Dracca sold much of its feeding equipment line to a retailer known as Baby Boutique (BB). BB was a partnership formed between friends Beth Brown, Silvia Gray, and Valerie White. BB was behind on its payments and owed Dracca over $500,000 for delivered feeding equipment. Eventually, Dracca sued BB and obtained a judgment for $500,000 in Dracca's favor.
The board of directors for Dracca decided to seek enforcement of the judgment against Silvia Gray, acting on a tip that Ms. Gray had just inherited a large sum of money and that the other partners had no personal assets. As it turned out, Ms. Gray had sufficiently dispersed her inheritance money and did not have the funds to pay the judgment. Dracca incurred substantial attorney fees in attempting to collect its judgment from BB.
The accounting manager overseeing the BB account had been with Dracca for 20 years. His name was Martin Long, and he started with the company as a part-time bookkeeper. Long received numerous positive job evaluations over the first 15 years with the company, and he was promoted several times until he reached his current position of accounting manager five years ago. Long and his life partner, Will Short, receive medical, dental, and life insurance benefits as part of Long's employment package with Dracca.
Long reported to the Director of Accounting, Mary Smith, who recently came onboard to Dracca from another company. Smith took away a good portion of Long's responsibility and froze his pay. She was heard to say, "This company does not need to be burdened with paying for same-sex marriages." She posted Bible verses in the breakroom and had a screensaver that read, "Marriage is between a Man and a Woman." Long quit under the new working conditions.
One of Long's subordinates, Kate Katz, reported Long's treatment to the EEOC. Kate was an at-will employee who had been withDracca six years. In response to the EEOC report, Dracca fired Kate.
The sales department was charged with hiring new salespeople for its feeding equipment line to generate more retail and end-user customers. May Hernandez was the lead salesperson for the line, and was responsible for making the final hiring decisions. May interviewed thirty candidates for six positions, and hired only women with children, stating that women, as mothers, made better salespeople for the line. After this hiring session, Dracca noticed a significant decrease in male applicants.
In light of these facts, please respond to the following questions using course material and credible outside research to support your findings.
- Can Dracca seek to recover from Silvia Gray individually on the judgment for BB partnership? Why or why not? Use legal principles from the readings to support your findings.
- Using the Business Judgment Rule, did the board of directors fulfill its duty of care to shareholders in suing Silvia Gray individually for the BB judgment? Why or why not?
- Can Long sue Dracca for employment discrimination? Can Long argue constructive discharge in this instance? Use legal principles and case law from the readings to support your conclusions.
- Can Dracca fire Kate? Why or why not? Will the court consider any claims of retaliation in this instance?
- What are the legal and ethical ramifications for Dracca from Hernandez's action in hiring only women? Can it be argued that being a woman with children is a bfoq for the position? Why or why not?
- What actions (internal and external) do you recommend to Dracca to remedy the ethical and legal considerations of this scenario? Be specific and detailed, and be sure to base recommendations on relevant legal and ethical principles.