Prompt: Discuss the importance of one’s ability to settle a dispute (both criminal and civil) in a formal court setting. Also, discuss the importance and requirements of the “shopkeeper’s privilege”

 BP – Violation of Clean Air Act, Willful failure to correct OSHA violations; manslaughter and obstruction, resulting in over $24 billion in damages paid  Intra -Business Crimes (90%) include theft, kickbacks, and theft from employer  Inter -Business Crimes include stealing from competitors, acting illegally to gain a competitive advantage, electric eavesdropping, and federal violations (including securities fraud) Business Crimes, cont.

 Officers and Directors are liable  If they authorize conduct, or  If they know about the conduct and did nothing  United States v. Park , 421 U.S. 658 (1975)  What does the case hold about a manager’s responsibility?

 Managers are responsible for problems they are warned or aware of but take no action to remedy or correct. Federal Laws  Insider Trading and Securities Fraud Enforcement Act of 1988 (ITSFEA)  Significantly increased the penalties associated with insider trading and securities fraud  Example: penalties are the result of 3x the amount of $ made by perpetrating the crime  Sarbanes -Oxley (SOX) from 2002  Penalties for mail and wire fraud increased to 20 years in prison  Penalties for violations of the trust, reporting, and fiduciary duties to 10 years in prison  Fines increased substantially  Created the crime of False Financial Statement Certification Federal Laws, cont.

 The Financial Services Reform Act a.k.a. Dodd -Frank Wall Street Reform and Consumer Protection Act (2010)  Passed as a result of the mortgage and investment market crisis  Created the Bureau of Consumer Financial Services (CFSB)  Created new rules for the disclosure and trading consequences of credit default swaps among other additional rules  IRS violations: $500,000 fine and 5 years in prison  Clean Air Act: $1,00,000 fine and 5 years in prison  Clean Water Act: Knowing first violations $50,000 per day and/or 3 years in prison  OSHA: Willful violation causing death $70,000 and /or 1 year in prison  Consumer Protection Safety Act: Tampering $50,000 and 10 years in prison Additional Penalties  Monitoring (usually in conjunction with Deferred Prosecution Agreements)  Companies may be assigned a monitor to report any missteps  Keep offices within the company and attend meetings and the like  Examples: Coca -Cola, Blue Cross Blue Shield, Monsanto  Personal criminal penalties  Example: Imperial Foods’ owner was sentenced to 19 years in prison for the burning deaths of 25 employees due to workplace hazards  Shame punishments  May be required to take out ads alerting the public to the misdeeds Additional Penalties, cont.

 Community service  United States v. Allegheny Bottling Co., 695 F. Supp.

859 (E.D. Va. 1988) held that the company must provide an executive every week for community service for 3 years  Officer and Executive Banishment  The SEC has held COOs responsible if they are a supervisor and fail to take action to correct an action once they became aware of it  Hospital Administrators may be held criminally liable and banished from the industry when their hospitals file fraudulent Medicare/Medicaid claims under the Responsible Corporate O fficer D octrine Corporate Sentencing  Sentencing guidelines are a form of mandatory sentencing and serve as a method of crime prevention  The court uses a formula that takes the following into account:

 Seriousness of the crime; company’s history of violations; cooperation in investigation (or efforts to cover up); effectiveness of compliance program; role of senior management in the wrongdoing Corporate Sentencing, cont.

 Businesses should follow these steps  (1) have a code of ethics (2) conduct training on the code of ethics (3) Have a company hotline and compliance officer for employees to report misconduct (4) protect employees who report violations (5) investigate all allegations (6) report all violations immediately (7) offer restitution to affected parties (8) cooperate with regulators (9) admit mistakes (10) be forthright and public with the code of ethics Corp. Board Criminal Responsibility  Board members can be held personally liable for frauds and subsequent shareholder losses while acting on the board.  In re Caremark International, Inc. , 698 A.2d 959 (Del. Ch. 1996)  Board members can be held liable for failure to institute and monitor adequate internal controls to prevent fraud. Corp. Board Criminal Responsibility, cont.

 Example: WorldCom board members were held criminally liable for the company’s $11 billion overstatement of revenues  Example: While GM was fined $900 million for its mishandling of its defective ignition switches, its board members were not held personally liable because its failure to change risk management procedures did not cause the failure to detect the faulty switch Elements of Business Crimes  Mens rea – mental intent or knowledge of a wrongdoing (state of mind)  For corporations, must prove intention on behalf of the directors  To prosecute, must show individual intent  This can be established by showing knowledge of actions and failure to object Elements of Business Crimes, cont.

