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Part One. Introduction to Law, 2
1. Law as the Foundation of Business, 4
Introduction, 4
1. WHY NATIONS ARE ECONOMICALLY WEAK OR STRONG, 6
Law, the Rule of Law, and Property, 7
2. LAW, 7
3. THE RULE OF LAW, 8
sidebar 1.1 The Chief Justice and the Rule of Law, 8
4. PROPERTY, 9
sidebar 1.2 How Property Protects the Poor, 10
5. PROPERTY IN ITS BROADEST SENSE, 11
sidebar 1.3 Russia's Property Problems, 13
6. JURISPRUDENCE, 13
Classifications of Law, 14
7. COMMON LAW AND CIVIL LAW, 14
8. PUBLIC AND PRIVATE LAW, 15
sidebar 1.4 Cyber Law Connection, 15
9. CIVIL LAW AND CRIMINAL LAW, 16
10. SUBSTANTIVE LAW AND PROCEDURAL LAW, 16
Sources of Law, 16
11. CONSTITUTIONS, 16
12. LEGISLATION, 17
Uniformity of Legislation, 17
Uniform Commercial Code, 17
Interpretation of Legislation, 18
13. ADMINISTRATIVE REGULATION, 18
14. JUDICIAL DECISIONS OR CASE LAW, 18
Advantages, 19
Disadvantages, 19
Legal Sanctions, 20
15. FOR CRIMINAL CONDUCT, 20
16. FOR BREACH OF CONTRACT, 21
17. FOR TORTIOUS CONDUCT, 21
18. FOR VIOLATING STATUTES AND REGULATIONS, 22
A Property-Based Legal System and Corporate Governance, 22
19. THE SPECIFIC SENSE OF CORPORATE GOVERNANCE, 23
20. THE GENERAL SENSE OF CORPORATE GOVERNANCE, 23
2. The Ethical Basis of Law and Business Management, 28
Contemporary Business Ethics, 30
1. ETHICS AND SOCIETY, 30
Public Education and Family Structure, 31
Economic Interdependence, 31
News Media and the Internet, 31
sidebar 2.1 Fluctuating Values?, 31
2. ETHICS AND GOVERNMENT, 32
The Nature of Ethics, 32
3. ETHICS AND MORALITY, 32
4. ETHICS AND LAW, 33
sidebar 2.2 Price Gouging after Hurricane Katrina, 34
Two Systems of Ethics, 34
5. FORMALISM, 35
Kant and Formalism, 35
The Social Contract, 36
6. CONSEQUENTIALISM, 37
sidebar 2.3 Virtual Morality, 38
The Protestant Ethic, 38
7. COMPARING THE TWO ETHICAL SYSTEMS, 39
sidebar 2.4 Tobacco Facts, 40
Sources of Values for Business Ethics, 40
8. LEGAL REGULATION, 40
Liberty and Rights, 41
Good Faith, 41
Due Care, 42
Confidentiality, 42
Conflicts of Interest, 43
9. PROFESSIONAL CODES OF ETHICS, 44
sidebar 2.5 American Bar Association Model Rules of Professional Conduct, 44
sidebar 2.6 American Institute of Certified Public Accountants Code of Professional Conduct, 45
10. ORGANIZATIONAL CODES OF ETHICS, 45
Different Approaches to Ethical Codes, 46
11. INDIVIDUAL VALUES, 46
Achieving an Ethical Business Corporation, 50
12. THE OBSTACLES, 50
The Emphasis on Profit, 50
sidebar 2.7 The Swedish Example of Lagom, 51
The Effect of the Group, 51
The Control of Resources by Nonowners, 51
sidebar 2.8 Corporate Governance Failure at Wordcom?, 52
13. THE STEPS, 52
Involvement of Top Management, 52
Openness in Communication, 53
Consideration of All Stakeholders, 54
sidebar 2.9 The Demise of Arthur Andersen, 55
14. THE REWARDS, 55
15. THE MORALITY OF PROPERTY, 56
Criticism of Property, 56
Support of Property, 56
sidebar 2.10 Moral Criticism of Property, 57
sidebar 2.11 Moral Support for Property, 58
Property as a System of Personal Ethics, 58
Part Two. Dispute Resolution, 62
3. The Court System, 64
sidebar 3.1 Corporate Governance and the Soaring Cost of Legal Representation, 66
Personnel, 66
1. JUDGES AND JUSTICES, 66
2. JURORS, 67
sidebar 3.2 Jury System Reforms, 68
3. LAWYERS, 69
Organization of the Court System, 70
4. SUBJECT MATTER JURISDICTION, 71
5. STATE COURTS, 71
Trial Courts, 71
Appellate Courts, 71
sidebar 3.3 Small-Claims Courts, 72
6. FEDERAL COURTS, 73
sidebar 3.4 Total Activity Test, 74
District Courts, 75
Appellate Courts, 75
7. DECISIONS BY THE U.S. SUPREME COURT, 75
sidebar 3.5 The Very Slim Odds, 77
sidebar 3.6 The Role of the Reviewing Court, 77
The Power of Judicial Review, 78
sidebar 3.7 Choosing a Supreme Court Justice, 79
8. JUDICIAL RESTRAINT, 79
sidebar 3.8 Understanding Judicial Restraint, 80
sidebar 3.9 Typical Judicial Restraint Decisions, 81
