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Question 6. 6. (TCOs A, D, E) Jane worked at the local country club pool as a lifeguard, not a swim teacher, for the summer of 2013. Jane was a public school physical education teacher. The country club did not do a background check or confirm any references when they hired her. They relied on the “say-so” of Jane’s brother, a member of the country club board of directors. The country club only did a cursory Internet search of the state’s Department of Education website to verify that she had a valid teaching certificate. When one of the swim instructors unexpectedly quit one day, she took over the class. Initially, the class went well. Eventually, Jane also took over coaching the club’s competitive swim team. When she became the swimming coach, Jane effectively stopped “teaching” the swim classes. Instead, she had all the swimmers in the classes do races and train for competitive meets during the 30 minute lessons. Jane had done this many times during the summer. Her boss, the country club director, knew this and, as the swim team was winning, ignored complaints from parents and students. Jane raced with the swimmers and pushed the winners out of the way when they tried to touch the side of the pool so that Jane’s team would win each time. This was not the first time that Jane had injured swimmers. Last year, she was arrested for physically abusing a child she coached at her school. Although the criminal charges were dropped, Jane is on administrative leave from her public school job until an administrative hearing with the state Department of

Question 6. 6. (TCOs A, D, E) Jane worked at the local country club pool as a lifeguard,
not a swim teacher, for the summer of 2013. Jane was a public school physical education
teacher. The country club did not do a background check or confirm any references when
they hired her. They relied on the “say-so” of Jane’s brother, a member of the country club
board of directors. The country club only did a cursory Internet search of the state’s
Department of Education website to verify that she had a valid teaching certificate. When
one of the swim instructors unexpectedly quit one day, she took over the class. Initially,
the class went well. Eventually, Jane also took over coaching the club’s competitive swim
team. When she became the swimming coach, Jane effectively stopped “teaching” the
swim classes. Instead, she had all the swimmers in the classes do races and train for
competitive meets during the 30 minute lessons. Jane had done this many times during the
summer. Her boss, the country club director, knew this and, as the swim team was
winning, ignored complaints from parents and students. Jane raced with the swimmers
and pushed the winners out of the way when they tried to touch the side of the pool so that
Jane’s team would win each time. This was not the first time that Jane had injured
swimmers. Last year, she was arrested for physically abusing a child she coached at her
school. Although the criminal charges were dropped, Jane is on administrative leave from
her public school job until an administrative hearing with the state Department of
Education can be held in the fall. The incident was reported in several local papers, and
her administrative suspension is listed on the state’s database.
Several of the children, ages 6–8, reported to their parents that they had been physically
assaulted by Jane while in swim class for not “working hard enough!” The children had
bruises on their shoulders. In addition, Jane began “approaching” an 18-year-old college
student who worked as a lifeguard and assisted Jane with the coaching. Over time, Jane’s
“advances” toward the young man became very aggressive. Jane continued even though
the young man asked her to stop. In fact, after the young man told Jane to stop, as he felt
harassed, Jane hired another lifeguard to assist her with the coaching. The country club

director was aware of this situation, but as the swim team was winning, he took the
position that it was an interpersonal issue that the two should workout among themselves.
Several parents brought suit against the local country club, Jane, and the country club
director. The young lifeguard has also brought suit. The local country club pool alleges
that it is not liable. Discuss the ethical, liability, and agency issues presented by this
matter, and all defenses available to the local country club pool. (Points : 30)