 Actus reus – the requirement of a specific action or conduct (criminal act)  Intent alone is not enough to constitute a crime, act must also be committed  This is the required conduct for each crime, can be found in the statutory elements of the crime  Failure to act may be enough for some crimes  Example: failure to pay taxes Business Crimes  Theft  Intent to take property  Actual taking for permanent use without authorization  Embezzlement  Intent to take property  Actual taking of property for use (even if temporary)  By person entrusted with property Business Crimes, cont.

 Obstruction of Justice  Destruction or altering of documents;  That are subject to a subpoena or that are related to a pending investigation;  Or encouraging other to destroy or alter such documents  This includes audit papers – amended by SOX Business Crimes, cont.

 Computer Crimes – crimes committed via a computer  Types of computer crimes  Unauthorized access of computers  Electronic Communications Privacy Act of 1986 (ECPA)  Prohibits unauthorized access to live communications  Stored Communication Act (SCA)  Prohibits unauthorized interception of stored electronic communications  Unauthorized use of computers  Economic Espionage Act (EEA)  Prohibits the theft or misappropriation of trade secrets or to copy, duplicate, sketch, draw, photograph, download, upload, alter, destroy, replicate, transmit, deliver, send, mail, or communicate a trade secret Business Crimes, cont.  Types of computer crimes, continued  Spamming  Prohibits sending thousands of emails at once to many computer users  Using Computers to commit fraud  Prohibits the use or access of federal or private computers without authorization (also includes new technology)  Cyberbullying  Prohibits online harassment (usually through the use of social media)  Both civil and criminal penalties Business Crimes, cont.

 Criminal Fraud  A false statement was made  With the intent to mislead the buyer for the purposes of affecting the transaction  The statement was material (affecting the buying decision)  The buyer relied on the false statement Business Crimes, cont.

 Commercial Bribery – the corrupt dealing with agents or employees of potential buyers to secure an advantage over business competitors  Racketeer Influenced and Corrupt Organizations (RICO)  Pattern of racketeering activity  Must have at least two consecutive activities  Qualifying offenses  Pornography, Murder, Kidnapping, Bribery, Extortion, Fraud  USA Patriot Act  Prior to 2001 – Money Laundering Control Act  Post 2001 – USA Patriot Act amended Money Laundering Control Act and Bank Secrecy Act  Prohibits contracting with terrorist groups or funnel cash to them for services Procedural Rights  4 th Amendment to the U.S. Constitution  Protects privacy  Basis for search warrants of private property  Must be based on probable cause  Must be issued by a disinterested magistrate  If searches are conducted improperly, evidence is admissible at trial  Kyllo v. United States , 533 U.S. 27 (2001) – a thermal imaging device constituted a search of a home and therefore was subject to a search warrant requirement  Dow Chemical Co. v. United States , 476 U.S. 1819 (1986) – pictures from a low flying airplane above a Dow Chemical plant were held to be constitutional and not a violation of the search warrant requirement Procedural Rights, cont.

 4 th Amendment to the U.S. Constitution, cont.  Exceptions to the search warrant requirement  E vidence is being destroyed  Plain view exception  Records in the possession of a 3 rd party can be recovered and the 3 rd party cannot assert 4 th amendment rights Procedural Rights, cont.

 5 th Amendment to the U.S. Constitution  Protects against self -incrimination  Given to natural persons, but not corporations  Corporate make make this assertion in order to protect themselves, but to protect corporate records  Miranda v. Arizona , 384 U.S. 436 (1996) – Maranda warning must be given to those subjected to custodial interrogation.  Maranda warnings consist of  5 th Amendment right not to testify against oneself  6 th Amendment right to counsel Procedural Rights, cont.

 5 th Amendment to the U.S. Constitution, cont.  Provides for due process – the right of the accused to be heard, to present evidence on his/her behalf, and to question witnesses  Warrant/Arrest – when a warrant is issued for someone’s arrest OR when the police arrest someone they witnessed committing the crime  Initial Appearance – when the accused appears before the judge, the charges are explained, bail is set, and terms of release are set Procedural Rights, cont.

 5 th Amendment to the U.S. Constitution, cont.  Preliminary Hearing/Grand Jury  Preliminary Hearing – evidence presented to a judge and cross -examined by the defense; if sufficient proof then an information is issued.  Grand Jury – evidence of the crime is presented to a jury; if the jury finds sufficient evidence then an indictment is issued.  Arraignment – here the defendant enters his/her plea (guilty, not guilty, no contest)  This plea can be the result of a plea bargain Procedural Rights, cont.