9. JUDICIAL ACTIVISM, 81
sidebar 3.10 Typical Judicial Activist Decisions, 82
10. A SAMPLE CASE, 82
sidebar 3.11 Supreme Court Justices, 83
sidebar 3.12 Typical Alignment of Justice, 83
case 3.1 KELO V. CITY OF NEW LONDON, CONNECTICUT, 84
11. THE NATURE OF THE JUDICIAL PROCESS, 87
case 3.2 THE NATURE OF THE JUDICIAL PROCESS, 88
4. Litigation, 92
Litigation—An Overview, 94
1. PARTIES, 94
sidebar 4.1 Understanding the Sample Complaint, 94
2. STANDING TO SUE, 95
case 4.1 ELK GROVE UNIFIED SCHOOL DIST. V. NEWDOW, 96
sidebar 4.2 Identity Theft and Standing to Sue, 98
3. PERSONAL JURISDICTION, 98
sidebar 4.3 The Car Crash, 99
4. CLASS-ACTION SUITS, 99
sidebar 4.4 Class Actions in Federal Court, 100
sidebar 4.5 Examples of Recent Class-Action Lawsuits, 101
sidebar 4.6 Certifying a Class, 101
Pretrial Procedures, 102
5. PLEADINGS, 102
6. STEPS IN DISCOVERY, 103
Purpose, 103
Methods, 103
7. SCOPE OF DISCOVERY, 104
sidebar 4.7 Costs of Discovery, 104
case 4.2 CHUDASAMA V. MAZDA MOTOR CORP., 105
sidebar 4.8 Destruction of Evidence, 107
8. MOTIONS, 108
9. FRIVOLOUS CASES, 109
The Trial, 110
10. JURY SELECTION, 110
sidebar 4.9 Corporate Governance and the Jury Selection Process, 110
sidebar 4.10 The Jury and Constitutional Limits on Preemptory Challenges, 111
case 4.3 UNITED STATES V. BROWN, 112
sidebar 4.11 Challenging the Use of a Preemptory Strike, 113
11. OTHER STEPS DURING A TRIAL, 113
sidebar 4.12 Technology in the Courtroom, 114
12. BURDEN OF PROOF, 115
Criminal Cases, 116
Civil Cases, 116
sidebar 4.13 Televising Jury Deliberations, 116
13. DECIDING THE CASE, 116
Posttrial Issues, 117
14. APPEALS, 118
Appellate Procedures, 118
Deference to Trial Courts, 118
sidebar 4.14 Appealing an Evidentiary Ruling, 119
15. ENFORCEMENT OF JUDGMENTS AND DECREES, 120
sidebar 4.15 How Do You Prevent a Lawsuit in Your Firm?, 120
16. RES JUDICATA, 120
5. Negotiation and Alternative Dispute Resolution Systems, 124
Conflicts and Negotiation, 126
1. CONFLICTS AND DISPUTES, 126
2. STYLES AND METHODS OF NEGOTIATION, 127
sidebar 5.1 Negotiation Styles, 127
sidebar 5.2 A Business Dispute, 128
3. POSITIONAL NEGOTIATION, 129
4. PRINCIPLED NEGOTIATION, 129
Communication, 129
Relationship, 130
Interests, 130
Options, 130
Legitimacy, 130
Alternatives, 130
Commitment, 130
Alternative Dispute Resolution (ADR) Systems, 131
5. RANGE OF OPTIONS, 132
6. SETTLEMENTS, 132
sidebar 5.3 Ending Litigation through Settlements, 133
7. FOCUS GROUPS, 133
Arbitration, 133
sidebar 5.4 Examples of Contracts with Arbitration Clauses, 134
8. SUBMISSIONS, 135
sidebar 5.5 Sample Arbitration Clause, 135
sidebar 5.6 To Arbitrate or Litigate, 136
9. ARBITRATORS, 136
Expertise, 136
Number Chosen, 136
Authority over Certain Matters, 137
case 5.1 HOWSAM V. DEAN WITTER REYNOLDS, INC., 137
10. AWARDS, 138
11. THE FEDERAL ARBITRATION ACT, 139
Impact on Policy, 139
sidebar 5.7 Do Agreements to Arbitrate Limit the EEOC's Remedies?, 140
Impact on State Laws, 140
12. STATUTORILY MANDATED ARBITRATION, 140
Types of Cases, 140
Procedures, 141
13. VOLUNTARY/CONTRACT-BASED ARBITRATION, 141
case 5.2 GREEN TREE FINANCIAL CORP. V. RANDOLPH, 142
14. JUDICIAL REVIEW, 143
Review of Voluntary/Contract-Based Arbitration Awards, 144
sidebar 5.8 Judicial Review of Arbitrator's Award, 144
Review of Statutorily Mandated Arbitration, 145
Review under the Federal Arbitration Act, 145
Mediation, 147
sidebar 5.9 Bill's and M&N Revisited, 148
15. PROCEDURES, 148
sidebar 5.10 Steps in the Mediation Process, 149
16. ADVANTAGES/DISADVANTAGES, 149
17. LACK OF JUDICIAL INVOLVEMENT, 150
18. COMBINATION OF ADR SYSTEMS, 150
Part Three. Business Foundations, 154
6. The Constitution and Business, 156
Basic Concepts, 158
1. SEPARATION OF POWERS, 158
2. SUPREMACY CLAUSE, 159
Preemption, 159
3. CONTRACT CLAUSE, 159
sidebar 6.1 Examples of State Laws Preempted by Federal Law, 160
The Commerce Clause, 160
4. REGULATION OF FOREIGN COMMERCE, 161
5. REGULATION OF INTERSTATE COMMERCE, 161
