B-16
ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 5
ETHICS AND BUSINESS DECISION MAKING
5-1A. Consumer welfare
(Chapter 5—Pages 93–96 & 101–106)
The court hearing the case was not convinced by the father’s arguments. Rather, the court held that
certain risks, such as falling off a jungle gym, are so obvious that manufacturers need not warn of them.
5-2A. Duty to consumers
(Chapter 5—Pages 93–96 & 101–106)
The state trial court held that although Terry’s use of the lighter was an unintended use, Bic should have
known that harm caused by a child’s use of its product was a foreseeable risk. Because Bic failed to
5-3A. Employment relationships
(Chapter 5—Pages 93–98 & 101–106)
The court ruled in favor of Faverty. McDonald’s argued that under the Restatement (Second) of Torts,
Sections 315, that “[t]here is no duty so to control the conduct of a third person as to prevent him from
5-4A. Ethical conduct
(Chapter 5—Pages 93–98 & 101–106)
The court enjoined the defendants, for a period of three years, “from disclosing, using or selling any of
[Elm City’s] confidential customer information, trade secrets, procedures, technical data or know-how
5-5A. Consumer welfare
(Chapter 5—Pages 93–98 & 101–106)
On the defendants’ motions, the court issued two summary judgment orders, effectively dismissing the
B-18 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 5
case. The court reasoned in part that riding unrestrained in the bed of a pickup truck is “an open and
obvious danger as a matter of law, and the manufacturer of a pickup truck is not under a duty to warn
5-6A. Ethical conduct
(Chapter 5—Pages 93–98 & 101–106)
The court entered a judgment in part ordering Zandford to disgorge $343,000 in “ill–gotten gains.” On
Zandford’s appeal, the U.S. Court of Appeals for the Fourth Circuit reversed this judgment. The SEC
appealed to the United States Supreme Court, which reversed this decision and remanded the case,
5-7A. Ethical conduct
(Chapter 5—Pages 93–98 & 101–106)
You can infer from the problem that the damage award included not only actual damages to
compensate Eden for Amana’s failure to fulfill its contractual obligations but also punitive damages. The
5-8A. Ethical conduct
(Chapter 5—Pages 93–98 & 101–106)
The court concluded that the federal laws in question protect only electronic communications in the
course of transmission, and granted a summary judgment in favor of Nationwide. Here, of course, the e–
mail had already been sent and was in storage in Nationwide’s computers. “[R]etrieval of a message
from post-transmission storage is not covered” by the federal laws in question. Those laws provide
protection “only for messages while they are in the course of transmission. The facts of this case are that
Nationwide retrieved Fraser’s e-mail from storage after the e-mail had already been sent and received
by the recipient. Nationwide acquired Fraser’s e-mail from post-transmission storage. Therefore,
5-9A. Ethical conduct
(Chapter 5—Pages 93–98 & 101–106)
The bankruptcy court held that Schilling was not entitled to any fees because he was not a
“disinterested” party: “The moment that [Schilling] approached three of Big Rivers’ largest * * *
B-20 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 5
5-10A. A QUESTION OF ETHICS
1. The court granted the manufacturer summary judgment, and Welch appealed. The state
appellate court affirmed the lower court’s decision. The appellate court pointed out in its discussion,
“Under the open and obvious danger rule, a manufacturer of a product is liable only for defects which
2. In discussing the openness and obviousness of the dangers of a disposable lighter, the
appellate court based its conclusions on “[t]he physical characteristics of the lighter, including the fact