 5 th Amendment to the U.S. Constitution, cont.  Discovery – mandatory disclosure of witnesses and evidence  Omnibus Hearing – hearing to challenge the admissibility of evidence  Trial  Appeal Procedural Rights, cont.

 6 th Amendment to the U.S. Constitution  Ensures a speedy trial  Timely criminal proceedings and trials  Right to counsel  Corporate counsel does not represent employees individually Business Torts  Tort – a civil wrong; it is the interference with someone or with someone’s property that results in an injury to that person or that person’s property  Tort in Latin is tortus , which means crooked, dubious or twisted  Tort vs. Crime  Tort is a private wrong, while a crime is a public wrong  In tort: the injured party (plaintiff) will seek a remedy/damages from the party who committed the harm (defendant)  In crime: the wrongdoer (defendant) is prosecuted by the State and pays debt to society by fine and/or jail time Types of Torts  Intentional Torts  More than an accidental wrong; must demonstrate intent of action  Tort of Negligence  Accidents; accidental harms that result from the failure to think through the consequences; when a duty of care is breach resulting in a harm Types of Torts, cont.

 Strict Tort Liability  Absolute liability; the basis for products liability cases  Property Torts vs. Personal Torts  Property torts result in harm to one’s property  Examples: trespass to land, disparagement, negligence, conversion  Personal torts result in harm to the person  Examples: assault and battery, defamation, false imprisonment Defamation, cont.

 Untrue statement by one party published (communicated) to another  Defamation can be in the form of either Slander or Libel  Slander is oral defamation (spoken)  Libel is written defamation (including online and in social media and in some states broadcasted) Defamation, cont.

 Elements  Statement about a business’ or person’s reputation or honesty that is untrue  Publication – someone heard an understood the statement  Statement that is directed at a particular person or business with the intent to injure  Damages – economic losses such as damage to reputation  In some cases, proof of malice is required – when public figures are involved Defamation, cont.

 Defenses to defamation  Truth is a complete defense (although may be difficult to prove)  Privileged speech  Absolute – testimony under oath  Opinion – analysis and op -ed articles  Qualified – media (as long as it was published without malice)  Malice – requirement that the information was published with the knowledge of its falsity or reckless disregard to whether it was true or false  Trump v. O’Brian , 29 A.3d 1090 (N.J. Super. 2011)  Why was summary judgment awarded to O’Brian? Employee References and Defamation  Giving references and defamation  Randi W. v. Muroc Joint Unified School District , 929 P.2d 582 (Cal. 1997)  Held that employers are not liable for defamation if the information they disclose about former employees is provided in “good faith” or the absence of “bad faith .”  Robinson v. Shell Oil CO., 519 U.S. 337 (1997)  Held that giving a negative reference on a former employee who has sued the company for discrimination can be considered retaliatory and a violation of Title VII.  Many employers simply choose to avoid risk by not providing information past a confirmation that the individual worked at the company and for what length of time. Contract Interference  Elements  3 rd party knew of existing contract between two primary parties  3 rd party intended to interfere with or cause a breach of the contract  Original party to the contract is injured by breach of contract induced by the 3 rd party  Example: A and B have a contractual relationship. C, who knows of this relationship, entices party B to breach the contract. A can sue B for breach of contract and C for wrongful contract interference.  Macy’s v. Martha Stewart Living Omnipedia , Inc , 127 A.D. 3d 48 (Sup. Court N.Y. 2015) False Imprisonment  Custody of someone else for any period of time against their will (and without privilege)  Detainment is enough to establish damages; no need to show physical damages  Defense of Shopkeeper’s Privilege  Can detain for a reasonable time and under reasonable circumstances  Must have a reasonable basis for detaining the individual  The detainment is for investigation purposes Intentional Infliction of Emotional D istress  Liability for conduct that exceeds all bounds of decency and results in emotional distress to the harmed individual  Difficult for the plaintiff to establish this tort – damages  This tort has been used by debtors against collectors for illegal collection practices and by individuals who have suffered at the hands on online bullies Invasion of Privacy  Intrusion into the Plaintiff’s Private Affairs requires  T he defendant, without authorization, must have intentionally invaded the private affairs of the plaintiff;  T he invasion must be offensive to a reasonable person;  The matter that the defendant intruded upon must involve a private matter;  The intrusion must have caused mental anguish or suffering to the plaintiff . Invasion of Privacy, cont.

 Galella v. Onassis , 353 F.Supp . 196 (S.D.N.Y. 1972).

 T he former First Lady brought this action against a photographer for repeatedly invading her privacy. The photographer was order to remain 50 yards from Mrs. Onassis and 100 yards from her children. Invasion of Privacy, cont.