6. LIMITATION ON STATE POLICE POWER, 161
Exclusively Federal, 162
Exclusively State, 162
sidebar 6.2 Federalism and State Rights under the Commerce Clause, 163
Dual Regulation, 163
sidebar 6.3 $100 Fee: Regulating Interstate Commerce, 164
case 6.1 GRANHOLM V. HEALD, 165
7. LIMITATION ON STATE TAXATION, 169
Amendments and Basic Protections, 170
8. FREEDOM OF RELIGION, 170
sidebar 6.4 Examples of Freedom of Religion Issues Affecting Business, 171
9. FREEDOM OF THE PRESS, 171
10. FREEDOM OF SPEECH, 172
sidebar 6.5 Picketing as Free Speech, 173
sidebar 6.6 Free Speech versus an Individual's Right of Privacy, 173
Commercial Speech, 174
sidebar 6.7 Balancing the Protection of Commercial Speech, 174
11. EMINENT DOMAIN, 174
sidebar 6.8 Constitutional Standards for Regulatory Takings, 175
The Fourteenth Amendment, 176
12. DUE PROCESS OF LAW, 176
Incorporation Doctrine, 176
sidebar 6.9 Punitive Damages Limitation, 177
13. EQUAL PROTECTION, 177
Minimum Rationality, 178
sidebar 6.10 Economic Regulations and the Rational-Basis Test, 178
Strict Scrutiny, 178
case 6.2 ADARAND CONSTRUCTORS, INC. V. PENA, 179
Quasi-Strict Scrutiny, 182
sidebar 6.11 Analysis of Equal Protection, 183
7. Principles of Contract Law, 188
Basic Concepts, 190
1. CONTRACT LAW IN PRIVATE ENTERPRISE, 190
sidebar 7.1 The Confidentiality Agreement, 191
2. SOURCES OF CONTRACT LAW, 191
3. CONTRACTUAL CLASSIFICATIONS, 192
Bilateral and Unilateral Contracts, 192
Express and Implied-in-Fact Contracts, 193
sidebar 7.2 Terms of Delivery in the UCC, 193
Implied-in-Law or Quasi-Contracts, 194
4. CONTRACTUAL ENFORCEMENT TERMINOLOGY, 194
5. CONTRACTUAL PERFORMANCE TERMINOLOGY, 195
6. BREACH OF CONTRACT, 195
sidebar 7.3 Limiting Liability, 197
sidebar 7.4 Restitution Puts Parties in Precontractual Position, 197
Contract Formation, 197
7. OFFER TO CONTRACT, 198
sidebar 7.5 Does an Offer Exist?, 198
Definition of Terms, 199
Termination of Offer, 199
sidebar 7.6 When an Offer Terminates, 199
8. ACCEPTANCE OF OFFER, 199
Mirror Image Rule, 200
sidebar 7.7 UCC's Battle of the Forms, 200
Silence Not Acceptance, 200
Deposited Acceptance Rule, 201
sidebar 7.8 Impact of Mailings, 201
9. CONSIDERATION, 201
Must Be Bargained For, 202
Agreement Not to Sue, 202
Preexisting Obligation, 202
sidebar 7.9 Consideration Not Necessary, 203
10. CAPACITY OF PARTIES TO CONTRACT, 203
Minors, 203
Intoxicated and Mentally Incompetent Persons, 204
Other Situations Involving Voidable Contracts, 204
11. LAWFUL PURPOSE, 205
sidebar 7.10 Examples of Illegal Contracts, 205
Contracts That Restrain Trade, 205
Other Contract Issues, 206
12. WRITTEN CONTRACTS, 206
Sale of an Interest in Land, 207
Collateral Promise to Pay Another's Debt, 207
Cannot Be Performed within One Year, 207
Sale of Goods of $500 or More, 208
sidebar 7.11 Exceptions to Statute-of-Frauds Requirement That Sale-of-Goods Contracts be in Writing, 208
Others, 208
The Parol Evidence Rule, 208
13. INTERPRETATION OF CONTRACTS, 209
case 7.1 NORFOLK SOUTHERN RAILWAY COMPANY V. KIRBY PTY. LTD. DBA KIRBY ENGINEERING, 209
14. ASSIGNMENT OF CONTRACTS, 212
Notice of Assignment, 212
Contracts That Cannot Be Assigned, 213
15. PERFORMANCE OF CONTRACTS, 213
case 7.2 VENTURE MEDIA LIMITED PARTNERSHIP V. COLTS PLASTICS COMPANY, INCORPORATED, 214
16. DISCHARGE OF CONTRACTS, 217
sidebar 7.12 Events That Discharge a Party to a Contract, 217
Impossibility of Performance, 217
Commercial Impracticability, 217
8. Torts in the Business Environment, 222
Intentional Torts, 224
sidebar 8.1 Types of Intentional Torts, 224
1. ASSAULT AND BATTERY, 224
2. INTENTIONAL INFLICTION OF MENTAL DISTRESS, 225
case 8.1 VAN STAN V. FANCY COLOURS & COMPANY, 225
3. INVASION OF PRIVACY, 227
sidebar 8.2 The Man on the Coffee Jar, 227
4. FALSE IMPRISONMENT AND MALICIOUS PROSECUTION, 228
5. TRESPASS, 228
6. CONVERSION, 229
7. DEFAMATION, 229
Defamation and the First Amendment, 230
