Legal and Ethical Challenges in Business Organizations

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The following is an overview:
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. Prepare a 8- to 12-page paper that identifies the legal issues and potential solutions and answers all questions presented, supported by relevant legal authority.
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, CRR sold four of the ovens to another refurbishing company for $4,000 two days before filing bankruptcy. CRR still owes approximately $35,000 to FSPC for the ovens.
• Evaluate the legal and ethical issues associated with CRR'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."