WEEK 2 LECTURE TRANSCRIPT
PART I
Slide 1:
Hello Class, welcome to week 2 of BU 206 Business Law 1. This week you will be discussing ethics and business decision making, and courts and alternative dispute resolution. We will focus on chapters 1 and 2 of the text book.
Slide 2:
For this week’s presentation we will discuss the following topics:
§ What business ethics is and why it is important.
§ What business leaders can do to ensure their company is acting ethically.
§ The things business owners and employees can do to ensure they are acting ethically.
§ Ethical issues as it relates to international business transactions.
Slide 3:
We will also discuss:
§ Judicial review and how judicial review was established.
§ The various forms of jurisdiction.
§ The difference between a trial court and an appellate court.
§ Alternative methods of resolving disputes.
Slide 4:
Let us proceed to the next part of the presentation with our discussion on business ethics.
PART II
Slide 1
Welcome back. During this presentation we will discuss ethics and decision making.
Slide 2
Ethics are applied values, that is, moral principles and values applied to social behavior. Specifically, for this class, the moral principles are applied to business behavior. Ethics are critical to the long-run viability of a business and to its stakeholders. As we know, the category of stakeholders includes customers, employees, the community and others.
Obeying the law is the moral minimum; merely following laws does not equate to ethical behavior.
Slide 3
Top management sets the ethical tone. Historically, many unethical decisions were made because they enhanced short term profits, for example, low wages, poor working conditions, shoddy products, etc., and there were no regulations in place to control this unethical behavior. Today, firms have an understanding not to behave unethically. But the great firms have an understanding of looking for truly ethical behavior. Setting unrealistic financial goals can often encourage unethical behavior. If goals are unrealistic, employees may believe they can cut corners to boost earnings.
Periodic evaluations will enhance ethical behavior by reminding employees of the importance of ethical behavior to the company. A strong code of conduct can create an ethical tone. Ethical training does the same thing. Not only do they offer specifics of ethical conduct, but demonstrate that management believes that ethical behavior is important.
Slide 4
A Corporate Compliance Program is the entire set of codes of conduct, training and other programs supported by a corporation. This would also include and ethics committee which would review behavior, and internal audits. Most marketing professionals have to submit their advertisements to an ethics committee for approval before publishing the materials. The committee would review the materials in terms of fairness, accuracy, and whether they comply with the overall spirit of the organization.
Slide 5
Many of you may have heard of the Sarbanes-Oxley Act. The Sarbanes-Oxley Act was legislation passed in reaction to the corporate scandals at the turn of the century, for example, Enron, Tyco, Worldcom, etc. Among other things, it mandates that public companies set up confidential reporting mechanisms for suspected accounting fraud or other illegal activities. All of these programs together create a confidential Corporate Compliance Program.
Slide 6
This is the end of this section of the presentation. We will continue our discussion on ethics by discussing the approaches to ethical reasoning.
PART III
Slide 1
Let us now turn our attention to a discussion on the approaches of ethical reasoning.
Slide 2
There are many approaches to ethical reasoning. The first group of approaches is called “duty based” because it looks at the process, rather than the outcome. The first example is Religious based ethical standards. The Judeo-Christian culture of the Bible gives us the 10 Commandments. While some of the Commandments are really religious law, like keep holy the Sabbath, others are universal truths for behavior like “Thou Shall Not Steal”. The New Testament is replete with teachings on behavior such as “Blessed are the Peacemakers” or “Due Unto Others as they would do Unto You” and the like.
Slide 3
Immanuel Kant developed the concept called a categorical imperative. The concept notes that you should judge actions by looking at what would happen if everyone acted this way. So, if you are considering throwing a chip bag out of your car window, consider what would happen if everyone threw their trash outside on the road. Interesting right?
The Principle of Rights approach says that people are born with fundamental rights (often called “Natural rights”) such as freedom, and that ethical decisions should be based on how actions affect the rights of others.
On the other side, there is outcome based ethics. Utilitarianism was developed by Jeremy Bentham and John Stuart Mill. This is really a cost benefit analysis, in which you analyze whether an action will provide an overall positive utility to society. The downside is that this approach can be abused and used to tyrannize minorities groups (race, ethnic, economic, educational level). If we take all of the assets of the top 10% richest people and spread them around, 90% of the population would be better off.
Slide 4
The most basic Corporate Responsibility is to make a profit for its shareholders. But a shareholder is not the only stakeholder faced by corporations. They must honor employees, customers, suppliers and community. Acting as good corporate citizens can also benefit companies in recruitment and retention of employees.
Slide 5
Foreign countries have different cultures than the U.S. In some countries, bribery was a common practice and US companies would often participate in that practice when doing business in those countries. The Foreign Corrupt Practices Act forbids US Companies and their managers from bribing officials of foreign governments if the purpose is to get those officials to act in their official capacity to provide business opportunities. You can pay small sums to “grease the wheels,” for example, to get your ship unloaded to accelerate delivery.
Slide 6
This is the end of our discussion on ethics. Let us shift focus and discuss courts and alternative methods of dispute resolution.
PART IV
Slide 1
Welcome back. For the next few presentations we will focus our attention on a discussion about courts and alternative dispute resolution.
Slide 2
Judicial review means that a court reviews a statute or law passed by the legislative branch to ensure that it is consistent with the U.S. Constitution. This power was established by Chief Justice John Marshall in the case “Marbury v. Madison.” For example, as we learned last week, the first amendment guarantees your right to free speech. If Congress passed a law that forbade, criticism of President Obama, courts would review that law and undoubtedly strike it down for violating the First Amendment of the U.S. Constitution.