sidebar 8.3 Football Coaches as Public Figures, 230
8. FRAUD, 231
case 8.2 WELLS FARGO BANK V. ARIZONA LABORERS, TEAMSTERS, AND CEMENT MASONS, 231
Additional Fraud Examples, 234
sidebar 8.4 Internet Torts, 234
Fraud and Corporate Governance, 234
9. COMMON LAW BUSINESS TORTS, 235
Injurious Falsehood, 235
Intentional Interference with Contractual Relations, 235
Negligence, 236
10. DUTY OF CARE, 236
sidebar 8.5 Elements of Negligence, 236
case 8.3 IANNELLI V. BURGER KING CORP., 237
sidebar 8.6 Medical Malpractice Crisis, 239
11. UNREASONABLE BEHAVIOR—BREACH OF DUTY, 239
Examples of Negligence, 239
Willful and Wanton Negligence, 240
12. CAUSATION IN FACT, 240
13. PROXIMATE CAUSATION, 241
sidebar 8.7 Explosion on the Long Island Railroad, 241
14. DEFENSES TO NEGLIGENCE, 242
Contributory Negligence, 242
Assumption of Risk, 242
Strict Liability in Tort, 243
15. STRICT PRODUCTS LIABILITY, 243
sidebar 8.8 Tort Reform, 245
16. ULTRAHAZARDOUS ACTIVITY, 245
sidebar 8.9 The Great Molasses Flood, 245
17. OTHER STRICT LIABILITY TORTS, 245
Damages, 246
sidebar 8.10 Highest Jury Tort Awards of 2004, 246
18. COMPENSATORY DAMAGES, 247
19. PUNITIVE DAMAGES, 247
sidebar 8.11 Punitive Damage Guidelines, 248
Alternatives to the Tort System, 248
20. WORKERS' COMPENSATION ACTS, 249
History, 249
The System, 250
Tests for Determining Compensation, 251
case 8.4 PEE V. AUM, INC., 251
Exclusive Remedy Rule, 253
The Future of State Workers' Compensation, 253
9. Criminal Law and Business, 258
sidebar 9.1 Examples of White-Collar Crimes, 260
sidebar 9.2 Handcuffs and Jail Time, 261
Terms and Procedures, 262
1. CLASSIFICATIONS OF CRIMINAL CONDUCT, 262
2. BASIC CONCEPTS, 262
sidebar 9.3 The Price of the $11 Billion Accounting Fraud at WorldCom, 263
3. THE GRAND JURY, 263
Constitutional Issues, 264
4. THE FOURTH AMENDMENT: ILLEGAL SEARCH AND SEIZURE, 264
5. THE FIFTH AMENDMENT: PROTECTION AGAINST SELF-INCRIMINATION, 265
6. THE FIFTH AMENDMENT: DOUBLE JEOPARDY, 266
case 9.1 HUDSON V. UNITED STATES, 266
7. THE SIXTH AMENDMENT: RIGHTS IN A CRIMINAL CASE, 268
sidebar 9.4 Know Your Miranda Rights, 269
Specific Crimes, 270
8. FRAUD, 270
Mail and Wire Fraud, 270
sidebar 9.5 FBI Report: Common Fraud Schemes, 271
case 9.2 SCHMUCK V. UNITED STATES, 271
Securities Fraud, 273
Health Care Fraud, 273
Counterfeiting, 274
Bankruptcy Fraud, 274
9. CONSPIRACY, 275
sidebar 9.6 Elements of a Conspiracy, 275
case 9.3 UNITED STATES OF AMERICA V. HUGHES AIRCRAFT CO., INC., 276
10. OBSTRUCTION OF JUSTICE, 277
sidebar 9.7 Think Before You Act: Examples of Obstruction of Justice, 278
11. FALSE STATEMENT TO A BANK, 278
12. FALSE STATEMENT TO A FEDERAL AGENCY, 278
13. LARCENY, 279
14. RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT (RICO), 280
sidebar 9.8 RICO: What Is “Racketeering Activity”?, 280
15. CYBER CRIME, 281
sidebar 9.9 Unauthorized Access: Trouble by a Computer Science Graduate Student, 282
16. ENDANGERING WORKERS, 282
17. AIDING AND ABETTING, 283
18. SENTENCING GUIDELINES, 283
19. TRENDS, 285
10. Intellectual Property in the Property System, 290
sidebar 10.1 Enforcement and Dispute Resolution in the Property System, 292
1. THE JUSTIFICATION FOR INTELLECTUAL PROPERTY, 292
Intellectual Property and Competition, 293
sidebar 10.2 Relative Poverty and Property, 294
2. THE KNOWLEDGE ASSETS OF MODERN BUSINESS, 294
Trade Secrets, 295
3. TRADE SECRET: TAKING REASONABLE MEASURES TO KEEP THE SECRET, 295
Employees and Reasonable Measures, 296
4. TRADE SECRET: THE ECONOMIC VALUE REQUIREMENT, 296
5. TRADE SECRET: CIVIL ENFORCEMENT, 296
sidebar 10.3 Sport Drink Secrets, 297
6. TRADE SECRET: CRIMINAL ENFORCEMENT, 298
sidebar 10.4 ONCIX and Trade Secret Spies, 298
Patent Law, 299
sidebar 10.5 A Famous Writer's Love Affair with Patents, 299
7. OBTAINING A PATENT, 300
8. PATENTABLE SUBJECT MATTER, 300
case 10.1 J.E.M. AG SUPPLY, INC. V. PIONEER HI-BRED INTERNATIONAL, INC., 301
sidebar 10.6 Business Methods as Patentable Subject Matter, 303
