Management Chapter 9 Furthermore Contained Standard Merger Clause Stating That

Chapter Nine

Torts

A MANAGER’S DILEMMA: PUTTING IT INTO PRACTICE

Negotiating Customer Privacy with Big Brother

Issues Presented: Should RIM provide a way for the UAE to monitor the communications

of BlackBerry users? What should RIM consider when making this decision?

In determining the best course of action in responding to UAE’s request, Research in

Motion (RIM) must weigh several factors. First, it must be cognizant of its customers’ privacy

rights. In general, Canada takes the position that private data should be gathered by

governments or the private sector only when essential for legitimate purposes and with the

QUESTIONS AND CASE PROBLEMS

Question 1

Issue Presented: Do the Ewens have a valid claim against Federico Maccherone?

The court in Ewen v. Maccherone, 927 N.Y.S. 2d 274 (N.Y. App. Div. 2011), rejected the

Ewens private nuisance and negligence claims.

The elements of a cause of action for a private nuisance are: (1) an interference

substantial in nature, (2) intentional in origin, (3) unreasonable in character, (4) with a person’s

Question 2

Issue Presented: Is a bus driver whose reactions after being stung by a bee result in an

accident negligent as a matter of law?

In this classic case, Schultz v. Cheney School Dist. No. 360, 371 P.2d 59 (Wash. 1962), the

plaintiff did not contend that the driver was operating the bus in a negligent manner before the

bee stung him. Instead, the plaintiff argued that the evidence showed that the driver was

Question 3

Issue Presented: Is the website operator liable for any defamatory or private information

posted?

Section 230 of the Communications Decency Act of 1996 (“CDA”) immunizes providers of

interactive computer services against liability arising from content created by third parties.

However, this grant of immunity is not unlimited. Immunity is granted only if the interactive

computer service provider is not also an “information content provider.” An “information

Question 4

Issue Presented: Does a company have any cause of action against a competitor who

hires away its employees?

CRST’s complaint alleged that Werner was liable for intentional interference with

contract, negligent interference with contract, violation of the California Unfair Competition

Law (UCL), interference with prospective economic advantage, and misappropriation of trade

secrets. The district court granted Werner’s motion to dismiss CRST’s complaint, but the U.S.

Court of Appeals for the Ninth Circuit reversed in CRST Expedited, Inc. v. Werner Enterprises,

Inc., 479 F.3d 1099 (9th Cir. 2007).

The court rejected Werner’s argument that under California law, the only non–at-will

employment contracts that an employer and employee may reach are those contained in Cal.

Lab. Code Section 2924, which provides: “An employment for a specified term may be

terminated at any time by the employer in case of any willful breach of duty by the employee in

The court also concluded that CRST had adequately alleged that Werner violated the

UCL because CRST alleged that Werner had engaged in an “unlawful” business act that

harmed CRST, namely its intentional interference with CRST’s employment contracts.

Finally, the court concluded that CRST had also adequately alleged the following four

elements required for the tort of interference with prospective economic advantage: (1) an

Question 5

Issue Presented: If shareholders receive verbal promises from a company as a condition for

selling their shares, do they have legal recourse if the company intended to break these

promises?

The former Access shareholders sued Res-Care, alleging common law fraud and unfair

and deceptive trade practices in violation of N.C. Gen. Stat. Section 75-1.1. Fraud requires proof

that the defendant either intentionally misled the plaintiff by making a material

misrepresentation of fact upon which the plaintiff relied or omitted to state a material fact when

the defendant had a duty to speak because of a special relationship with the plaintiff.

The Access shareholders should have required Res-Care to represent and warrant in the

written acquisition agreement that Res-Care was not currently negotiating, and had no future

plans to negotiate, with VOCA. Such a warranty would have given them a clear basis for

rescinding the sale and collecting damages even if the court had refused to admit parol

evidence.

When Arnold had asked Randall to represent in writing that Tiger would never be sold,

Randall had refused. Instead, he warranted (accurately) that he was not aware of offers to

purchase Tiger and was not engaged in negotiations for its sale. Moreover, Arnold represented

that he was not relying on any representations other than those expressly stated in the written

acquisition agreement.

The court ruled in Randall’s favor, holding that a nonreliance clause in a written stock–

sale agreement precluded a seller of stock from recovering damages under the federal securities

laws for prior oral statements. Judge Easterbrook explained:

Memory plays tricks. Acting in the best faith, people may “remember” things

Question 6

Issue Presented: Are beer companies liable for targeting an underage audience?

In Hakki v. Zima Co., 2006 WL 852126 (D.C. Super. 2006), the court concluded that the

beer companies could not be held liable for allegedly targeting a youthful audience because the

plaintiffs lacked standing to bring suit and failed to state a valid claim.

In asserting standing, the plaintiffs, who represented a class of parents and guardians of

Alternatively, the plaintiffs could not bring a claim as the representative of a class of

parents seeking to protect their children. Any such claim, explained the court, belongs to the

child and must be brought by a parent on behalf of the child. A plaintiff does not have a private

right of action unless he or she can plead an injury in fact to a legally protected interest that is

particular to him or her. Because the complaint did not allege such an injury, the case was

dismissed.

Question 7

Issues Presented: Should Crystal Rock Spring Water Company be held liable under the

doctrine of respondeat superior for the injuries suffered by the third party driver? When can

an employer be held liable under this doctrine? Under what rationales?

Under the well-recognized “going and coming rule,” an employee is not acting in the

course of employment, and thus the doctrine of respondeat superior does not attach, while going

1. The employee consumed alcohol at a party hosted by the employer which was held

to further the employer’s interest in some way and at which the employee’s presence

was requested or impliedly or expressly required by the employer.

2. The employee negligently consumed alcohol to the point of intoxication when he

The employer is, therefore, vicariously liable under respondeat superior because the

proximate cause of the accident occurred while the employee was acting within the scope of his

employment. This theory differs from the “going and coming rule” on the grounds that the

“proximate cause” of the accident occurred at the banquet, before the employee even attempted

to drive away. In determining “scope of employment,” the test is whether the employee’s

conduct was related to the employment enterprise or if the employer derived any benefit from

the activity, i.e., the banquet or other function.

The court posited an additional rationale for imposing vicarious liability upon the

employer: the employer has the right to control the employee’s conduct. This reasoning

supports the imposition of liability where the injury causing employee gets intoxicated at a

Question 8

Issue Presented: Does an accounting firm employed by a corporation have a duty to a vice

president of the company so that the vice president can hold the accountants liable for

negligence?

Under New York law, accountants do not have a duty to the public at large. In order to

establish the liability of accountants on the basis of advice or services to clients when

Coopers & Lybrand never met or communicated with Parrot nor did it know that he

owned company stock. The accounting firm also did not know that the stock would be

repurchased by the company at a value fixed by the accountants. There were no written or