Assignment 1 – Solar Co. Inc., a solar panel manufacturing
Solar Co. Inc., a solar panel manufacturing and installation company, has recently encountered a series of scandals and bad publicity relating to defective solar panels, poor workmanship, and employee allegations of harassment by executives within the company. One claim resulted in a two-year trial which Solar Co. lost; all other claims were settled out of court.
Solar Co. enters into a contract with XYZ Media to prepare a 6-month national advertising and public relations campaign to help restore its tarnished reputation at a cost of $600,000. XYZ Media launches the campaign, and it is successful for the first two months until XYZ’s computer servers are hacked and all client information is lost because XYZ failed to have adequate backup systems in place. In addition, social media account information and passwords were compromised, resulting in derogatory and inappropriate posts being made on all of XYZ’s social media accounts for several hours. Because XYZ was managing Solar Co.’s social media presence at the time, Solar Co.’s social media accounts were also taken over by the hackers for a brief time and filled with damaging posts.
XYZ issues a public apology; however, Solar Co. wishes to terminate the contract with XYZ and receive a refund of the $200,000 it paid for the first two months of the campaign due to the damages caused by the computer hack. XYZ refuses to cancel the contract or issue a refund, insisting that it can successfully continue the campaign and re-create all of the material that was lost. Solar Co. refuses to pay any further amounts due under the contract and has already begun seeking a new media relations firm to re-launch the campaign.
Part I
Write a 525- to 700-word recommendation to Solar Co.’s CEO advising whether Solar Co. should:
file a lawsuit and proceed to trial try to reach a settlement with XYZ Media, or use a method of alternative dispute resolution (ADR)
Your analysis should specifically discuss each of the nine factors provided in the “Contemporary Environment Cost-Benefit Analysis of a Lawsuit” feature found in Ch. 4, “Judicial, Alternative, and E-Dispute Resolution.” Provide a clear explanation and reasoning for your recommendation based on the facts of the scenario.
Would your recommendation be different if you were advising XYZ Media’s CEO? If so, how?
Part II
Solar Co. intends to use arbitration agreements with all clients, subcontractors and employees in the future.
Write a 350- to 525-word memo to Solar Co.’s CEO explaining the arbitration procedure and the enforceability of arbitration provisions under the Federal Arbitration Act.
Include a recommendation as to whether arbitration agreements should be used in the future to reduce Solar Co.’s legal risk and why. CORE SKILL: separating the TYPES of liability at issue, because a scenario with defective products, poor workmanship, AND harassment allegations raises THREE distinct bodies of law, and merging them is the error the fact pattern is designed to induce.
1. PRODUCT LIABILITY (defective panels) — three theories, and you should address each:
— NEGLIGENCE: duty, breach, causation, damages. Requires proof of fault.
— STRICT PRODUCTS LIABILITY: the seller of a product in a DEFECTIVE CONDITION UNREASONABLY DANGEROUS is liable regardless of fault or of the exercise of all possible care (Restatement (2d) §402A). NO PRIVITY REQUIRED. This is the crucial doctrinal point: the plaintiff need not prove the manufacturer was careless — only that the product was defective and caused harm. THREE DEFECT TYPES: MANUFACTURING defect (this unit departed from the intended design), DESIGN defect (the entire line is unreasonably dangerous — tested by consumer expectation or risk-utility balancing, including whether a reasonable alternative design existed), and FAILURE TO WARN / marketing defect.
— BREACH OF WARRANTY: express warranty; implied warranty of MERCHANTABILITY (fit for ordinary purposes — UCC §2-314); implied warranty of FITNESS FOR A PARTICULAR PURPOSE (§2-315, where the seller knows the buyer’s particular purpose and the buyer relies on the seller’s skill). Note disclaimers and their limits (§2-316) and the Magnuson-Moss Act.
DEFENSES: comparative fault, assumption of risk, product misuse, state-of-the-art, statute of repose.
2. NEGLIGENT WORKMANSHIP (installation): a services claim — negligence, breach of contract, possibly breach of an implied warranty of workmanlike performance.
3. HARASSMENT BY EXECUTIVES: this is EMPLOYMENT LAW, not tort or contract. TITLE VII of the Civil Rights Act of 1964. Distinguish QUID PRO QUO harassment from HOSTILE WORK ENVIRONMENT (which requires conduct severe OR pervasive enough to alter the terms and conditions of employment — an objective and subjective standard). KNOW THE FARAGHER/ELLERTH FRAMEWORK, which is what the fact pattern is really about: when a SUPERVISOR harasses and there is a TANGIBLE EMPLOYMENT ACTION (firing, demotion, pay cut), the employer is STRICTLY (vicariously) LIABLE with NO affirmative defense available. Absent a tangible employment action, the employer may raise the affirmative defense that (a) it exercised reasonable care to prevent and promptly correct the harassment (a real, communicated, enforced anti-harassment policy with a complaint procedure), and (b) the employee unreasonably failed to take advantage of it. THAT DEFENSE IS THE ENTIRE PRACTICAL REASON companies maintain training and reporting systems — and it is the recommendation your answer should build to.
4. VICARIOUS LIABILITY generally: RESPONDEAT SUPERIOR — the employer is liable for torts committed by employees WITHIN THE SCOPE OF EMPLOYMENT. Intentional torts (like harassment) are often outside the scope, which is precisely why Title VII’s separate framework matters. Distinguish employees from INDEPENDENT CONTRACTORS (generally no vicarious liability, subject to exceptions for non-delegable duties and inherently dangerous activities) — and note that misclassification is itself a live legal exposure.
RECOMMENDATIONS: compliance program, document retention, insurance (CGL, product liability, EPLI, D&O), quality control and supplier audits, recall protocol, anti-harassment policy with training and a genuinely safe reporting channel, and independent investigation.
Use IRAC throughout.
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