9. NONOBVIOUSNESS, NOVELTY, AND USEFULNESS, 304
Patent Duration and Enforcement, 304
10. CURRENT ISSUES IN PATENT LAW, 305
Business Method Patents, 305
Pharmaceutical Patents, 305
Patenting Genes, 306
Trademark Law, 306
11. TYPES OF TRADEMARKS, 307
Trade Dress, 307
12. TRADEMARK REGISTRATION, 308
13. TRADEMARK ENFORCEMENT, 309
Trademarks and the Internet, 310
14. TRADEMARK DILUTION, 310
case 10.2 MOSELY V. V SECRET CATALOGUE, INC., 311
Copyright Law, 313
15. COPYRIGHT PROTECTION, 313
case 10.3 CAMPBELL V. ACUFF-ROSE MUSIC, INC., 314
16. COPYRIGHT IN THE DIGITAL AGE, 316
17. DIGITAL MILLENNIUM COPYRIGHT ACT, 316
Property and the Common Good, 317
18. PROPERTY AND NATURAL LAW, 317
sidebar 10.7 Marx, Locke, and Private Property, 318
A Problem with the Natural Law Approach to Property, 318
19. PROPERTY AND THE GENERAL WELFARE, 319
Property and Adverse Possession, 319
20. PROPERTY LIMITATIONS AND THE COMMON GOOD, 320
Duration Limitations on Property, 320
Zoning and Regulatory Limitations on Property, 321
21. EMINENT DOMAIN, 321
Eminent Domain and the Common Good, 321
Public Use, 322
Just Compensation, 323
22. TAXATION, 323
Part Four. Business Regulations, 328
11. Agency Law and Business Organizations, 330
1. FORMS OF BUSINESS ORGANIZATIONS, 332
sidebar 11.1 Possible Forms of Business Organizations, 332
Principles of Agency Law, 332
2. TERMINOLOGY, 333
3. TORT LIABILITY, 333
4. CONTRACTUAL LIABILITY, 334
Actual Authority, 335
Implied Authority, 335
Apparent Authority, 335
5. CRIMINAL LIABILITY, 336
case 11.1 ARTHUR ANDERSEN LLP. V. UNITED STATES, 336
Factors to Consider When Selecting a Business's Organizational Form, 339
6. CREATION, 339
7. CONTINUITY, 339
8. MANAGERIAL CONTROL, 340
9. LIABILITY, 340
10. TAXATION, 340
Selecting the Best Organizational Form, 340
11. SOLE PROPRIETORSHIPS, 340
12. PARTNERSHIPS, 341
Creation, 342
sidebar 11.2 Formation and Naming of a Partnership, 342
Continuity, 342
sidebar 11.3 Anticipating a Partnership's Dissolution—Buy and Sell Agreements, 343
Managerial Control, 343
Liability, 343
Taxation, 344
13. CORPORATIONS, 344
Creation, 345
sidebar 11.4 Steps in Creation of a Corporation, 345
Continuity, 345
Managerial Control, 346
sidebar 11.5 Role of Corporate Boards, 347
Liability, 347
sidebar 11.6 Director's Personal Liability, 348
case 11.2 MEYER V. HOLLEY, 349
Taxation, 350
sidebar 11.7 Corporate Tax Rates, 351
14. LIMITED PARTNERSHIPS, 352
Creation, 353
Continuity, 353
Managerial Control, 353
Liability, 353
sidebar 11.8 Actions by Limited Partner, 354
15. S CORPORATIONS, 354
sidebar 11.9 Applicable Tax Return—Personal versus Organizational, 354
16. LIMITED LIABILITY COMPANIES, 355
Creation, 355
Continuity, 356
Managerial Control, 356
Liability, 356
Taxation, 356
17. MAKING THE DECISION, 356
12. Administrative Law and Corporate Governance, 360
sidebar 12.1 Trends in Regulation: Growth of Government in the 20th Century, 362
Administrative Agencies, 363
sidebar 12.2 Major Federal Agencies, 363
1. REASONS FOR AGENCIES, 364
Providing Specificity, 364
Providing Expertise, 364
Providing Protection, 364
Providing Regulation, 365
Providing Services, 365
2. FUNCTIONS OF AGENCIES, 365
Rule Making, 365
Adjudicating, 366
sidebar 12.3 Recent Fines by Administrative Agencies, 366
Advising, 367
Investigating, 367
3. ORGANIZATION OF AGENCIES, 368
In General, 368
Quasi-Judicial Staff, 369
sidebar 12.4 Procedures Followed in Quasi-Judicial Proceedings, 370
4. INFLUENCING AGENCY DECISIONS, 370
Judicial Review of Agency Decisions, 371
5. STANDING TO SUE, 371
Reviewability, 371
Aggrieved Party, 371
sidebar 12.5 Standing to Sue or Who May Challenge an Administrative Policy, 372
6. REVIEW OF RULE MAKING, 372
Is Delegation Valid?, 372
case 12.1 NATIONAL CABLE & TELECOMMUNICATIONS ASSOCIATION V. BRAND X INTERNET SERVICES, 373
Authority Exceeded?, 375
sidebar 12.6 The FCC and Video Descriptions: Going Too Far, 375