 Public Disclosure of Private Facts requires  The disclosure of facts must be public.  The facts disclosed must be private, and not generally known.  Publication of the private facts in question must be offensive to a reasonable person of ordinary sensibilities.  The facts disclosed must not be newsworthy – not of legitimate public concern Invasion of Privacy, cont.

 Health Insurance Portability and Accountability Act of 1996 (HIPPA)  Controls how medical information is collected, used, and conveyed  Office personnel must be careful how medical records are stored and viewed Invasion of Privacy, cont.

 Appropriation of Another’s Name, Likeness, or Image for Commercial Advantage  O ccurs when a defendant uses a plaintiff's name, likeness, or image without his or her permission for commercial purposes (and not a newsworthy event)  Fairey v. Associated Press , No. 09 -01123 (S.D.N.Y. 2010 )  Shepard Fairey , a famous artist, was sued by the AP for appropriation of a photograph of Barack Obama that he used to create the iconic “HOPE” poster for Obama’s presidential campaign. The case settled. Invasion of Privacy, cont.

 Comparison of two like cases  Rogers v. Koons , 960 F.2d 301 (2d Cir. 1992)  Jeff Koons , a famous artist, appropriated a photograph taken by Art Rogers of two people holding a ‘string of puppies’ by making a sculpture from the photo. Even though he changed color of the puppies to bright blue and altered a number of elements, the court rejected Koons ’ parody defense.  Blanch v. Koons , 467 F.3d 244 (2d Cir. 2006)  Jeff Koons appropriated a photograph of woman’s legs and sandals from a Gucci ad for one of his paintings. Here, in contrast to the above case, the court found that the photograph had been sufficiently transformative to merit fair use protection. Negligence  F ailure to exercise the care toward another which a reasonably prudent person would do under the circumstances  Elements required to establish Negligence  Duty – all persons are expected to behave as ordinary and reasonably prudent persons  Example: A 45 mile per hour speed limit is not reasonable under icy conditions Negligence, cont.

 Elements, cont.

 Breach – when an individual fails to comply with a duty of care (can be either action or failure to act)  Example: Chaney v Starbucks Corporation , 115 F. Supp. 3d 380 (S.D.N.Y. 2015) – Here the court granted Summary Judgment to Starbucks when a plaintiff failed to show that a plugged -in computer charger was not open and obvious and not inherently dangerous when he fell over it, meaning that Starbucks had not breached its duty to keep its premises safe for customers. Negligence, cont.

 Elements, cont.

 Causation – breach of duty must cause the plaintiff’s injuries  Two types of causation: (both must be met)  (1) cause in fact – “but for” test  “but for the action (or lack of action) by the defendant, the plaintiff would not have been injured.”  (2) proximate cause – foreseeability test  Palsgraf v. Long Island Railroad Co ., 162 N.E. 99 (NY. 1928) - a negligent conduct resulting in injury will result in a liability only if the actor could have reasonably foreseen that the conduct would injure the victim  Damages – plaintiff must have suffered an identifiable injury including  Medical bills; Lost wages; Pain and suffering; or Loss of consortium (as between spouses) Defenses to Negligence  Comparative Negligence – compare acts of plaintiff and defendant and assess blame for accident; reduces plaintiff’s recovery by amount of fault  Assumptive of Risk – plaintiff knew of inherent risk and partook in the activity anyway  The Landing Assoc. Inc. v. Williams (2012) – Here the court granted summary judgment to The Landing on the theory of Assumption of Risk holding that the victim assumed the risk of walking near an alligator infested lagoon when she was aware that alligators resided in those waters. Tort Reform  Current Attempts to Reform  Limits on verdicts  Standards for recovery  Limits on Punitive Damages  8 th Amendment excessive punitive damages is cruel and unusual punishment  Due process violated with excessive punitive damages – State Farm v. Campbell (2003)  Exxon Shipping Co. v Baker , 554 U.S. 471 (2008) – The Supreme Court held that the maximum punitive damages should not exceed compensatory damages (limited to these facts). Strict Liability  Is absolute liability for abnormally dangerous activities  Transporting, manufacturing, storing, or blasting dynamite  Keeping wild animals  Using or transporting certain chemicals, such as combustibles and acids  Disposing of hazardous chemical wastes  Production or containment of radioactive emissions  Performing controlled burns  Certain product defects  Complete reading assignments  Complete writing assignments  Answer discussion questions  Complete unit quiz 51 What’s Next ? Jennings , M. (2017 ). Business; It’s Legal, Ethical, and Global Environment . (11 th ed.). South -Western Cengage Learning . The Holy Bible 52 References