ANSWER KEY
Chapter 28 Government Regulation of Corporate Person
The Opening Case Questions
2. The Dodd-Frank Act defines whistleblower as one who “provides” or “acting jointly” with
3. The text tells us that “(t)extualism requires judges to analyze legal documents as literary works,
by focusing exclusively on each document’s language. In contrast, purposivism insists that
5. The result should be crystal clear. The text of the Dodd-Frank Act says that a whistleblower in
any securities matter, like this one, must report to the SEC. The plaintiff did not report to the
A Question of Ethics-1
Whistleblowing from Another Angle
Special Directions to the Instructor: Instructors often find it problematical to establish in advance the
many and diverse answers that students will deliver for these ethical questions, especially since the
students are given a choice as to which ethical theory to use (market value ethics, social contract ethics,
CLASSIC CASES
Single Entity or Collection Point— American Needle, Inc. v. The NFL
The questions here are pretty straight forward. They ask: What might the pro-competitive results be
from the single contract with Reebok? What might the anti-competitive results be? Now balance the
two and predict how the court will rule. However, it is necessary to recall that the questions also ask for
the learner to use the rule-of-reason standard. So, the instructor must make certain that the learners
A Question of Ethics-2
Textualism and Pragmatism Revisited
Special Directions to the Instructor: Teachers often find it demanding to figure out in advance the
diverse wide-ranging answers that students will offer for these ethical questions, especially since the
students must pick and choose from among four ethical theories (market value ethics, social contract
ethics, utilitarianism, or rational ethics). Accordingly, the teacher should avoid scoring “right” and
“wrong” answers. As an alternative, the teacher should examine the responses provided by the learners
to see if the ethical theory chosen by a particular student is applied correctly and consistently. On the
other hand, the instructor should pay special attention to the manner in which these two questions are
worded. This is how the questions appear in the text: “One of the defenses given in support of
textualism says that the consistent use of the textual approach by the courts will encourage legislators
to write clear and unambiguous laws. Is this an ethical rationale in support of textualism? Explain.
Some people attack textualism because it narrows the interpretation strategies available to judges. Is
this an ethical rationale in support of pragmatism? Explain.” The best support for each position will be
to provide examples and concrete evidence of the results predicted by both positions. Reward students
Questions for Review and Discussion
1. The federal power to regulate business comes from the Commerce Clause of the Constitution, that
is, Article I, Section 8, Clause 3. The Commerce Clause has expanded the ability of the federal
2. The source of state power to regulate business is the state’s police power, that is, the state’s power
3. The Securities and Exchange Commission prevents unfair practices by regulating the issuance of
new securities by requiring the filing of a registration statement and prospectus before the new
securities can be sold by a corporation. It also requires periodic reports of financial information
4. A per se antitrust violation is one that is so contrary to antitrust policy matters, that the harm is
7. The techniques of corporate expansion include mergers, consolidations, asset acquisitions, and
stock acquisitions. A merger involves the joining of two companies one of which is absorbed into the
other. A consolidation involves the joining of two companies both of which disappear and from which a
10. A limited liability company may undergo dissolution by the unanimous agreement of all its
members. A dissolution may also be triggered by the expulsion, bankruptcy, or withdrawal of a
Cases for Analysis
1. The term “taking the company private” refers to a process by which a group of shareholders,
usually represented by the officers and directors of the company, purchase all the outstanding public
stock and then transform the company into a private corporation. If the shareholders conducting the
2. No. The United States Supreme Court ruled that Filburn was incorrect. Even though Filburn’s
wheat was not sold at market, it still had an effect on interstate commerce. Because he was using his
3. Yes. A security is defined as money investment that expects a return solely because of another
person’s efforts. These land and service contracts were purchased by out-of-state residents who had no
4. No. Certain practices have been interpreted by the courts as constituting violations of the
Sherman Antitrust Act. These practices will always be found to violate the act. An agreement between
6. Yes. In this case the complaining shareholder was allowed absolutely no input into the operation
of the business. In addition, he received no salary, dividends, or other money from the corporation.
END CHAPTER TWENTY-EIGHT