1. The Answers are HERE!
GM520 Final Exam (2)
TCO D Short Answer Question and Facts for Page 1 Questions:
A well known pharmaceutical company, Robins & Robins, is working through
a public scandal. Three popular medications that they sell over the counter
have been determined to be tainted with small particles of plastic
explosive. The plastic explosives came from a Robins & Robins supplier
named Casings, Inc., that supplies the capsule casings for the medication
pills. Casings, Inc., also sells shell casings for ammunition. Over $8 million in
inventory is impacted. The inventory is located throughout the Western United
States, and it is possible that it has also made its way into parts of Canada.
Last fall, the FDA had promulgated an administrative proposed rule that would
have required all pharmaceutical companies that sold over-the-counter
medications to incorporate a special tracking bar code (i.e., UPC bars)
on their packaging to ensure that recalls could be done with very little
trouble. The bar codes cost about 35 cents per package.
Robins & Robins lobbied hard against this rule and managed to get it stopped
in the public comments period. They utilized multiple arguments, including the
cost (which would be passed on to consumers). They also raised “privacy”
concerns, which they discussed simply to get public interest groups
upset. (One of the drugs impacted is used for assisting with alcoholism
treatment – specifically for withdrawal symptoms – and many alcoholics were
afraid their use of the drug could be tracked back to them.) Robins & Robins
argued that people would be concerned about purchasing the medication with
a tracking mechanism included with the packaging and managed to get
enough public interest groups against the rule. The FDA decided not to
impose the rule.
Robins & Robins' contract with Casings, Inc., states, in section 14 B.2.a., "The
remedy for defects in supplies shall be limited to the cost of the parts
supplied." Casings, Inc., had negotiated that clause into the contract after a
lawsuit from a person who was shot by a gun resulted in a partial judgment
against Casings for contributory negligence.
Robins & Robins sues Casings, Inc., for indemnification from suits by injured
victims from the medication, for the cost of the capsule shells, for attorney's
fees, and for punitive damages. List any defenses Casings, Inc., would have
under contract theory ONLY. (short answer question)
2. TCO B. The FDA decides to require all pharmaceutical companies to
immediately implement the tracking bars (UPC) as a result of the disaster with

2. Robins & Robins. Robins & Robins decides not to challenge this and begins
the process of adding them to all of their products. However, McFadden, Inc.,
a New York pharmaceutical company, realizes that this new requirement is
going to bankrupt them immediately. McFadden did not participate in the
original public comment period. However, this rule is different from the
rule that went through that public comment period in that it specifically
names four companies as being impacted: Robins & Robins, McFadden, Inc.,
Bayer, and Johnson & Johnson. On what bases can McFadden challenge this
requirement imposed by the FDA, and can they be successful? Provide at
least two bases under the Administrative Procedures Act and justify your
answer. (Points: 30)
3. TCO C. Robins & Robins immediately issued a massive recall for the
tainted medication upon learning of the situation. Despite the recall, 1,400
children and 350 adults have been hospitalized after becoming very ill upon
taking the tainted medication. Each of them had failed to note the recall after
having already purchased the medication. It is quickly determined that they
will need liver transplants and many of them are on a waiting list. During the
wait, to date, 12 children have died. Their families are considering suing for
both 402A and negligence. The attorneys stated that but for the lobbying
efforts, the recall process would have been automated and the people would
not have gotten sick or died.
You are the attorney for one of the dead children’s family. List the causes of
action (if any) you would file against Robins & Robins, the FDA, and the
bribed FDA member. List the elements of the causes of action, and set forth
the facts that you have that would support a lawsuit against each of the three
named defendants. State any defenses any of the three would have. Analyze
the success of the defenses.
TCO A. It is discovered that Robins & Robins knew about the tainted
medication 2 months earlier than they announced the recall. They hid it and,
in fact, sent out contract buyers to try to buy up all of the medication off the
shelves. Their “fake” recall failed. Using the Laura Nash method of analyzing
ethical dilemmas, analyze the ethical dilemma faced by the CEO of Robins &
Robins for the fact that they saved 35 cents/package and are now in the
middle of a major, life-threatening recall. Analyze their “fake” recall as well.
Show all of the steps of the model and give a recommendation to the CEO of
what to do now that the deaths are escalating. What is the “right” thing for the
CEO to do in this case? Did the model help you come to this conclusion, or
did you use some other method? Explain.
Have you defined the problem accurately?
1. The problem in terms of its magnitude and impact was not defined
accurately, which could have led the CEO to make the wrong decision

3. 2. Given that the issue has now been firmly established, the problem, its
impact and consequence should be seen, to be appreciated fully.
How would you define the problem if you stood on the other side of the fence?
1. Risk or harm leading to personal injury or even loss of life
2. Loss of life and loss of trust
How did this situation occur in the first place?
1. Faulty quality checking and manufacturing. Faulty supplies.
2. Negligent decision to go ahead with fake recall
To whom and to what do you give your loyalty as a person and as a member
of the organization?
1. To investors and shareholders. To customers
2. To customers direct affected. To customers and society.
What is your intention in making this decision?
1. To save money
2. To ensure the company is fair, and to take up responsibility
How does this intention compare with the probable results?
1. Inadequate
2. Fair
Whom could your decision or action injure?
1. Innocent end customers and consumers
2. Innocent end customers and consumers
Can you discuss the problem with the affected parties before you make your
decision?
1. No
2. No
Are you confident that your position will be as valid over a long period of time
as it seems now?

