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1. (TCOs D, E, F) State Senator Leghornne, while filibustering the opposition party’s proposed statute on public education, accuses State Senator Gentile, the bill’s sponsor, of being an “unabashed child lover.” It is common knowledge that State Senator Gentile, who is gay, recently married an 18-year-old college intern who had worked in his legislative offices. The relationship and the marriage were covered in the local papers. Although many conservative people had “their opinions” on the matter, most dealt with the situation with decorum and respect. State Senator Leghornne had recently and vehemently opposed the state’s same sex marriage law. State Senator Gentile’s spouse was so distraught and upset by the comments made during the filibuster that he attempted suicide by overdosing on sleeping pills. Fortunately, State Senator Gentile returned home in time to call an ambulance, and all are now doing fine. Senator Gentile’s spouse seeks your advice about possible legal actions that he could bring against State Senator Leghornne. He points out to you that he met State Senator Gentile when he was 18, an adult allowed to marry under state law, and that their marriage and relationship are perfectly proper pursuant to the state’s same sex marriage law. (Points : 15)

1. (TCOs D, E, F) State Senator Leghornne, while filibustering the opposition party’s
proposed statute on public education, accuses State Senator Gentile, the bill’s sponsor, of
being an “unabashed child lover.” It is common knowledge that State Senator Gentile,
who is gay, recently married an 18-year-old college intern who had worked in his
legislative offices. The relationship and the marriage were covered in the local papers.
Although many conservative people had “their opinions” on the matter, most dealt with
the situation with decorum and respect. State Senator Leghornne had recently and
vehemently opposed the state’s same sex marriage law. State Senator Gentile’s spouse was
so distraught and upset by the comments made during the filibuster that he attempted
suicide by overdosing on sleeping pills. Fortunately, State Senator Gentile returned home
in time to call an ambulance, and all are now doing fine.
Senator Gentile’s spouse seeks your advice about possible legal actions that he could
bring against State Senator Leghornne. He points out to you that he met State Senator
Gentile when he was 18, an adult allowed to marry under state law, and that their marriage
and relationship are perfectly proper pursuant to the state’s same sex marriage law. (Points
: 15)

Question 2. 2. (TCOs B, C, G, I) Vineyard Air, a small business with one twin engine
airplane that shuttles people from Boston to Martha’s Vineyard, learns from reading in the
industry trade magazine that the Federal Aviation Administration (FAA) has proposed a
regulation change. Instead of requiring planes to undergo a major 48 hour maintenance
and inspection process after 1000 hours of flight time, the proposed regulation will require
airplanes to undergo this process after either 1000 hours of flight time or 500 flights –
whichever occurs first. As Vineyard Air’s typical flight is 25 minutes, the change will
require them to triple their major plane overhauls. As Vineyard Air has only one plane and
services a small niche market, this change could bankrupt them.
What should Vineyard Air do regarding the proposed change? (Points : 15)

Question 3. 3. (TCO C) Three professors from Keller’s Illinois campus, Favre, Bush, and
Clinton, decide to visit XYZ Go-kart facility together in Minnesota. This decision is made

after a lengthy faculty brunch, at which unlimited alcoholic mimosas were served. XYZ
Go-kart advertises at the college’s various campuses and, in fact, the professors use their
faculty discount at the facility. At the facility signs are posted everywhere in bold: “BY
PARTICIPATING IN Go-KART RACING, YOU VOLUNTARILY ASSUME THE RISK
OF ANY DEATH OR INJURY THAT MAY RESULT. “ Additionally, the professors
hurriedly sign a contract, which states: “YOU ARE GIVING UP ALL LEGAL RIGHTS”;
“XYZ WILL NOT BE HELD LIABLE FOR ANY NEGLIGENCE RESULTING IN
YOUR INJURY OR DEATH”; and “THE PARTIES AGREE THAT ANY POSSIBLE
LEGAL ACTION WILL BE HEARD IN THE STATE OF MINNESOTA.”
Professor Favre, who lives in Wisconsin, is sick and sweating profusely after consuming a
great deal of alcohol. He decides not to race. He suspects that he is having a minor
reaction as he is diabetic and drank more than he intended. In the Waiting Area, which is
located next to the track, he takes off his helmet. There is a sign posted that says “KEEP
YOUR RACE HELMET ON WHILE IN THE WAITING AREA!”
Clinton and Bush, who dislike each other for unknown reasons, are the only ones on the
track. They use go-carts manufactured by PrimoKarts. As they begin the race they drive
very aggressively. Unbeknownst to either party, Ritchie, XYZ’s mechanic, fed up with
low pay, did not do the usual morning inspection of the brakes and tires on either vehicle
that morning. XYZ had been contemplating firing Ritchie due to his erratic work habits.
XYZ instructed Ritchie to inspect the PrimoKarts daily as they never trusted their brake
mechanism. PrimoKarts are regularly marketed to amusement parks. Their instruction
manual states that they are not to be used for racing.
After two laps, Clinton’s brakes fail as he tries to aggressively pass Bush. He crashes into
Bush’s kart near the waiting area. The brakes on both vehicles fail to hold. A tire dislodges
at a high-rate of speed, and hits Professor Favre in the head, rendering him unconscious
and bleeding from head injuries. His helmet is lying on the ground nearby. An ambulance
is called. The medical technicians, seeing the head injuries, fail to notice the medical alert
bracelet on Professor Favre’s wrist. At the hospital, Favre dies from insulin shock and
other complications due to his diabetes while the emergency room doctor was doing a
procedure to prevent blood clots and a possible stroke from the head injury. At autopsy, it
was later learned that Professor Favre had been rendered brain dead by accident at the
XYZ Go-kart facility.
(a) What claims may Professor Favre’s widow bring against the various parties?
(b) What defenses might each party bring against the possible claims asserted by
Professor Favre’s widow?
(c) In what state should the case be brought?
(Points : 30)

