Study
Will Manuel Perez prevail in invalidating the arbitration clause? Why or why not? Identify the ethical concerns regarding Walexron’s approach to the arbitration process and recommend actions Walexron could take to remedy the ethical concerns.
Manuel Perez has high chances of invalidating the arbitration clause in question for several reasons.
Firstly, the case materials indicate that there is no applicable arbitration clause at all. Thus, in Staschiak v. Certified Logistics, the court made a ruling that if there is a special disclaimer in the employee handbook, it may not be considered as a part of the employment contract. In addition, this ruling stipulated that the employment agreement should contain a specific reference that the employee handbook constitutes its integral part. Otherwise, it should be viewed as guidelines only.
Secondly, even if the court rules that this arbitration clause forms part of an employment contract, Manuel Perez may never signed it. Instead, he signed the document confirming that he had received the copy of handbook, but did not expressly state that he became acquainted with its provisions, including his consent to be bound by them. Furthermore, Mr. Perez acknowledged that English was not his first language. Most assuredly, the company managers were aware of that fact, and thus impliedly consented to the fact that he Mr. Perez might have had difficulties understanding the handbook provisions. Therefore, their actions may be construed as coercion, which make the employment contract unenforceable.
Thirdly, even if the court rules that the arbitration is binding, and Manuel Perez acted consciously when signing the agreement, the arbitral institution prescribed in the arbitration raise is dubious. In AT&T Mobility v. Concepcion, the Supreme Court of the United States unequivocally ruled that a dispute submitted to arbitration should be resolved by an unbiased, impartial and independent arbitrator. The materials of this case indicate that the arbitration institution in question is a ‘puppet’ arbitration chamber of the company. In this case, the dispute should be resolved by a traditional court.
There are two main ethical issues requiring immediate resolution.
Firstly, in order to make it entirely enforceable, the arbitration clause should be integrated into the employment contract itself, not in the employee handbook, which is viewed by the courts as guidelines or recommendations, not as a binding part of a contract (Deaking & Morris, 2005).
Secondly, having a ‘puppet’ arbitration agency is not an ethically agreeable approach. As an employer, it should provide its employees with an option of choosing the method of dispute resolution. Although it is a popular practice among employees to choose an arbitral institution, in this case it recommended either to make it possible to choose between arbitration or litigation, or to select one of the internationally accepted arbitration institutions (e.g. New York International Arbitration Center).
Is Walexron responsible for the actions of Dee Struction? Why or why not?
Under the principle of ‘superior respondeat’, Walextron should be held liable for the actions of its employees (Bhasin, 2011). The only exclusion in this regard is when an employee acts beyond the scope of his/her professional obligations (Bhasis, 2011_. Yet, in this case Dee Struction was executing his professional duties. At the same time, the court recognized in Lister v Romford Ice Cold Storage that after claim with an aggrieved party is settled, an employer can recover indemnification from employee, who active willfully and intentionally.
Can Walexron hold Lou Scannon responsible for misappropriation of a trade secret?
Lou Scannon should not be brought to liability for alleged misappropriation of a trade secret due to the following factors:
In order to make the clause enforceable, the employer should have expressly communicated to the employee what information constitutes a trade secret and, therefore cannot be disclosed (Duska, 2007). In this case, however, while informing the employee that their dealings are confidential, the employer failed to explain what aspects of their cooperation should be confidential.
Any information, which may potentially harm the consumers, cannot be classified as a trade secret (Maclntyre, 2008). The act of Lou Scannon should be viewed as a form of legitimate whistleblowing, which is protected by the Office of The Whistleblower Protection program.
Is the confidentiality provision within Scannon’s employment contract valid?
Oral agreement between the parties regarding confidentiality aspect of their cooperation is not valid due to the following reasons.
Employment contract supersede all prior negotiations of the parties (Deakin & Morris, 2005). Whatever the oral agreement between the parties might have been, it should have been fixed in the contract (the practice known as ‘Integration Clause’). Failure to comply with this requirement results in unenforceability of the confidentiality claim (Bhasin, 2011).
The act of whistleblowing the information, which may harm consumers, nullifies the trade secret protective remedies (Lipman, 2012). Therefore, the company may not argue that the conference of Scannon violated its IP rights.
Identify possible claims Kwong Lee might bring against Walexron and the employee who printed the receipt. Which party is most likely to win? Why?
Kwong Lee can file a discrimination against a company under the ‘superior respondeat’ principle on the grounds of racial hatred and derogatory treatment. In CVC vs. Lee, the court ruled that labelling a customer with ‘Ching Chong’ or other racially attributed derogatory or pejorative names is the act of racial intolerance. Kwong Lee is entitled to sue the company directly, which, in its turn has the right of recourse action against the cashier (Maclntyrem 2008).
