Business Law Chapter 2 Homework When an agreement for a joint venture made outside a state

B-1

ALTERNATE CASE PROBLEM ANSWERS

CHAPTER 2

COURTS AND ALTERNATIVE

DISPUTE RESOLUTION

2-1A. Jurisdiction

(Chapter 2—Pages 30–32)

A court can exercise personal jurisdiction over nonresidents under the authority of a long arm statute.

Under a long arm statute, it must be shown that the nonresident had sufficient contacts with the state

to justify the jurisdiction. In regard to business firms, this requirement is usually met if the firm does

business within the state. In this case, the parties to the sponsorship agreement contemplated that

substantial activities to further their joint venture would take place in Florida. Sutton lived in Florida,

and he was expected to and did play in tour events in Florida. Sutton was to be provided health care in–

surance in Florida. All earnings from Sutton’s golf-related activities in Florida and elsewhere were to be

paid by the Professional Golfing Association from its headquarters and bank account in Florida to the

2-2A. Arbitration

(Chapter 2—Pages 43–44)

B-2 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 2

The public policy that the court weighed in making its decision included the policy of “not tolerating the

knowing misappropriation of state funds by state officials or employees,” as well as “[t]he public policy

2-3A. Arbitration

(Chapter 2—Pages 43–44)

The U.S. Court of Appeals for the Third Circuit held that the arbitration award, requiring Exxon to

2-4A. Jurisdiction

(Chapter 2—Pages 30–32)

The North Carolina state court held that it had personal jurisdiction over the Florida defendants. On

appeal, the North Carolina Court of Appeals agreed. The appellate court initially pointed out that a court

2-5A. Standing to sue

(Chapter 2—Pages 35–37)

The court held that the Blues had standing and denied the tobacco companies’ motion to dismiss the

case. The defendants argued in part that any injury to the plaintiffs was indirect and too remote to

permit them to recover, and that it would be too difficult to determine whether the plaintiffs’ injuries

APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 2 B-3

damages claimed in this case were separate from the damages suffered by smokers. The plaintiffs “seek

recovery only for the economic burden of those medical claims and procedures which they directly paid

as a result of tobacco use.” The Blues had paid for the smokers’ health care, and thus only the Blues

could recover those amounts. As to whether the injuries were too remote, the court said that if “as

alleged, the defendants conducted a decades long scheme to deceive the American public and its health

2-6A. E-Jurisdiction

(Chapter 2—Pages 33–34)

The court denied Boyer’s motion to dismiss the complaint for lack of personal jurisdiction. “[T]he

likelihood that personal jurisdiction can be constitutionally exercised [in the context of Internet

activities] is directly proportionate to the nature and quality of commercial activity that an entity

conducts over the Internet.” Boyer “posted Internet messages on the Yahoo bulletin board, which

included negative information regarding ABFI.” He “also sent an e–mail to ABFI’s independent auditors,

accusing ABFI of ‘fraudulent accounting practices’ and ‘borderline criminal conduct’ . . . with the under-

standing that the independent auditors were situated in Pennsylvania.” Also, the court held that the e–

2-7A. Arbitration

(Chapter 2— Pages 43–44)

B-4 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 2

be enforced. Auto Stiegler argued in part that the “provision applied evenhandedly to both parties.” The

court stated, “[I]f that is the case, [the defendant fails] to explain adequately the reasons for the $50,000

award threshold. From a plaintiff’s perspective, the decision to resort to arbitral appeal would be made

2-8A. Jurisdiction

(Chapter 2— Pages 30–32)

The court denied Sharman’s motion to dismiss. The court explained that “fairness consists principally of

ensuring that jurisdiction over a person is not exercised absent fair warning that a particular activity may

2-9A. Standing to sue

(Chapter 2— Pages 35–37)

This problem concerns standing to sue. As you read in the chapter, to have standing to sue, a party must

have a legally protected, tangible interest at stake. The party must show that he or she has been

2–10A. A QUESTION OF ETHICS

1. A court can generally exercise personal jurisdiction over a defendant that has had

minimum contacts with the forum “necessary to have reasonably anticipated being haled into court

there.” After minimum contacts have been established, a court can consider whether the exercise of

personal jurisdiction comports with “traditional conceptions of fair play.”

In this case, the court held that “Rosedale’s representations—which were made as part of a

2. Under the Federal Arbitration Act (FAA), a court must compel the arbitration of a dispute

if there is a valid agreement to arbitrate that covers the dispute. In this case, the court focused primarily

on the validity of the agreement.

B-6 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 2

A critical factor was the manner in which Linden presented the “Terms of Service” (TOS). A

participant was effectively told to “take it or leave it”—one who declined could not gain access to

Second Life. There was no opportunity for negotiation so that even a participant like Bragg, who was an