Question 4. 4. (TCOs A, D, E) Anita Baker, a then-unknown jazz singer, signed a three
album recording contract with Beverly Glen Music, Inc. Beverly Glen Music was a
boutique label specializing in jazz artists. Baker’s first album for Beverly Glen was
moderately successful. The second album, unfortunately, was panned by the critics and
did not sell. Beverly Glen Music was acquired by MegaMedia, Inc. MegaMedia, in an
effort to re-vitalize Baker’s career, encouraged her to leave the smooth jazz style she was
committed to and do more commercially viable pop material. Baker rejected this request.
Furious with MegaMedia, Baker wanted to end the contract. On her own, with what
remaining personal funds she had left, she immediately went to an independent recording
studio and did sessions toward a third album without approval or consent by MegaMedia.
Using her concert band, she recorded tracks for over 30 songs. Due to the financial failure
of Baker’s second album and her recent unsuccessful concert tour, MegaMedia did not do
the final production work on Baker’s third album.
Baker then entered into a contract with Elysium Communications, Inc. She began
recording a new jazz album with Elysium in conjunction with a concert tour that they
financed and produced. At her concerts, Baker would regularly introduce the new material
that would be on her new album.
Shortly after the concert tour began, MegaMedia brings suit against Anita Baker and
Elysium Communications, Inc.
(a) What causes of action might MegaMedia bring against Baker and Elysium?
(b) What causes of action might Baker and Elysium bring against MegaMedia?
(c) What types of relief might either party seek? (Points : 30)

 

Question 5. 5. (TCOs A, B, F, H)
PART A
Paul and Thomas Franklin, brothers, are college students and web designers. While at the
University of Megalopolis, a private, for-profit college in the “Quad State” area, they
started an online chat service called FaceLinked. Paul attended and resided at the college’s
campus in the State of Quadrahenria. Thomas, who was on probation during college for a
low level felony drug conviction, could not be a resident student and took classes at the
campus in the Commonwealth of New Guernsey campus. The chat service began by
putting information from the school’s student directory online, and offering blog, chat,
and message board features. FaceLinked was such a hit that within a year, the school
advised the brothers that they had to remove FaceLinked from the university’s server as it
was utilizing too many resources. This was not a problem as the Franklins found
advertisers, so they were able to move FaceLinked to a private server without charging
user fees. In fact, FaceLinked was earning so much revenue that the Franklin brothers
were able to pay themselves and the six friends who helped them start and operate it
salaries. The Franklin brothers are graduating from the University of Megalopolis and will
be attending separate graduate programs. Paul will attend Quadrahenria State University,
and Thomas the College of New Guernsey. As FaceLinked is so successful, the brothers
not only plan to expand it to the two new colleges that they are attending, but to as many
other colleges within the four states comprising the “Quad State” area as possible. They
even have hopes of “going national.” As part of their plan to expand to other campuses,
they expect to recruit a student from each of the new schools “to get them in.” They wish
to formalize FaceLinked by organizing it as a proper business. The brothers would like to
maintain a majority interest in the business, give about 20 percent to the six friends from
their undergraduate days who helped them run the service, and use the remaining interest
in the business to attract other investors and use employee incentives.
They seek your advice on (a) the form of business they should use, (b) who might have a

claim on the business, and (c) how they might protect themselves from claims regarding a
computerized internet platform?
PART B
FaceLinked has been a phenomenal success for over ten years. They are now a worldwide
social networking phenomenon. Over the years and the various incarnations of the
business enterprise, they are now a corporation with just under 100 shareholders. In
anticipation of a public offering, they have just completed a private stock offering and
allowed several of the initial equity owners to exercise stock options. The Franklin
brothers each exercised options to purchase 10,000 shares for $5 a share. Also in
anticipation of the public offering, pursuant to the early intervention drug plea he made
while in college, Thomas Franklin had his conviction expunged. In addition, FaceLinked
sold $10 million in two year advertising contracts, which would allow the clients to back
out for a 90 percent refund. These unusual contracts increased their current revenue by
15%. As FaceLinked is such a phenomenon, the hype regarding the public offering has
been enormous. Even college students are attempting to buy the stock. Days before the
public offering, the following occurred: (a) a broker at their underwriter, Silversmith &
Baggs, showed a pension fund director a draft version of the prospectus; (b) Paul sold
1000 shares of the stock that he purchased through the stock option plan for $45 a share,
telling the private investor that the issue price for the public offering would be at least $60
a share; and (c) several of the people who bought stock in the private offering sold it at a
nice profit. The initial public stock offering had many problems. The NASDAQ computer
system, which was implemented pursuant to a recent regulation change by the Securities
And Exchange Commission (SEC), could not keep up with the demand. The system could
not accurately report the price, and many day traders, including Big Profit Hedge Fund,
lost money. Big Profit had formally filed its opposition to the SEC’s regulation when it
was proposed. After the public offering was completed, FaceLinked stock stabilized at
$40 a share, well below the initial offering price of $70 a share. In light of the fiasco of
the public offering and the bad press that it generated, users began to drop FaceLinked in
favor of a new, upstart rival service offered by TronCom. Fearful that the new advertisers
would back out of their contracts, the Franklin brothers sold a great deal of their stock.
What issues does FaceLinked, its officers, and stockholders face under (a) state securities
law, (b) the Securities Act of 1933, and (c) the Securities and Exchange Act of 1934?
(Points : 60)

 

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