April 8, 2021

Include a script of your narration in the notes section of the PowerPoint.

Review Case One: Blue Mood Clothing, Inc.

Take some time to collect your thoughts and review the first case Vice President Dodger assigned to you. First, you need an introduction to the legal environment of business. Next, you open the Blue Mood Clothing, Inc. case file to assess the details of this assignment.

Upon completing your initial review of the file, you begin thinking about the legal issues contained in the file. In the next step, you will gather the information you need to answer the questions from the VP.

Introduction to the Legal Environment of Business

The Legal Environment: Courts, Alternative Dispute Resolution, and Agency

by Rosemary Hartigan and Paula O’Callaghan, Professors, UMUC

Why Should I Care about the Law?

Why do businesspeople need to know anything about the law? Some people think of lawyers in business as a necessary evil. There is some truth to the “necessary” part: if everyone were scrupulously honest and had photographic memories regarding all statements uttered that could constitute promises, perhaps lawyers wouldn’t be needed. But, alas, we are mere mortals with failing memories and sometimes failing ethics.

A Systems View of the Roles of the Lawyer and the Manager

One view of the respective roles of the lawyer and the manager in a business is that the lawyer should guide the manager in analyzing risk—this is in the lawyer’s training, and it’s the lawyer’s responsibility to accurately convey the nature of legal risks to the client; however, it is up to the manager to make the final business call.

Generally speaking, lawyers are inherently conservative when it comes to risk. Managers can’t abdicate responsibility for making the business call. This is one of the main reasons for managers to have legal literacy. You need to know when you need legal advice, and then what to do with it. Sometimes, basic legal knowledge is necessary on the front lines of dealing with customers and coworkers.

Knowing something about the law can assist you in prevention. Legal analysis skills help you to avert lawsuits and other unpleasantness so that you can stay focused on running your business. However, there will be instances in which you have to bring a legal-related matter to closure. Perhaps you’ve taken over from an executive who has left the department or company and left behind a problem that requires a legal solution. Or, you did something that triggered a legal response from a customer or vendor. If you know the relevant legal rules for your area of business, you’ll know when it’s appropriate to involve legal counsel.

Let’s begin with a basic overview of the two types of law.

Differences between Civil and Criminal Law

American society highly values ingenuity and entrepreneurship, but there are legal limits on the conduct of commerce. Some of these limits are statutory, which means that a law-making body has enacted a specific law to regulate a specific activity (e.g., the Sherman Act statute regulating antitrust). Some of these legal limits are found in the common law (e.g., tort law imposing liability on an infinite variety of behaviors). Most of the legal limits on business fall into the category of civil law.

One big difference between civil and criminal law is in the potential penalties. Civil law liability carries penalties that are monetary—so-called damages. The culpable party pays damages in an amount the court believes will make the wronged party whole. This contrasts with criminal law, where the possible penalties are limits on personal freedom (such as incarceration or death), although monetary penalties are also possible (such as a fine payable to the government or restitution to the victim).

There is one major exception to the rule that business contracts do not involve criminal penalties for breach: this is in government contracting. Because so many students at UMUC have employment that involves contracts with the US government in some manner, this is often a point of confusion.

Government contracting is a special circumstance where the contracts involve civil law, yet breach of contract potentially involves criminal penalties. The criminal penalties can include jail time for serious violations. Those of you who work in this area probably have attended or will attend a professional development seminar about contract compliance in which you learn the particulars of your contractual obligations.

Trend Developments in Business Law

The past 20 years have seen a rise in the criminalization of business law. While it’s still true that no one goes to prison for breaking the terms of a contract (notable exception: government contracting), there has been a marked increase in the number of business-related activities that carry possible criminal penalties.

Business activities that are punishable by criminal penalties (in addition to fines and damages) are known as white-collar crimes. Many of you are familiar with famous cases involving business people—Martha Stewart (ImClone), Kenneth Lay (Enron), Dennis Kozlowski (Tyco), and, of course, Bernie Madoff. Those businesspeople got themselves into the criminal justice system by committing fraud, lying to federal authorities, or otherwise invoking specific laws to deter commercial crimes such as insider trading of stock. The possible penalties for white-collar crime do include imprisonment as well as fines and damages.

When you see a businessperson in handcuffs doing the “perp walk,” ask yourself, “What law has allegedly been broken?” Typically, there will be a law (statute) or a regulation (e.g., Securities and Exchange Commission [SEC] rule) that allegedly has been transgressed.

Resources

• Court System

Step 3: Review Case One: Blue Mood Clothing, Inc.

Blue Mood Clothing, Inc., a company devoted to producing positive, mood-altering apparel and various other clothing items, is a wholly owned subsidiary of Colossal Corporation. Blue Mood Clothing’s most famous and best-selling product is the Breezer—a skin-tight shirt with an air ventilation system that allows the breeze to pass through the shirt. Colossal Corporation has uncovered an incident of theft at Blue Mood Clothing: approximately one month ago, over five thousand Breezers were stolen from Blue Mood Clothing’s Atlantic City, New Jersey, warehouse.

Shortly after the theft was discovered, Colossal Corporation’s internal investigator, Bill, found an online advertisement for the sale of exactly five thousand Breezers, described as shirts with an “air ventilation system that allows a cooling breeze to pass through the shirt.” Bill called the contact on the website and set up a meeting with the seller, Nick Johnson. When Bill, under the guise of being an interested purchaser of the Breezers, inquired about Nick’s distributor, Nick did not hesitate to reveal that he purchased the Breezers from Juanita Winfrey, his long-time business associate. Bill inspected the five thousand Breezers, and confirmed they were indeed the same Breezer products that were stolen from the warehouse. He then requested a price quote from Nick and asked Nick to hold the products for him for seven days. Nick agreed.