Slide 3
Jurisdiction is the power to speak the law. In order for a court to pull a person in for trial, that court must have jurisdiction. Here, you are looking for jurisdiction over the defendant, not the plaintiff, because it is the defendant who is being “pulled in” by the plaintiff.
In personam jurisdiction is jurisdiction over the person. States always have jurisdiction over their residents. In addition, they have jurisdiction over non-residents under “long-arm statutes” these usually apply if the person had “minimum contacts” with the state. If a non-resident conducts business or commit a crime or a tort within another state, that would constitute minimum contacts. For example, assume that Joe, a resident of Louisiana, is vacationing in Wyoming. Susie, a resident of Ohio, runs a stop sign, causing harm to Joe. Joe could file suit against Susie in any state that has jurisdiction over Susie. Ohio has jurisdiction because she is a resident of Ohio; Wyoming has jurisdiction over Susie because that is where she committed a tort. Louisiana does not have jurisdiction over Susie. Thus, Joe could file suit in Wyoming or Ohio.
In rem jurisdiction is jurisdiction over property.
Slide 4
Subject matter jurisdiction deals with special courts for special subjects. For example, bankruptcies are filed in bankruptcy court, disputes with the IRS are held in tax court. Appeals of decisions of special courts go back into the regular court system. To go to federal court, you must meet one of two criteria: either the case must involve an issue of federal law (called a federal question), or there must be diversity of citizenship between the parties. Diversity of citizenship means that they must be residents of two different states, and the dispute must exceed $75,000. In our Joe/Susie example above, Joe could file in Federal Court IF the damages exceeded $75,000.
Slide 5
The previous example of Joe and Susie would be concurrent jurisdiction (if it exceeded $75,000).
In cyberspace, a sliding scale standard is used: minimum contacts probably require actual sales activity; you must conduct sales in a state. Passive advertising or the presence of a website does not constitute minimum contacts; interactivity can go either way.
Slide 6
The term venue refers to the location of the trial. To file a suit, one must have standing, that is, he/she must have an interest in the suit. You cannot file suit over any injustice that you perceive; it must have happened to you. You might notice that the American Civil Liberties Union (ACLU) or the National Rifle Association (NRA) is involved in many lawsuits. The reason is that they get standing by providing attorneys for the litigants. They often look for cases with which to get involved. So, if a town denies some controversial group the right to parade, the ACLU cannot just file suit. They would not have standing. To get standing, they must become counsel for the denied group.
In other words, in order to bring a suit, you must have standing. This requires that a party have an interest in the suit. Further, the controversy must be justiciable. A justiciable controversy is a real situation. You cannot sue over hypothetical issues, fears that a governmental body might do something, or something that has not happened yet. The case must be real and it must be viable right now.
Slide 7
This is the end of our discussion on jurisdiction. We will now turn our attention to a discussion on the structure of the court system.
PART V
Slide 1
Welcome back.
Slide 2
The structure of the court systems is similar in the federal and state courts. In the state system, trials are held in trial court. Each trial court is assigned a court of appeal; appellate courts usually review cases to ensure that the trial was fair. They review legal rulings. Usually, they do not second-guess juries regarding their interpretation of evidence unless a jury’s decision is outrageous. States have a high court, which, in most states, is called the Supreme Court.
Slide 3
In the federal system, trials are held in U.S. District Court. Each district court is assigned to an appellate court. Binding precedent means that a court is bound by decisions of other courts; all courts are bound by decisions of the U.S. Supreme court. District courts are bound by precedent set in the appellate court to which they are assigned. Decisions of other appellate courts (ones to which they do not report) is considered persuasive authority. A court can use court decisions/ persuasive authority for insight, but are not bound by them. Every trial in district court gets an automatic appeal to an appellate court. For the U.S. Supreme court to hear a case, you must file a writ of certiorari. 4 of the 9 justices in the U.S. Supreme Court must grant certiorari for the case to be heard.
Slide 4
When you sue someone you file a complaint. The complaint must contain 3 items: statement of the facts (what happened); statement of jurisdiction (why you are in this court), and the statement of remedy (what you want). A summons is also filed. The summons serves to notify the other party of the lawsuit.
The other party must file an answer to the suit. In the answer, they can admit the allegation, deny the allegation, or offer a defense (I did it, but I had a legal reason to do it). The defendant can also file a counterclaim, in which he makes a claim against the plaintiff.
Slide 5
Before the trial the defendant can make a motion for summary judgment, in which a party asks the court to dismiss the suit. There must be no dispute as to fact and the court will grant this if there is no legal case.
There is also a phase referred to as discovery. Discovery is the process of obtaining information from the opposing party. For example, during discovery, the plaintiff may seek to get the defendant’s deposition or submit a request for interrogatories. A deposition is sworn oral testimony while the interrogatories are written questions submitted to the other party.
Slide 6
Then, during trial there is the voir dire process. Voir dire is the process of examining jurors. Each side gets 3-5 peremptory challenges –these allow a side to dismiss a potential juror for any reason (except race of the juror). A party can also challenge a potential juror for cause. Here, you ask the court (the judge) to dismiss a juror because of bias. There is a strategy in using the peremptory challenges. If you ever saw the movie “Runaway Jury” you can see jury consultants and the use of challenges within a fictional Hollywood setting at work.