Part 1 – Fact Situation: Identification of Issues

1. a. Did QPI violate Section 10(b) of the Securities Exchange Act of 1934 by engaging in transactions with DOA to boost their financial reports?
Was Nouv’s behavior unethical when he tried to bribe Betty into completing the draft and deal in a way that made the transactions look legitimate?
b. Is the cooperation between QPI and DOA on pricing (price fixing) and segmenting product sales to customers (market division/Refusal to deal) a horizontal agreement in violation of Antitrust laws? If so, were their actions a per se violation of Section 1 of the Sherman Act?
c. Did Nouv’s behavior lack integrity? If so, was his veiled threat and coercion of Betty to remain silent unethical?
d. --- Individuals listed below:
i. Would the firing of Billy Aged based on his age be disparate treatment and illegal discrimination in violation of the Age Discrimination in Employment Act of 1967? ii. Is firing Cindy Octane due to her future change in marital status be a disparate treatment violation of Title VII of the Civil Rights Act of 1964? iii. Is Tommy Grey 40 years of age or older, and if so, would his firing due to seniority be in violation of the Age Discrimination in Employment Act of 1967? iv. Would firing Belinda Black be an act of disparate treatment and discrimination based on her color in violation of Title VII of the Civil Rights Act of 1964?
e. Was Nouv’s unwelcomed sexual advance, innuendo and quid pro quo offer sexual harassment according to Title VII of the Civil Rights Act of 1964?
2. a. Could Cindy’s firing be deemed discrimination under Title VII of the Civil Rights Act of 1964 due to her pregnancy?
Additionally, would Cindy’s treatment of being made to sit and wait in a small “telephone room” against her desires be considered a false imprisonment and/or an intentional infliction of emotional distress tort?
b. Was Betty’s draft sufficient enough to constitute a contract under the UCC?
Was Betty’s deletion of the draft agreement ethical behavior?
In the event of an investigation, does Betty’s behavior constitute destruction (spoilage) of evidence?
3a. Did Sam violate his fiduciary duty as an agent of QPI by disclosing confidential information to Best Optics for his own benefit?
Was there a non-compete clause in Sam’s employment contract, and if so, would Sam taking a job with Best Optics violate that contract?
Is Sam’s purchase of 10,000 shares of Best Optics stock guilty of misappropriation in violation of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934?
If they suspected foul play, could QPI legally search Sam’s e-mail under the Electronic Communications Privacy Act of 1986?
b. Is the export of the lenses for the large rifle scopes in violation of the Arms Export Control Act?
Was Sam’s request for and acceptance of the additional 5% “deal sweetener” unethical?
Is Sam’s acceptance of the additional 5% into his personal account a violation of his fiduciary duty to QPI, specifically a lapse of his Duty of Loyalty by accepting outside benefits?
Did Sam properly record the transaction, and was the transaction’s accounting of the additional 5% in violation of the Securities Exchange act of 1934?
c. Is Sam guilty of fraud by falsifying expenses to feed his slush fund?
Are Sam’s practices of bribing foreign officials in violation of the Foreign Corrupt Practices Act?
Could QPI reclaim the money from the vendor under section 3-302 of the UCC since the supplier gave nothing of value and the acquisition of the check was not in good faith?
Is Sam’s overall lack of integrity and irresponsibility a major ethics violation?
d. Did Sam violate his fiduciary duties as an agent of QPI with his inappropriate (drunk & fighting) behavior and failing to act in their best interest by his unauthorized selling their products below set costs?
Was the contract between Sam and the bar customer legal & binding under Article 2 of the UCC?
Was Sam guilty of the tort of battery?
Was Sam acting within his scope as an employee of QPI when he had the altercation with the bar patron? If so, is QPI liable for the battery tort committed by Sam?
Did the bar have a statutory or common law duty of due care to Sam? If so, did the bar breach that duty by continuing to serve someone who was obviously very intoxicated?
Is the bar liable for the damages to Sam’s neighbor’s garage due to violating Dram Shop laws when they continued to serve Sam after he was obviously intoxicated?
e. Is Sam’s e-mail in violation of Title VII of the Civil Rights Act of 1964 due to disparaging jokes about minorities and women?
Does Sam’s statement about Beatty constitute defamation? Was it racial and/or gender discrimination under Title VII of the Civil Rights Act of 1964?
Was Sam acting within his scope of an Employee of QPI when sending the e-mail, and if so is QPI liable for the discriminatory comments and/or defamation?
f. Did the security guards commit the tort of intentional infliction of emotional distress in their handling of Sam’s ejection?
Is QPI liable for the torts of the independent contractors?
4. Was the termination of Emily Ethical a wrongful discharge?
Is Nouv’s review of Emily protected by the qualified privilege and therefore not considered defamation?
5.a. Did the security interest agreement meet the minimum UCC requirements to attach to the collateral? If so, since a security interest in inventory held as collateral does NOT constitute a PMSI and is therefore NOT automatically perfected, where does QPI stand in the priority list of creditors?
b. Would hiring the second candidate violate a potential noncompete agreement the candidate may have had with his prior employer?
Were both candidates considered and inverviewed equally and unbiased?
c. Are QPI’s technology patents and trademarks adequately protected?
If the license is exclusive to ATSA, does the agreement violate article 85 of the EU Antitrust laws or the Sherman Act?
Is the verbal agreement for licensing legally sufficient under Article 2B of the UCC?
Was Nouv self-dealing when brokering the deal with ATSA (true relationship with ATSA CEO is unknown), and if so does the business judgment rule apply any longer?
d. Would the vertical price fixing and market division agreement between QPI and their distributors be a per se violation or rule of reason violation of the Antitrust Laws, specifically Section 1 of the Sherman Act.
e. Does only having 5 out of 7 members constitute a quorum for the board?
Did the board members violate their duty of care by not further investigating Nouv’s proposals? If so, was their uninformed decision fair to the shareholders and if not, could they be culpable if things go wrong?