That same afternoon, before additional investigation, Bill sent an email intended solely to be sent to the vice president of Blue Mood Clothing, Inc., but he accidentally hit “reply all” to a previous message, and sent the email to every employee at Blue Mood Clothing, Inc., over two hundred people. The email stated, among other things, that “Nick Johnson was a thief and had an extensive criminal record in New Jersey. He stole the five thousand Breezers. I will continue my investigation tomorrow.” This statement was not true. Nick’s old friend from high school, who worked at Blue Mood Clothing, Inc., forwarded this message to Nick, who became worried about his business and reputation.

Bill arranged a meeting with Juanita the very next day, during which he posed as an interested clothing buyer. He asked Juanita if she had any Breezer distributors she could recommend. Juanita said that she works directly with a Blue Mood Clothing sales agent named Alex Ridgefield, and that she recently purchased five thousand Breezers from him at a fair price. Juanita also said that Alex is quite interested in expanding his business with her, and would provide Bill with a great deal.

After his meeting with Juanita, Bill checked the personnel records at Blue Mood Clothing and identified Alex Ridgefield as a low-level warehouse employee who has been with the company for over 20 years. Alex’s personnel record is spotless, with no prior personnel issues and no complaints. Alex is an at-will employee who is in charge of night security at the Atlantic City warehouse and has no history in sales. As a night security guard, Alex is responsible for protecting the warehouse from theft and is not permitted to sell products. After further investigation, Bill found company emails between Juanita and Alex in which Alex posed as a sales agent. Reading the emails, it became obvious that neither Juanita nor Nick knew that the five thousand Breezers were stolen, and that both bought the Breezers for fair-market value. Bill then collected video from all of Alex’s shifts and was able to locate a film of Alex packing the Breezers into his personal minivan and driving them out of the warehouse parking lot.

Your task is to research the legal issues surrounding the stolen property. It is up to you to decipher which laws have been broken and deduce any potential remedies. Vice President Dodger wants you to prepare a narrated PowerPoint to present this information to the senior leadership team. Because of the sensitive nature of this case, the vice president has asked you to operate with total confidentiality and without involving the legal department.

Step 4: Gather and Analyze Information

As you read through the materials, try to begin answering the questions Vice President Dodger asked you. You will likely encounter many new legal concepts, so take notes about which sections apply to this case so that you can easily refer back to them when you begin to write your presentation. The VP’s precise questions about the legal issues are as follows:

• Can Colossal Corporation terminate Alex without any notice or a hearing? Why or why not? This question relates to employment-at-will.

• Did Alex, Nick, Bill, or Juanita commit any crimes and, if so, which crimes did each person commit? Fully explain your answer for each person as you explore the subject of business criminal law.

• What defenses, if any, might the relevant persons allege in response to the crimes you identified? Fully explain your answer for each person.

• Did Alex, Nick, Bill, or Juanita commit any intentional torts and, if so, which intentional torts did each person commit? Read about the law of tortsin order to make your determinations.

• What defenses, if any, might the relevant persons allege in response to the intentional torts you identified? Fully explain your answer for each person.

• Can anyone collect damages for the intentional torts? Who can collect and whom would they sue? Detail the specific damages that may be available to potential plaintiffs as you read about tort damages.

Step 5: Focus on Your Rationale and Conclusions: Create Your Outline

You’ve finished your research. You’ve reflected on how the facts and the law come together in this situation. You’ve analyzed the possible arguments and determined which seem most reasonable. Now it is time to formulate these arguments, addressing all the issues raised by the narrative in the Blue Mood Clothing, Inc. case file Vice President Dodger gave you.

Outline your presentation to the leadership team, either on paper or in a Word document; don’t make the PowerPoint yet. Review your outline to make certain it covers all relevant points and progresses in a logical order. Identify the major bullet points that you will highlight on your slides, and allocate the appropriate supporting information to each bullet point—make sure that you have adequately covered all the relevant arguments or reasons needed to support them. In the next step, you’ll use your outline to create the PowerPoint presentation for the VP.

Step 6: Communicate Your Findings and Conclusions to the Vice President of Colossal Corporation: Create Your PowerPoint

You have finished getting all of your ideas organized surrounding the Blue Mood Clothing case when you receive an email with delivery instructions from Vice President Dodger:

INBOX (1 NEW EMAIL)

From: Kenneth Dodger, Vice President, Colossal Corporation

To: You

Just wanted to check in as you begin to communicate your findings and conclusions on the Blue Mood Clothing case.

I’d like you to use your outline and research notes from your work on this case to prepare a narrated PowerPoint for the senior leadership team. As you will not deliver this in person, it will need to follow the form of an asynchronous presentation.

Further, here is a list of additional requirements I need you to follow to meet standard presentation protocol:

• Include a title slide, with your name on it, introducing the presentation.

• On the presentation slides, include only the major bullet points for each issue.

• Include no more than 20 slides.

• Use your narration to provide the supporting rationale for each major bullet point.

• Include a script of your narration in the notes section of the PowerPoint.

• Title your files using this protocol: yourlastname_BlueMoodPowerPoint_date.

• The final slide must present a clear summary of your major conclusions and any recommendations.

You should be prepared to answer questions about your presentation after you have submitted it. That should be all for now.

Looking forward to seeing the final product,

Ken