case 12.2 FOOD AND DRUG ADMINISTRATION V. BROWN & WILLIAMSON TOBACCO CORPORATION, 376
7. REVIEW OF ADJUDICATIONS: PROCEDURAL ASPECTS, 379
Exhaustion of Remedies, 380
sidebar 12.7 Exceptions to Requirement of Exhaustion, 380
Primary Jurisdiction, 380
8. REVIEW OF FACTUAL DETERMINATIONS, 381
9. EQUAL ACCESS TO JUSTICE ACT, 382
Criticism of Administrative Agencies, 382
10. THE COSTS TO BUSINESS, 382
sidebar 12.8 Criticisms of Administrative Process, 383
sidebar 12.9 Costs for Each Employee to Comply with Federal Regulations, 384
11. THE COSTS TO SOCIETY, 384
sidebar 12.10 Too Much Information—An Agency Overwhelmed?, 385
13. Antitrust Laws—Regulating Competition, 388
1. HISTORICAL DEVELOPMENT, 390
The Sherman Act, 391
2. RESTRAINT OF TRADE, 392
3. MONOPOLY, 392
sidebar 13.1 Example of Monopoly, 393
sidebar 13.2 Proving an Illegal Monopoly Exists, 394
sidebar 13.3 Settlement of Antitrust Lawsuits, 395
4. ANALYSIS IN ANTITRUST LAW, 395
The Rule of Reason, 395
Per Se Illegality, 396
5. SANCTIONS, 397
6. EXEMPTIONS, 398
Types of Cases, 399
7. HORIZONTAL PRICE FIXING, 399
8. VERTICAL PRICE FIXING, 401
case 13.1 STATE OIL COMPANY V. KHAN, 401
9. INDIRECT PRICE FIXING, 404
10. TERRITORIAL AGREEMENTS, 404
11. CONCERTED ACTIVITIES, 405
sidebar 13.4 Basic Provisions of National Cooperative Production Amendment Act, 405
12. INTERNATIONAL CASES, 406
sidebar 13.5 Microsoft in the Global Marketplace, 406
The Clayton Act, 407
13. INTRODUCTION, 407
14. PRICE DISCRIMINATION, 407
case 13.2 VOLVO TRUCKS NORTH AMERICA, INC. V. REEDER-SIMCO GMC, INC., 409
15. SPECIAL ARRANGEMENTS, 412
16. MERGERS AND ACQUISITIONS, 413
The Federal Trade Commission Act—Unfair Competition, 414
17. ENFORCEMENT, 415
18. PREVENTION, 415
14. Sarbanes-Oxley and Securities Regulations, 420
1. WHAT IS A SECURITY?, 423
case 14.1 SECURITIES AND EXCHANGE COMMISSION V. EDWARDS, 423
2. SECURITIES AND EXCHANGE COMMISSION, 425
sidebar 14.1 The Securities and Exchange Commission in the Headlines, 425
Sarbanes-Oxley Act of 2002, 426
3. REVITALIZATION OF SEC, 426
4. ACCOUNTING REFORMS, 426
5. CORPORATE GOVERNANCE, 427
6. FINANCIAL STATEMENTS AND CONTROLS, 427
sidebar 14.2 SOX Compliance by Smaller Companies, 429
7. SECURITIES FRAUD, 429
The Securities Act of 1933: Going Public, 429
8. PARTIES REGULATED, 430
9. DOCUMENTS INVOLVED, 431
Registration Statement, 431
Prospectus, 432
10. LIABILITY, 432
Section 11: Registration Statement, 433
Section 12: Prospectus and Other Communications, 433
Section 17: Fraudulent Transactions, 434
11. DEFENSES, 434
Materiality, 434
Statute of Limitations, 434
Due Diligence, 435
Securities Exchange Act of 1934: Being Public, 436
12. SECTION 10(b) AND RULE 10b-5, 436
sidebar 14.3 Language of Section 10(b) of the 1934 Act and SEC's Rule 10b-5, 437
case 14.2 SEC V. ZANDFORD, 437
Damages, 439
sidebar 14.4 Proof of Loss Due to Fraud, 440
sidebar 14.5 Right to Contribution from Others, 440
Materiality, 440
13. INSIDER TRANSACTIONS, 441
14. NONPUBLIC INFORMATION, 442
case 14.3 UNITED STATES V. O'HAGAN, 443
15. ADDITIONAL CIVIL LIABILITY, 446
16. CRIMINAL LIABILITY, 446
Considerations beyond the Federal Securities Laws, 448
17. STATE BLUE SKY LAWS, 448
Registration Requirements, 449
Exemptions, 449
15. Employment and Labor Laws, 454
Employment Laws, 456
sidebar 15.1 Summary of Major Federal Employment Laws, 456
1. MINIMUM WAGES AND MAXIMUM HOURS, 456
sidebar 15.2 State versus Federal Minimum Wages, 457
case 15.1 IBP, INC. V. ALVAREZ, 457
2. THE WARN ACT, 460
3. THE FAMILY AND MEDICAL LEAVE ACT, 461
sidebar 15.3 FMLA: Can Employees Sue Their Government Employer?, 462
4. PENSION PLANS AND HEALTH CARE, 462
sidebar 15.4 Changes in Pension Plans, 463
5. LIMITATIONS ON EMPLOYMENT AT WILL, 463
sidebar 15.5 Federal Statutes Limiting Employment-at-Will Doctrine, 464
6. WORKERS' PRIVACY, 465
7. EMPLOYEE LAWSUITS, 465
Labor Laws, 467
sidebar 15.6 Federal Laws Governing Labor-Management Relations, 468
