BUSINESS LAW ASSIGNMENT

This is a take-home test. You are free to use any resource that you would like in order to complete it. Because of this, I will necessarily be much stricter with my grading, so you should be as thorough and detailed with your answers as is reasonably necessary.

I am sending you a Word copy of this exam, so I am not going to try to leave sufficient space between questions for your answers. You should feel free to insert space as needed for your answers.

Short answer or fill-in-the-blank.

1. During class we showed a video segment featuring John Paul DeJoria, an entrepreneur who founded two billion-dollar companies. What are the names of those two companies and what products and/or services do they produce? (careful - he has been involved in many other smaller businesses as well).

2. Who are the primary two owners of the business profiled in the narrative that appears at the end of most chapters in our textbook? What is their educational background? Where was each of them working prior to forming this new corporation?

3. What is the name of the business profiled in the narrative that appears at the end of most chapters in our textbook? What product are they going to produce?

4. There were realistically only two viable choices for structuring their business - either a standard C corporation or a limited liability company. Which one did they select, and what was a principal reason why this was done? (hint - they were going to require venture capital investments)

5. What document is filed with a state official (often called a Secretary of State) in order to form a corporation?

6. What document is created by a corporation in order to provide the rules that establish a framework for its internal operation and management?

7. The legal theory under which creditors may go after the personal assets of stockholders on the theory that the limited liability of the corporation should be disregarded because the owners have failed to keep their business and personal affairs separate is known as __________________.

8. Please explain the purpose of the business judgment rule.

9. Please explain what is necessary in order for those who made an unsuccessful business decision to be protected from personal liability under the business judgment rule. In other words, what two things must be true?

10. Please explain the meaning of the doctrine of employment at will. Does this doctrine provide more advantages for the business or for its workers?

11. What are three categories or types of exceptions to the doctrine of employment at will that we discussed in class? (Warning: DO NOT cite the "implied covenant of good faith and fair dealing discussed in the textbook. We did not discuss this in class because California is one of the few states where that exception is frequently utilized. Kentucky and many other states do not recognize this exception).

12. Under present Kentucky law, an employee handbook does not constitute a contract guaranteeing certain employment rights as long as there is a disclaimer present that cautions employees that the relationship remains one of employment at will. But please explain why a prudent Kentucky business should still act in accordance with the provisions of its employment handbook when it comes to terminating employees.

13. Please list the five protected categories under Title VII of the Civil Rights Act of 1964.

14. In class we watched a portion of the movie Philadelphia. The employer contended that it fired the character played by Tom Hanks because of a serious error that nearly resulted in losing a large case and because he has an attitude problem. But what does Tom's character believe is the true reason for his discharge?

15. Is a person who quit his or her job ordinarily entitled to receive unemployment compensation benefits? Why or why not?

16. What are the two categories of sexual harassment claims?

17. Please explain the difference between angel investors and venture capitalists.

18. What are the two primary securities laws? Which one governs issues the first time they are traded upon a public stock exchange, and which one governs them for all periods thereafter?

19. What is "crowdfunding?" What is the name of the 2012 law designed to facilitate use of crowdfunding by small businesses?

Essay. Please answer the questions indicated.

20. Survival expert and former British special forces soldier Bear Grylls, age 42, the star of the show Man vs. Wild, forms a company designed to teach wilderness survival skills to laypeople. Impressed by their skills at living for so long on a deserted tropical isle despite packing for a mere three-hour tour, Bear hires Gilligan and the Skipper to serve as his lead instructors. Both are white men who are now over 40 years old. One year after being employed, both are fired by Bear and replaced by Ginger and Mary Ann, white females also now over age 40. No disciplinary action of any type had been taken against them, so both allege unlawful discrimination. However, Bear contends that he fired them because of poor performance. He says that Skipper failed to properly supervise Gilligan, and that Gilligan got people lost and in dangerous situations on numerous occasions due to his constant carelessness, requiring Bear to have to come rescue the groups. Bear testifies that as the youngest-ever Chief Scout of the British scouting organization, he models his life upon the organization's ideals of honesty and integrity and would never fire someone for an unlawful reason, though he admitted that he had been too busy to provide written employee reviews. In opposition, the Professor was hired as an expert witness by the Skipper and Gilligan. He testified that they had significantly increased company revenues and that Bear actually fired them to hire less expensive employees.

Please analyze his claim in light of the three steps in the McDonnell-Douglas burden-shifting analysis. Your answer will obviously need to explain what is required by each of the three steps and how these facts fit into that pattern. Better answers will address the pros and cons of each side's case. Hint: it is perfectly legal to fire highly-paid workers in order to replace them with less expensive workers, as long as you aren't really using such alleged cost savings as a way to disguise the fact that you are actually discriminating on the basis of impermissible factors like age).

Text Book: The Entrepreneur's Guide to Business Law by CONSTANCE E. BAGLEY and CRAIG E. DAUCHY, FOURTH EDITION.