences to Credible might have begun with the way in which its other employees subsequently regarded their employment and its termination. An involuntary discharge could mean that a fired employee would reap a windfall in terms of the repayment of a tuition loan. This circumstance would seem to encourage employees to obtain the loans and, when they wished to change their employment or desired simply to avoid repayment of what, given the cost of tuition, could be a substantial amount (plus interest), act in a manner so as to be fired. The result would not only be the cost to Credible of the loss of the amount of the loan, but havoc in the workplace, due to the employee‘s effort to get fired. This sort of misconduct would create disharmony in the workplace, lowering productivity, and undermining the economic and social objectives of the business.

Case 10.2 179. Could Panera have successfully argued that a drop in its revenue allowed it to impose the cap? Why or why not? Solution No, a drop in Panera‘s revenue would not have supported the employer‘s decision to change the terms of its unilateral contract to pay bonuses to its managers. Panera might have argued that such an economic downturn allowed it to impose a cap on the amount of the bonuses because the purpose of the contract with the managers had been commercially frustrated. But an economic downturn is a foreseeable event that an employer should anticipate when making a bonus offer. For example, Panera could have accounted for this possibility when it devised the bonus program and used different criteria to determine the amounts. Under the circumstances, Panera bore the risk of changes in revenue. Similarly, the decline in general business conditions that on which Panera based its action in the Boswell case was foreseeable. Business is risky. Markets can be undependable.

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180. Does the fact that the managers continued to work for Panera after it imposed the cap undercut their claim? Explain. Solution No. Panera‘s imposition of the cap on the amount of the bonuses was a repudiation of its original offer. That is, the modification of the terms of the promise after the managers had begun to perform was a breach of the deal. But, in such a circumstance, the managers were free to continue performing. They did not have to regard the repudiation as an immediate breach. They could continue to perform until they were convinced that their employer was not going to restore the original term, at which time they could, as they did, file a suit for breach. By simply continuing to work, the managers could be held to have accepted the modification of their contract with their employer. In this case, silence is not acceptance. Something more than simply continuing to work would be needed to show the managers‘ acceptance of their employer‘s unilateral modification.

Case 10.3 1.

How might the result in this case have been different if the court had allowed Wagner‘s extrinsic evidence of a prior contract regarding Love Song to be used as evidence in this dispute? Solution In this circumstance, the court might have construed the language of the ―Charlie‘s Angels‖ contract to the same effect. But because Columbia acquired the movie rights to the property independent of any right it might have had in relation to the television series, the court might still have considered the acquisition separate from the exploitation rights covered by the Wagner contract, and the result would have been the same.

Chapter Review Practice and Review Mitsui Bank hired Ross Duncan as a branch manager in one of its Southern California locations. At that time, Duncan received an employee handbook informing him that Mitsui would review his performance and salary level annually. In 2020, Mitsui decided to create a new lending program to help financially troubled businesses stay afloat. It promoted Duncan to be the credit development officer (CDO) and gave him a written compensation plan. Duncan‘s compensation was to be based on the new program‘s success and involved a bonus and commissions based on new loans and sales volume. The written plan also stated, ―This compensation plan will be reviewed and potentially amended after one year and will be subject to such review and amendment annually thereafter.‖ Duncan‘s efforts as CDO were successful, and the business-lending program he developed grew to represent 25 percent of Mitsui‘s business in 2021 and 40 percent by 2023. Nevertheless, Mitsui refused to give Duncan a raise in 2021. Mitsui also amended Duncan‘s compensation plan to significantly reduce his compensation and to change his performance evaluation schedule to every six months. When he had still not received a raise by 2023, Duncan resigned as CDO and filed a lawsuit claiming breach of contract. Using the information presented in the chapter, answer the following questions. 181.

What are the four requirements of a valid contract?

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