Question 7. 7. (TCOs G and I) In the 1930s, after immigrating to the U.S. from Ireland at
the onset of World War II, Shamus and Mary McCream opened a bakery in Boston. They
specialized in snack cakes. McCream Cup Cakes became so popular in the area that the
family stopped being actual bakers and became manufacturers/ food processors of the
snack cakes on a regional basis. After returning from the war, their son Steve completed
college and began working in television advertising in the early 1950s. Steve approached
his parents and his older brother Tom, who was now running the business, about the
possibilities of advertising and “going national.” The family liked the idea and began
advertising and expanding. In addition, to fuel the expansion, they offered retailers price
discounts and other incentives if they prominently positioned the store displays set-up by
McCream rack jobbers. By the 1960s, they were a national brand, controlling over 80
percent of the snack food industry.
In the 1970s, with the advent of the hippie counter-culture and the back-to-Earth
movement, a new competitor made an impact on the McCream business. The company,
Healthy Snacks, began advertising that their products only used natural ingredients. They
even began running a commercial in which a mother and child compared their Healthy
Snacks with a lampooned product named “Cup Cake McCrumbs,” stating that it tasted
like poison and dog food! Tiny-Big- Brian, a counter-culture pop star with a late night
UHF and cable show, joined in on the controversy created by the commercial and stated

that he did not understand how people, “could buy such poisonous dog food and serve it
to their children as snacks!” Market studies showed that McCream Cup Cakes sales
suffered. As a result, McCream began a more aggressive shelf space and display
marketing campaign to combat Healthy Snacks’s television advertising. McCream’s
marketing efforts were successful. By also offering volume discount incentives, they had
prevailed upon retailers in their traditional East Coast and Midwest markets to
prominently display their products. To counter this strategy, Healthy Snacks offered a
deep discount to WaySafeMart, a Southwest and West Coast discount chain, in exchange
for an agreement to exclusively sell only their snack foods.
In reality, McCream Cup Cakes used only FDA approved ingredients and preservatives
and were made in American plants that always passed inspections. In contrast, although
Healthy Snacks’s pilot plant was in Florida, it had subcontracted the bulk of its production
to a plant in the Dominican Republic. As a result, to maintain a level of quality, Healthy
Snacks used the maximum amount of preservatives allowed under the law of the
Dominican Republic for the imported product. The level was so high, reactions to the food
were often reported. The levels were higher than those allowed by FDA regulations, but
allowed per an agricultural import/export treaty between the United States and the
Dominican Republic. Several people who ate these Healthy Snacks required emergency
room visits. A child in Georgia, with food allergy problems, even died. Her parents served
her the snack, relying on the advertising, not knowing that some of the natural ingredients
used in the Dominican Republic-made product were dangerous to her.
The McCream family seeks your advice and opinion regarding:
(1) Healthy Snacks’s advertising campaign.
(2) The marketing and distribution campaigns both companies have engaged in.
(3) The liability issues Healthy Snacks faces regarding their use of food manufactured
outside of the United States. (Points : 30)

Question 8. 8. (TCOs A, E, F) John and Edwin Booth, brothers and actors, decide to retire
after years on the road. They remember a town in Louisiana they were familiar with from
their travels. From the internet, they learn of a farm a few miles outside of town that
seems ideal. There is a great house and lots of land. The brothers wish to convert the farm
to a restaurant-hotel with a dinner theater. They contact the realtor by phone, and make
arrangements to buy the parcel. The Booth brothers plan on traveling to Louisiana prior to
the closing to look things over, but are unable to do so due to their touring schedule. The
realtor, whose commission is technically paid by the proceeds to the seller, and who has a
listing contract with the seller, advises the Booths that she will handle everything.
Louisiana custom, law, and practice does not require a purchaser of land to have an
attorney. The realtor does only the bare minimum needed for title to transfer to the
Booths. On their behalf, she only has a minimal title search and minimal inspections are
done, and she obtains a minimal coverage title insurance policy. As the area near the farm
was once occupied by a large chemical plant, when the realtor represents local purchasers,
as a precaution, she advises the buyers to get the maximum possible title search and title
insurance, and to get all possible inspections done. It is her regular practice to caution
local purchasers who she represents about the former chemical plant.
After closing on the property, the Booths learn of the old chemical plant. They seek your
advice as to their liability and the liability of any other parties. (Points : 30)

 

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