Can Walexron seek to recover from Alf Abett individually on the judgment for the Goin Postal partnership? Why or why not?
Before this issue can be resolved, understanding the type of partnership is important. Thus, if it is a general partnership, then all partners are equally responsible for the actions of a partnership. Yet, in limited partnerships, limited partners cannot be brought to liability for any actions of the partnership. In contrast, in general partnerships all partners are personally liable for the actions of a partnership (Borros & Duns, 2010).
However, the partners are equally liable for the debts of their partnership. Therefore, in this case it will be possible to recover only 33% of the alleged debt from Alf Abett.
Using the Business Judgment Rule, did the board of directors fulfill its duty of care to shareholders in suing Alf Abett individually for the Goin Postal judgment? Why or why not?
In this case the board of directors did not satisfy its duty of care towards the shareholders, when the decided to sue Alf Abttt for the debts of Goin Postal. Thus, the requirements of satisfying the business judgement rule formulated in Grobow v. Perot, 539 A.2d 180 say that:
A board of director should act in good faith – the Board of Directors satisfied this requirement
The actions of the board of directors should be in the best interest of the shareholders – recovering the debt understandably corresponds to the interests of shareholders.
The board of directors should act on an informed basis – in the present case the directors failed to investigate possible outcomes of the case.
Can Adam Upp sue Walexron for employment discrimination? Can Adam argue constructive discharge in this instance? Can Walexron fire Cybil? Why or why not?
Because in the present case the employer created a hostile professional environment, Adam had no option, but to resign. Civil Rights Act (Title VII) stresses that imposing any employment-related restrictions on an employee on the basis of his/her sexual orientation constitute discrimination (Kohn, Kohn & Colapinto, 2004).
The burden of proof in this case is to demonstrate whether a reasonable person would be compelled to resign under exactly similar circumstances. In Muhammad v. Caterpillar Inc., 767 F.3d 694, among other issues the court ruled that freezing payment and denying promotions should are sufficiently hostile actions, which can compel a person to resign.
In addition, termination of Cybil contract was wrongful. At-will employment is restricted by the contractual clauses, which list the scenarios, when an employee can be dismissed. In the present case, Cybil did nothing, which can seem contradictory to the provisions of her employment contract. Thus, there are no legal grounds for dismissing her.
In addition, under the ‘just- cause’ exception to the at-will employment doctrine, it is possible to fire an employee only when there is a legitimate cause of dismissing him/her (e.g. when a business is re-organized). The labor law does not allow firing out of malice or retaliation (Ross v. Vanguard,).
As the new Director of Compliance, you have reviewed each of the issues presented and the Vice President of Legal requested that you identify any ethical and legal concerns and provide recommendations on how to avoid both legal and ethical issues in the future. Be specific and detailed, and be sure to base recommendations on relevant legal and ethical principles.
The scenarios discussed above precisely illustrate that there is a plethora of various legal and ethical challenges in Walexron. However successful the financial performance of Walexron may be, such situations make the company untenable against potential lawsuits. In general, the following measures appear to be justified to improve its legal defensive system:
Revising employment contracts of the employees. In particular, it the arbitration and confidentiality clauses should be integrated into the ‘main’ contract, otherwise they may be considered unenforceable by the courts. The arbitration clause should name the authority, which will be adjudicating the dispute and outline the process of arbitrators appointment to ensure that they are unbiased, impartial and independent (Davidson, 2000).
Developing effective and comprehensive whistle-blowing policies. This case evinced that even actions of the senior managers of the company can inflict grave repercussions on the firm. Everyone should be aware of the permissible limits of their professional conduct (Lipman, 2012).
References
Duska, R. (2007). Contemporary reflections on business ethics. Dordrecht, the Netherlands: Springer.
MacIntyre, E. (2008). Business law. Harlow, England: Pearson Longman.
Deakin, S. & Morris, G. (2005). Labour law. Oxford Portland, Or: Hart Pub.
Bhasin, A. (2011). Labour and employment laws : a primer. Lucknow: Eastern Book Co.
Kohn, S., Kohn, M. & Colapinto, D. (2004). Whistleblower law : a guide to legal protections for corporate employees. Westport, Conn: Praeger.
Lipman, F. (2012). Whistleblowers: incentives, disincentives, and protection strategies. Hoboken, N.J: Wiley.
Boros, E. & Duns, J. (2010). Corporate law. South Melbourne, Vic.: Oxford University Press.
Davidson, F. (2000). Arbitration. Edinburgh: W. Green.
