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Corporate Veil, Employee Benefits and Rights in Contracts

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1). Years ago, New York law required that every taxicab company carry $10,000 of accident liability insurance for each cab in its fleet. The purpose of the law was to ensure that passengers and pedestrians injured by cabs operated by these companies would be adequately compensated for their injuries. At that time, Jay Colton organized 10 corporations, each owning and operating two taxicabs in New York City. Each of these corporations carried $20,000 of liability insurance. Colton was the principal shareholder of each corporation. The vehicles, the only freely transferable assets of these corporations, were collateral for claims of secured creditors. The 10 corporations were operated more or less as a unit with respect to supplies, repairs, and employees. Sam Walker was severely injured when he was run down by one of the taxicabs. He sued Colton personally, alleging that the multiple corporate structure amounted to fraud upon those who might be injured by the taxicabs. Should the court pierce the corporate veil to reach Colton individually? Explain the arguments of both parties before reaching your conclusion. Explain your reasoning.

2). ZIP Tours, Inc. arranged tours of central Florida's tourist attractions. Cynthia Hooper conducted 29 such tours for ZIP between July 1980 and March 1981. Both Hooper and ZIP considered Hooper an independent contractor. She worked for ZIP only when it needed her services, and could reject particular assignments. She was also free to work for other tour services, and did so. Once Hooper accepted a job from ZIP, she was told where to report and was given instructions about the job. She also had to use a ZIP-furnished vehicle and wear a uniform with the ZIP logo when conducting tours. Aside from ensuring that she departed on time, however ZIP did not tell her how long to stay or what kind of tour to conduct at each tourist attraction. Finally, Hooper was paid on a per tour basis. Hooper later filed a claim for unemployment compensation benefits with the Florida Division of Labor and Employment Security. The Division concluded that she was entitled to these benefits because she was ZIP Tours' employee. Was Hooper an employee or an independent contractor? Explain the arguments of both parties before reaching your conclusion. Explain your reasoning.

3). Frank agrees to build a garage for Sarah for $15,000. Sarah offers either to sign a contract showing her obligation to pay Frank $15,000 or to sign a negotiable promissory note for $15,000 payable to the order of Frank. Would you advise Frank to ask for the contract or the promissory note? Explain your answer, and be sure to address the differences in the rights of assingees of contracts versus holders in due course of negotiable instruments.

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Solution Summary

This in-depth solution address all three scenarios and for the first scenario provides arguments of Sam Walker and principal shareholder in all 10 corporations, and the decision of the court. In the second scenario arguments are provided for Hooper and ZIP tours and references the IRS 20 point checklist to decide on a conclusion. In the third scenario, the function of a contract and a promissory note is explained and suggestions are made for what Frank should do.

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Case Analyses: State the issue, rule of law, applications

Both case analyses and assessed question is for IRAC format.


Cindy is 36 years old and working as a sales representative for a small manufacturer. Cindy and her husband have been married for about 12 years. They have no children because initially they wanted to establish their careers before taking on the obligations of raising a family. Cindy has been trying to get pregnant for a couple of years without success. Cindy and her husband have recently learned the source of the problem is Cindy, and that she needs to reduce her working hours in order to reduce her stress level. Cindy currently works about 60 hours a week and wants to reduce her hours to about 40 or so. Cindy's employer refuses to change her responsibilities, but says that so long as she gets all her work finished, it is no problem if she works fewer hours per week. Cindy brings a claim under the ADA on the grounds that her inability to get pregnant is a covered disability.


Dennis comes up to his supervisor, Mae, at a Christmas party and tells Mae he wants to sue for sexual harassment. Mae asks what happened. Dennis says that Linda came over to him and tweaked his lower "cheek" and called him sweetie. Linda has done this to other guys at the party as well. Dennis reports it to management who laughs it off. He quits and files with EEOC. Does he win? If so, how much?


A black female employee is told that she cannot come to work at the bank with her hair in decorative braids traditionally worn in Africa, and if she continues to do so, she will be terminated. Does the employee have a claim under Title VII?


Father and son have their own parking lot cleaning business. They contract with Wal-Mart to clean the parking lot. While cleaning the lot, Wal-Mart employees from the nursery make Hispanic ethnic slurs and epithets. This continues even after the father complains to Wal-Mart management who refuses to do anything. Is there a Title VII violation? Does Section 1981 apply? Does it matter that father and son are independent contractors and not employees?

Accessed questions:

Please use IRAC format

1. An English professor puts a comment on a student's composition which says, 'Can't you write at all? You are writing at a third grade level and will never be able to graduate from this university.'The student is extremely upset and sues the professor for intentional infliction of emotional distress. Please state the issue, rule, application, and conclusion.

2. Dorothy Yu, an employee of Northwest Pipeline Corporation, was found to have in her possession a confidential personnel document that she was not authorized to possess. She admitted possession and identified Enser, who worked in the records department, as the source of the document. Both Yu and Enser were terminated for violating Northwest's confidentiality policy. Northwest then informed the Utah Job Services that Yu had been fired for this reason and therefore was ineligible for unemployment compensation. Selected nonsupervisory Northwest employees were also informed of the reasons for Yu's termination. Yu filed a defamation suit against Northwest. Please state the Legal Issue, Rule, Application, and Conclusion.

3. Laura promised her roommate Betsy that she (Laura) would "take care" of getting renter's insurance on their apartment. Two months later, when the apartment was broken into and looted, Betsy discovered that Laura had not purchased the insurance. Is there any theory under which Betsy might be able to recover damages from Laura in this case? Please state the Legal Issue, Rule, Application, and Conclusion.

4. Jack applied to Intex Corp., a company with 15 or more employees, for a job maintaining and repairing its copy machines on an "as needed" basis. Jack has his own tools. Jack is also trying to get contracts with other companies to repair their copy machines. If Jack is hired, is he a part-time employee or an independent contract?
Please state the Legal Issue, Rule, Application, and Conclusion.

5. Ewers, who own a saltwater aquarium with tropical fish, bought several seashells, a piece of coral, and a driftwood branch from the Verona Rock Shop. Just before the purchase, the sales clerk told Ewers that these items were "suitable for saltwater aquariums, if they are rinsed." After making the purchase, Ewers took the items home, rinsed them for 20 minutes in a saltwater solution, and put them in his aquarium. Within a week, 17 of his tropical fish died. The "rinsing" required to prevent their deaths is a week-long cleansing process that involves soaking the shells and the coral in boiling water. Assume that Ewers did not know the correct "rinsing" procedure. Please state the Legal Issue, Rule, Application, and Conclusion.

6. Maintenance Contractors, Inc., owed $13,600 to Westinghouse Electric Supply Co. Robert Pilkerton, the majority shareholder of Maintenance Contractors, caused Maintenance Contractors to cease operations. Twelve days later, Robert Pilkerton incorporated R.E. Pilkerton, Inc, which carried on the same business as Maintenance Contractors. Are Pilkerton and R.E. Pilkerton, Inc., liable to Westinghouse on the $13,000 debt? Please state the Legal Issue, Rule, Application, and Conclusion.

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