8. LAWS BEFORE 1935, 468
The Clayton Act, 469
The Railway Labor Act, 469
sidebar 15.7 How the Railway Labor Act Works, 469
The Norris-LaGuardia Act, 470
sidebar 15.8 Federal Courts Cannot Enjoin, 470
The Wagner Act, 470
sidebar 15.9 Congressional Actions through the Wagner Act, 471
9. THE NATIONAL LABOR RELATIONS BOARD, 471
NLRB Organization, 471
Jurisdiction, 472
sidebar 15.10 NLRB Assumes Jurisdiction over the Following, 472
Quasi-Judicial Authority, 472
sidebar 15.11 Limitation of NLRB's Remedies, 473
10. CERTIFICATION OF UNIONS, 473
Certification Elections, 473
Certification through Cards, 474
11. UNFAIR LABOR PRACTICES BY MANAGEMENT, 474
Interfering with Unionization, 474
case 15.2 ALLENTOWN MACK SALES AND SERVICE, INC. V. NATIONAL LABOR RELATIONS BOARD, 475
Dominating a Labor Organization, 478
Discriminating Based on Union Affiliation, 478
Discriminating as a Result of NLRB Proceedings, 478
Refusing to Bargain in Good Faith, 479
sidebar 15.12 Is Bargaining Required?, 479
The Taft-Hartley Act, 480
12. EIGHTY-DAY COOLING-OFF PERIOD, 480
sidebar 15.13 Major Provisions of Taft-Hartley Act, 481
13. FREE SPEECH, 481
14. UNION SHOP—MEMBERSHIPS AND FEES, 482
15. SUITS AGAINST UNIONS, 483
16. UNFAIR LABOR PRACTICES BY UNIONS, 483
sidebar 15.14 Unfair Labor Practices by Unions as Enacted in the Taft-Hartley Act, 484
Restraining or Coercing an Employee into Joining a Union, 484
Causing an Employer to Discriminate against a Nonunion Member, 484
Striking or Picketing for Illegal Purposes or Engaging in Secondary Boycotts, 484
sidebar 15.15 Example of Secondary Boycott, 485
17. AMENDMENTS, 485
Agreeing to Engage in a Secondary Boycott, 485
Picketing When Not Certified, 486
16. Discrimination in Employment, 490
The Civil Rights Act of 1964, 492
1. GENERAL PROVISIONS, 492
sidebar 16.1 Employers and Others Covered by Title VII, 493
2. ENFORCEMENT PROCEDURES, 494
The 1991 Amendments, 494
Winning a Title VII Civil Action, 495
3. DISCRIMINATION ON THE BASIS OF RACE OR COLOR, 496
sidebar 16.2 Examples of Disparate Impact on Race, 496
4. DISCRIMINATION ON THE BASIS OF NATIONAL ORIGIN, 497
5. DISCRIMINATION ON THE BASIS OF RELIGION, 497
6. DISCRIMINATION ON THE BASIS OF SEX, 498
Sexual Harassment, 498
sidebar 16.3 Examples of Illegal Sex Discrimination, 499
case 16.1 ONCALE V. SUNDOWNER OFFSHORE SERVICES, INC., 500
Pregnancy Discrimination Act, 502
Equal Pay Act, 502
sidebar 16.4 U.S. Gender Employment Figures for 2002, 503
Sexual Orientation Discrimination, 503
sidebar 16.5 Transgender Discrimination, 503
Employment Practices That May Be Challenged, 504
7. QUESTIONNAIRES, INTERVIEWS, TESTING, AND EDUCATIONAL REQUIREMENTS, 504
8. HEIGHT AND WEIGHT REQUIREMENTS, 505
9. APPEARANCE REQUIREMENTS, 505
10. AFFIRMATIVE ACTION PROGRAMS AND REVERSE DISCRIMINATION, 506
Private Employer Affirmative Action, 506
11. SENIORITY SYSTEMS, 507
Other Statutes and Discrimination in Employment, 508
12. CIVIL RIGHTS ACT OF 1866, 508
Unlimited Damages, 508
13. DISCRIMINATION ON THE BASIS OF AGE, 509
Types of Age Discrimination, 509
Employer Defenses in ADEA Cases, 510
Remedies under the ADEA, 510
14. DISCRIMINATION ON THE BASIS OF DISABILITIES, 510
Reasonable Accommodation under the ADA, 511
case 16.2 U.S. AIRWAYS, INC. V. BARNETT, 512
Remedies under the ADA, 514
15. DISCRIMINATION IN GETTING AND KEEPING HEALTH INSURANCE, 514
16. OTHER FEDERAL LEGISLATION, 515
17. STATE ANTIDISCRIMINATION LAWS, 515
18. TRENDS IN EMPLOYMENT DISCRIMINATION AND LITIGATION, 516
Surge in Private Lawsuits, 516
Discrimination Based on Genetic Testing, 516
Arbitration in Employment Discrimination Disputes, 516
sidebar 16.6 Circuit City's Arbitration Provision, 517
Insuring against Employment Discrimination Claims, 517
19. EMPLOYMENT DISCRIMINATION, CORPORATE GOVERNANCE, AND PROPERTY, 518
17. Environmental Laws and Pollution Control, 522
sidebar 17.1 Categories of Environmental and Pollution-Control Laws, 524