4. 1. No
2. Yes
Could you disclose without qualm your decision or action to your boss, your
CEO, your family, society as a whole?
1. No
2. Yes
What is the symbolic potential of your action if understood? If misunderstood?
1. Loss of trust, let down of customers and community the company operates
in
2. Loss of trust
Under what conditions would you allow exceptions to your stand?
1. If risk of loss of life is minimal, and if the company is able to do most of the
recalls within a quick time
2. When company has done all it can, and factors are not in its control
5. TCO I. A Canadian citizen whose son (resident of Ontario) died from the
medication sues Robins & Robins in a California court. The court there is well
known for being victim friendly and providing huge payouts to victim families.
In Canada, the cap on nonpecuniary damages is around $300,000. Punitive
damages in Canada are rarely allowed. Robins & Robins moves to dismiss
the case under the theory of sovereign immunity. Will Robins & Robins win
this motion using this theory? Why or why not? (short answer
question) (Points: 15)
Page 2
Question 2 - 2 essays, 30 points each.
TCO E and H. A private high school hires a new Superintendent, George
Forester. The school is owned by a local Lutheran Church and is run by a
board of directors chosen by church members. Supt. Forester shows up for
his first day of work, and sends a memo via intercompany mail to all teachers:
Dear Staff:
There is a new Sheriff in town – and it is me. As your new leader, I am
implementing a dress code that includes no slacks or shorts for women and
no earrings for male teachers. Men shall all be clean shaven. Violators will
be docked one week’s pay; 2nd offenses will result in a one week suspension

5. without pay and 3rd offenses, dismissal. All teachers will address me as
“Pastor Forester” or “Amen, Pastor Forester.” Teachers who fail to abide by
these dictates will be docked two points on their annual evaluations. Amen,
Pastor Forester.”
That day, one teacher, Anna Seenandfeld had a birthday party at the school,
having just turned 40. Her frown at the party showed everyone she was not
happy about her party. Pastor Forestor had bought black balloons for her and
joked with the other teachers about the "over the hill" teacher. The next day,
Pastor Forester goes into the teacher’s lounge and calls all non-tenured
teachers into his office. He tells them that he has assigned himself to be their
mentoring teacher and that effectively immediately they will be evaluated
weekly. One teacher, Anna Seenandfelt, begins to cry. Another teacher, Andy
DuFrane, rolls his eyes and says, "God! These menopausal women should
not be allowed around our students." Pastor Forester goes to Anna and hugs
her, offering her a tissue. He pats her gently on the behind and whispers, "Act
your age, please." When she pulls forcefully away from him, Pastor Forester
assigns her to work Saturday detention for the next three weeks to “toughen
her up.”
TCO E. Anna and Lisa both sue the school and Pastor Forester for
discrimination and further, for liability for their injuries (the stabbing damages
and the damages to Lisa’s son’s health.) You are one of the board of directors
and need to analyze the liability of the school. Limit your answer to the
SCHOOL'S liability only.
Write a brief memo as to whether Pastor Forester committed illegal or
discriminatory practices in his brief tenure described in this situation. Then,
analyze the potential liability of the school. Discuss agency liability, as well as
any employment law aspects. Explain whether you feel that the two injured
teachers have cases for recovery against the school. Discuss whether the
school being a religious, private school has any bearing on or protection from
liability. Include all defenses available to the school.
Bottom of Form
Given that both Anna and Lisa were discriminated against due to their gender
(less strenuous for a pregnant lady) and age (Act your age, please / to
toughen her up), they have valid claims against the school due to the acts of
its representative. In addition to that, the school's agent had placed them
under undue stress and in a dangerous position, due to which they had to
suffer. Drawing from employment law "discriminatory practices also include
harassment on the basis of race, color, religion, sex, national origin, disability,
genetic information, or age" [http://www.eeoc.gov/facts/qanda.html]. based on
this, it can be said that Pastor Forester committed multiple instances of illegal
and discriminatory practices during his tenure.