Part 2 – Legal Memos
M e m o r a n d u m

TO: Nouv O. Rich
FROM: Liddy Lawless
RE: New QPI Website
Issue Presented
What are the Intellectual Property implications for each of the website’s features? Can they be protected by IP law, and if so, under what type of IP law and who owns the IP in each element?
Conclusion / Recommendation
Each of the features on the website could be covered by Intellectual Property laws and care must be taken to avoid infringement of other people’s IP and to ensure protection of QPI’s IP.
Analysis / Reasoning
With regards to the original art work created by third parties, the work is protected by the Copyright Act. The doctrine of “fair use” may permit limited use of copyrighted material without permission, so long as it does not compete with the original work. However, the rules of “fair use” are restrictive in the frequency, spontaneity and intent, so in this case, it is recommended to get permission prior to using any copyrighted material. The owner retains the IP rights in any case. With respect to the stories and written materials, any contributions written by customers remains their IP under the Digital Millennium Copyright Act. A click-wrap type disclaimer could be used for posters to waive their IP rights and submissions would become the IP of QPI. For QPI employees , if done in the scope of their duties, their contributions become the intellectual property of QPI. Photos of employees working within QPI are the IP of the photographer, unless that person works for QPI, in which case QPI owns the IP rights. Under common law, as soon as it is used, the new “improved” trademark is automatically the IP of QPI, but should still be registered with the Lanham Act Principal Register. Depending on the specifics, the innovative “click to learn more” features could be considered a trade secret and would be covered under the Uniform Trade Secrets Act, or could possibly be protected by applying for a design patent. M e m o r a n d u m

TO: Nouv O. Rich
FROM: Liddy Lawless
RE: Magnifying Glass Liability
Issue Presented
What is QPI’s legal exposure under U.S. product liability theories for the damage to Jimmy’s neck, and does QQPI have any legal or ethical duty to future purchases/user of the QPI magnifying glasses?
Conclusion / Recommendation
QPI is not liable for the damage to Jimmy’s neck. Though there is no legal exposure of liability in this case, the ethical duty is to make the warning more prominent and aadd warning sticker on the glass itself.
Analysis / Reasoning
The magnifying glass was not defective and was reasonably safe for the intended use. Under the Restatement (Second) of Torts section 402a, when the buyer’s mishandling of the goods causes the harm, there is no strict liability. As noted in BOUMELHEM v. BIC CORPORATION, 550 N.W.2d 200, Supreme Court of Michigan., June 28, 1996, “The manufacturer of a simple product has no duty to warn of the product's potentially dangerous conditions or characteristics that are readily apparent or visible upon casual inspection and reasonably expected to be recognized by the average user of ordinary intelligence.” The fact that a magnifying glass can focus light and burn is common knowledge. Every adult ordinary intelligence would know this, in fact, any child who has ever watched “Looney Tunes” or similar cartoons has seen this happen as well. As such, there is no requirement to warn and therefore no negligence. The danger of using the glass to concentrate light and burn objects is readily apparent and common knowledge. Nonetheless, there is a warning stating that the product is intended for indoor use only. Though placing a warning sticker on the lens is unlikely to stop children from misusing the product, it is a sound ethical action to take at this point and recommended.

Part 3 – Ethical Memo
We work in the world’s most diverse and dynamic organization and are spread across all corners of the world. Every day presents a new set of challenges that must be met, but regardless of the location or challenge, one that must remain constant is ethical behavior by all members of this organization. From the lowest ranking Airman to the Chief of Staff of the Air Force, a commitment to maintain the highest degree of integrity and ethical behavior is paramount to maintaining the trust of the nation we defend. This goes beyond complying with the Uniform Code of Military Justice, Federal, State and local laws, it extends to every decision you make on a daily basis. The United States military is extremely visible in the public eye and we are held to a much higher standard than the average citizen. We should expect much more from ourselves as well. Ethics must be the central element of our workplace culture. You must demonstrate courage, not just in the face of the enemy, but the courage to fight for what you think is right, despite opposition and the status quo. The first of our Core Values is Integrity, and it is at the center of our Air Force culture. Time is a luxury that we often do not have so honest, frank and up front communication is an absolute necessity. Each member must also be trustworthy and dependable. In our line of work, you rely on the individuals around you to do their job to the best of their abilities, as your life may depend upon it. We must also display fairness in all of our actions to ensure they are free from fraud, favoritism or prejudice. The second core value is Service Before Self. This means putting the needs of the nation, the needs of the mission and the needs of your unit before your own. Every single member of the Air Force has made numerous sacrifices for the good of their country, but this applies to the small everyday sacrifices