Government's Regulation of Itself, 524
1. THE NATIONAL ENVIRONMENTAL POLICY ACT, 524
NEPA Basics, 525
case 17.1 METROPOLITAN EDISON COMPANY V. PEOPLE AGAINST NUCLEAR ENERGY, 525
2. EVALUATION OF ENVIRONMENTAL IMPACT STATEMENTS, 527
Government's Regulation of Business, 528
3. THE ENVIRONMENTAL PROTECTION AGENCY, 528
sidebar 17.2 Responsibilities of the EPA, 528
4. AIR POLLUTION, 528
Clean Air Act and Amendments, 529
Clean Air Act Enforcement, 530
Air Pollution Sources, 530
5. CLEAN AIR ACT TRENDS, 530
Emissions Reduction Banking, 531
sidebar 17.3 Beyond the Clean Air Act, 531
Prevention of Significant Deterioration, 532
The Permitting Process, 532
Indoor Pollution, 532
sidebar 17.4 Indoor Pollution, 532
Conclusion, 533
6. WATER POLLUTION, 533
case 17.2 SOLID WASTE AGENCY V. UNITED STATES ARMY CORPS OF ENGINEERS, 533
Goals and Enforcement, 535
7. ENDANGERED SPECIES ACT, 535
Application of the ESA, 536
8. PESTICIDE CONTROL, 536
The Federal Pesticide Acts, 537
Enforcement, 537
9. SOLID WASTE, 537
The Solid Waste Disposal Act, 538
10. TOXIC AND HAZARDOUS SUBSTANCES, 539
The Problem, 539
Toxic Substances Control Act, 539
Resource Conservation and Recovery Act, 540
The Superfund, 541
case 17.3 COOPER INDUSTRIES, INC. V. AVIALL SERVICES, INC., 542
sidebar 17.5 Superfund in Decline?, 543
Radiation, 543
Suits by Private Individuals, 544
11. CITIZEN ENFORCEMENT, 544
12. TORT THEORIES, 544
Nuisance, 545
Other Tort Doctrines, 545
Trends in Environmental Regulation, 546
13. AREAS OF ENVIRONMENTAL CONCERN, 547
Loss of Natural Ecosystems, 547
Ozone, 547
Greenhouse Effect, 547
Population Growth, 548
14. CORPORATE GOVERNANCE AND THE ENVIRONMENT, 548
15. PRIVATE PROPERTY AND THE ENVIRONMENT, 549
Part Five. Globalization, 554
18. International Law, 556
sidebar 18.1 What Are Corporate Codes of Conduct?, 558
International Law and Organizations, 559
1. SOURCES OF INTERNATIONAL LAW, 559
Public International Law, 559
Private International Law, 560
2. INTERNATIONAL ORGANIZATIONS, 560
United Nations, 561
World Trade Organization, 561
The European Union, 562
sidebar 18.2 Major Goals of the WTO/GATT System, 563
3. MAJOR AGREEMENTS AFFECTING TRADE, 564
Convention on the International Sale of Goods, 564
North American Free Trade Agreement, 564
Central America-Dominican Republic Free Trade Agreement, 565
Methods of Transacting International Business, 565
4. FOREIGN SALES, 565
case 18.1 VOEST-ALPINE TRADING USA V. BANK OF CHINA, 566
5. LICENSES OR FRANCHISES, 568
6. DIRECT FOREIGN INVESTMENT, 568
Risks Involved in International Trade, 569
sidebar 18.3 Risks in International Trade, 569
7. EXPROPRIATION AND NATIONALIZATION, 570
8. EXPORT CONTROLS, 570
sidebar 18.4 Arms Export Control Act: How Can a Company Avoid Violations?, 571
9. PRESSURES FOR BRIBES, 571
sidebar 18.5 FCPA: Legal or Permissible Payments, 572
Resolving International Disputes, 574
10. SUING FOREIGN GOVERNMENTS IN THE UNITED STATES, 574
case 18.2 DOLE FOOD COMPANY V. DEAD SEA BROMINE CO. AND BROMINE COMPOUNDS, LTD., 574
11. SUING FOREIGN FIRMS IN THE UNITED STATES, 576
case 18.3 MORELLIV. CEDEL, 576
sidebar 18.6 The Reach of U.S. Law: Spector v. Norwegian Cruise Line, Ltd. (2005), 578
Alien Tort Claims Act, 578
12. INTERNATIONAL ARBITRATION, 578
sidebar 18.7 U.S. Companies Sued for Violations of ATCA, 579
sidebar 18.8 The World Intellectual Property Organization Arbitration and Mediation Center, 579
Appendix I. Case Briefing and Legal Study Tips, 582
Appendix II. Sample Complaint, 584
Appendix III. The Constitution of the United States of America, 588
Appendix IV. Selected Sections of Article 2 of Uniform Commercial Code, 598
Appendix V. Selected Sections of the Sarbanes-Oxley Act of 2002, 604
Appendix VI. Selected Sections of Securities Act of 1933, 609
Appendix VII. Selected Sections of Securities Exchange Act of 1934, 611
Glossary, 613
Photo Credits, 649
Index, 650

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