6. The potential liability that the school has in this context is to investigate the
case, take action that would ensure that the affected parties are treated fairly
and also ensure that initiatives are taken that would prevent such activities
from taking place again. [http://www.mcnair.net/?&&] As the principal in this
case, the school would have liability due to the actions of its agent, who had
actual and apparent authority, which caused harm to others.
The two injured teachers have cases for recovery against the school, as their
injuries was directly caused due to the actions of the school's agent. Recovery
should however be limited to the damages that they suffered.
In spite of being a religious private school, it has responsibility to ensure that it
does not discriminate against or harass its employees to their detriment, and
hence would be liable. The defenses that the school can use in this case was
that actions of its representative were necessary as they we in line and
relation to their job and hence a business necessity. The school could also
suggest that the agent had illegal authority and when he was exceeding his
apparent authority, the teachers should have complained to the board to take
action.
TCO H and E. In the discovery portion of the case, it is determined that Pastor
Forester is really not a Pastor. His real name is Jerry Birches, who is a
parolee with convictions for child molestation. His parole agreement prohibits
him being closer than 1000 feet to any school. In order to cut costs, the
school had stopped doing background checks on new employees, and this
slipped through the cracks. The President of the Board of Directors
immediately fires Pastor “Jerry Birches” Forester and notifies his parole officer
of the violations. Pastor Forester claims the board knew about his
background, because one member of the board (his aunt Theresa) knew the
truth. He claims her knowledge should be imputed to the entire board of
directors. He then sues the school for firing him for being a convicted felon.
He claims that is illegal, and he publicly attacks the church for their "less than
Christian" behavior in firing him.
The board immediately convenes to discuss “damage control.” They know
you took a Law and Ethics course recently and ask you to write a news
release to the local newspaper, explaining the situation. Using ethical and
legal considerations (including the fact you are in the middle of multiple
lawsuits), write the brief news release. Then, explain why you wrote it the way
you did.
(Points: 30)
Page 3
Page 3 - Two essays at 30 points each.

7. TCOs F & G. Laura Etheridge and Rita O’Donnell, the CEO and Creative
Director of Clean Clothes (a Texas based lesbian women’s clothing line)
brainstormed together and came up with a tagline for their new slacks line:
“Masculine Attitude, Feminine Fit.” They market the product on YouTube,
Twitter, and Face Book showcasing their “Funky Femme” slacks collection,
made from a material which resembles alpaca wool, but is actually organic
cotton. To further the advertising impact, the team uses an Ellen DeGeneres
look-alike in the YouTube video, where the model does the “Ellen dance” –
and mouths “love the pants” as she points to her legs and then walks off
leading an Alpaca by a halter. Within months, the slacks are a huge hit in the
lesbian community. Clean Clothes sends a letter to their attorney asking him
to trademark their tagline, and move forward without another thought about it.
Meanwhile, Men2Wimmin, a French company with a branch in New York,
has established a huge following in the gay and cross-dressing community. It
has used the tagline “Feminine Attitude, Masculine Fit” for many years to
advertise their drag queen dress collection for men on billboards, the internet
and television.
Ellen DeGeneres learns that her likeness is being used to advertise for Clean
Clothes. She watches the ad and is incensed. She spends the next week on
her show bashing the Clean Clothes company, and states that she would
never endorse the use of Alpaca wool for clothing, as she feels shearing them
is cruel. (She doesn’t catch that the pants are really made from cotton.)
Further, she says she feels that lesbian women should not need to shop at
special stores, although she admits she often shops in the men’s department
at Joseph A. Bank (JOSB). Her comments cause a precipitous drop in sales
at both Joseph A. Bank (JOSB) and Clean Clothes. Using the above fact
pattern, analyze fully, the following questions:
TCO F. Ellen DeGeneres sues Clean Clothes for the use of a look-alike model
for the slacks advertisement. She includes Lanham Act, misappropriation,
and "Right of Publicity" claims in her complaint. Clean Clothes countersues
for product disparagement. Joseph A. Bank (JOSB) sues Ellen for impacting
their men’s clothing sales with her unsolicited comment. What facts will
Ellen use to support her cases and why will those support her cases? What
defenses will Ellen have against Clean Clothes and JOSB's countersuits? Do
you think any of the 3 will win their cases? (Why or why not.)
2. TCO G. It is discovered that two weeks before the Ellen show, she had sold
$2 million in JOSB stock (at a gain of about $2,200). The morning after her
show, Ellen sold JOSB short (which means she was betting the stock price
would go down), and she made another $210,000 in the next week on that
trade. The swing in the price was not directly tied to her comments, but was
suspected to be a result of a recall JOSB made on their entire line of men's
black and brown dress slacks when it was discovered that they had been
sewn together with white thread. Ellen's previous trading activity shows that

8. she made it a normal practice to “vigorously trade” the stock of any company
with which she did business. A review of her trading activity for the past year
showed that she had bought and sold JOSB stock 25 different times, including
short sales like this one. Her overall trading for JOSB stock for the last 12
months was a net loss of $82,000.00. Do you think the SEC will file anything
against Ellen for her sales of JOSB? Is there any cause to do so? Analyze her
transactions with respect to insider trading activity (based on what you know)
– and whether she should be concerned. Is her prior trading activity a
defense? Should Ellen have avoided discussing JOSB publicly on her
show since she typically trades their stock? (Points: 30)