Assignment

1. Woody worked at the local country club pool as a lifeguard, not a swim teacher, for the summer of 2013. Woody was a public school physical education teacher. The country club did not do a background check or confirm any references when they hired him. They relied on the "say-so" of Woody'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 he had a valid teaching certificate. When one of the swim instructors unexpectedly quit one day, he took over the class. Initially, the class went well. Eventually, Woody also took over coaching the club's competitive swim team. When he became the swimming coach, Woody effectively stopped "teaching" the swim classes. Instead, he had all the swimmers in the classes do races and train for competitive meets during the 30 minute lessons. Woody had done this many times during the summer. His boss, the country club director, knew this and, as the swim team was winning, ignored complaints from parents and students. Woody raced with the swimmers and pushed the winners out of the way when they tried to touch the side of the pool so that Woody's team would win each time. This was not the first time that Woody had injured swimmers. Last year, he was arrested for physically abusing a child he coached at his school. Although the criminal charges were dropped, Woody is on administrative leave from his 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 his 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 Woody while in swim class for not "working hard enough!" The children had bruises on their shoulders. In addition, Woody began "kidding" an 18 year old black college student who worked as a lifeguard and assisted Woody with the coaching. Over time, Woody's "jokes" toward the young man became very aggressive. Woody continued even though the young man asked him to stop. In fact, after the young man told Woody to stop as he felt harassed, Woody hired another lifeguard to assist him 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, Woody, and the country club director. The young lifeguard has also brought suit. The local country club pool alleges that they are not liable. Discuss the ethical, liability, and agency issues presented by this matter, and all defenses available to the local country club pool.

2. In the 1930s, after immigrating to the U.S. from a region in central Europe threatened by the onset of World War II, Luigi and Maria Spongee opened a bakery in Chicago. They specialized in snack cakes. Spongee 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 Spongee 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 Spongee business. The company, Herbal Snacks, began advertising that their products only used natural ingredients. They even began running a commercial in which a mother and child compared their Herbal Snacks with a lampooned product named "Cup Cake Spungies," stating that it tasted like poison and dog food! Very-Large-Tom, 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 Spongee Cup Cakes sales suffered. As a result, Spongee began a more aggressive shelf space and display marketing campaign to combat Herbal Snacks's television advertising. Spongee'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, Herbal Snacks offered a deep discount to TargetMart, a Southwest and West Coast discount chain, in exchange for an agreement to exclusively sell only their snack foods.

In reality, Spongee Cup Cakes used only FDA approved ingredients and preservatives and were made in American plants that always passed inspections. In contrast, although Herbal Snacks's pilot plant was in Montana, it had subcontracted the bulk of its production to a plant in Canada. As a result, to maintain a level of quality, Herbal Snacks used the maximum amount of preservatives allowed under Canadian law 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 Canada. Several people who ate these Herbal Snacks required emergency room visits. A child in Idaho, 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 Canadian-made product were dangerous to her.

The Spongee family seeks your advice and opinion regarding:

(1) Herbal Snacks's advertising campaign.
(2) The marketing and distribution campaigns both companies have engaged in.
(3) The liability issues Herbal Snacks faces regarding their use of food manufactured outside of the United States.

3. John and Janet Fonda, siblings and actors, decide to retire after years on the road. They remember a town in New Jersey 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 Fondas 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 Fondas plan on traveling to New Jersey 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 Fondas that she will handle everything. New Jersey 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 Fondas. On their behalf, she only has a minimal title search and minimal inspections 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 Fondas learn of the old chemical plant. They seek your advice as to their liability and the liability of any other parties.