CALIFORNIA STATE UNIVERSITY, LOS ANGELES College of Business and Economics, Department of Finance and Law FINANCE 205 - LEGAL AND REGULATORY ENVIRONMENT OF BUSINESS I Instructor: Prof. Mark S. Simonian Spring Quarter, 2016 ______________________ CASE ANALYSIS ASSIGNMENT ______________________ INSTRUCTIONS 1. Carefully READ the case excerpt listed on the next page. 2. Next, CONSIDER the issues presented in the Court's opinion. 3. Then, RESEARCH the law relevant to these issues in your textbook and/or online, at the sites provided. 4. Finally, ANSWER the numbered Questions. (You should be able to answer all of the Questions presented in less than two typewritten pages.) You must follow ALL \"Format Requirements for Written Work,\" as specified on page 5 of the Class Syllabus. You also must label your answers - e.g., \"a.\" or \"b)\" - rather than writing one run-on essay in response to the discretely numbered Questions presented. IF YOU DO NOT FOLLOW ALL OF THESE INSTRUCTIONS, YOU WILL FAIL (i.e., RECEIVE ZERO (0) POINTS FOR) THIS ASSIGNMENT. You may receive partial credit for identifying or explaining the legal doctrines or terms of art that apply, but, because this Case Analysis Assignment is an \"open book/open notes\" assignment, your answers will be graded primarily on completeness and clarity of thought, legal analysis, and written expression. You may quote from the Beatty Business Law and the Legal Environment (Business Law 205) Text or from online sources, but you MUST ATTRIBUTE ANY MATERIAL OBTAINED FROM AN OUTSIDE SOURCE. (A simple attribution, such as ... \"As stated in the Beatty Text at page 213,\" ... or ... \"As stated in the FindLaw webpage on 'negligence',\" ... will suffice. You need not use full term-paper citation format.) ANY PAPER THAT ATTEMPTS TO PLAGARIZE OR \"PASS OFF\" ANOTHER'S WRITING (INCLUDING BY QUOTING WITHOUT ATTRIBUTION) WILL RECEIVE ZERO (0) POINTS. Per the Instructor's policy on late papers, stated in the Class Syllabus, YOUR ANSWERS ARE DUE AT THE BEGINNING OF CLASS on the Due Date posted on Moodle, unless you receive an extension from the Instructor in advance. UNEXCUSED LATE PAPERS MAY RECEIVE ZERO (0) POINTS. WARNING: Although you may work with other students to analyze the case excerpt, research materials, and questions, your answers must be written IN YOUR OWN WORDS. If any of your answers are substantially similar in wording to another student's answers (i.e., if you copy or are copied from), each student will FAIL this Assignment (i.e., receive ZERO (0) POINTS as a [205:0146/2CSU_CaseAnalysisAssignment_Rev.4_Mathias_Beatty7e] FINANCE 205 - LEGAL AND REGULATORY ENVIRONMENT OF BUSINESS I Instructor: Prof. Mark S. Simonian Case Analysis Assignment - Spring Quarter, 2016 grade). It is YOUR RESPONSIBILITY to safeguard your own written answers so that no one else copies them. RESEARCH AND WRITING PROCESS 1. READ the excerpt of Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672 (7th Cir. 2003), which is attached separately to the class Moodle site. Also READ the reference materials on judicial interpretation in your Beatty Text, as referenced below. 2. CONSIDER the following facts discussed in the 7th Circuit Court's opinion. a. Plaintiffs Burl and Desire Mathias (the \"Mathiases\") sued Defendant Accor Economy Lodging, Inc. (\"Accor\" or \"Defendant\") after they were bitten by bedbugs when they stayed at a Motel 6, owned and operated by Accor, in Downtown Chicago in November, 2000. b. Previously, in 1998, EcoLab, an extermination service that the motel used, had discovered bedbugs in several of the motel's rooms. EcoLab recommended that it be hired to spray every room in the motel, for the low fee of $500. The motel's management refused. c. In 1999, motel management again discovered bedbugs in one room, and management asked EcoLab to spray that room. Motel management tried to negotiate a free \"building sweep\" for bedbugs, but EcoLab refused. d. At trial, the motel's manager testified that she \"started noticing that there were refunds being given by my desk clerks and reports coming back from the guests that there were ticks in the rooms and bugs in the rooms that were biting.\" Also, she testified that she had looked in some of the rooms and discovered bedbugs. One guest was moved four times after being bitten by insects while asleep and discovering insects in the first three rooms. e. At trial, the motel's manager testified because of the number of incidents of guests being bitten and demanding refunds, she recommended to her district manager at Accor that the motel be closed while every room was sprayed, but Accor's management refused her recommendation. f. By July, 2000, the motel's management was acknowledging to EcoLab that the hotel had \"a major problem with bedbugs,\" desk clerks were instructed to call them \"ticks,\" and many of the hotel's rooms were placed on \"Do not rent, bugs in room\" status. g. Hotel employees knowingly had placed the Mathiases in one of these infested rooms on \"don't rent\" status, and, in fact, many of the rooms on this status were rented to guests. Guests were charged full rates for these infested rooms. h. Despite Accor's claim that its conduct, at worst, was negligence (with the Mathiases' injuries caused by neglect and oversight, rather than by [205:0416/2CSU_CaseAnalysisAssignment_Rev.4_Mathias_Beatty7e] 2 FINANCE 205 - LEGAL AND REGULATORY ENVIRONMENT OF BUSINESS I Instructor: Prof. Mark S. Simonian Case Analysis Assignment - Spring Quarter, 2016 3. deliberate conduct), based on this evidence and testimony at trial, the jury awarded each of the Mathiases only $5,000 in compensatory damages but also $186,000 in punitive damages. RESEARCH the relevant law: a. The Beatty Text (7th ed.) covers torts (civil wrongs, but not breach of contract) extensively in Chapter 8 (\"Intentional Torts and Business Torts\"), pages 205 - 227, and in the \"Negligence\" section of Chapter 9 (\"Negligence, Strict Liability, and Product Liability\"), pages 228 - 239. b. The Beatty Text (7th ed.) discusses compensatory damages for torts on pages 212 - 214 and as part of the discussion on negligence on page 236. c. The Beatty Text (7th ed.) explains punitive damages on pages 214 - 216. d. You may wish to take a more detailed look at these issues online, at one or more free online legal research sites. One free legal research site is http://www.findlaw.com, which should allow you access to a wealth of legal information, perhaps after a quick, free registration. For example, you can find current law on negligence by clicking on the \"Accidents and Injuries\" link in the \"Learn About the Law\" column running down the middle of the FindLaw homepage, which takes you to the \"Accidents and Injuries\" page (specifically, http://injury.findlaw.com). From there, click on the \"Accident & Injury Law\" link near the top center of the webpage, (taking you to http://injury.findlaw.com/accident-injury-law.html). From the \"Accident & Injury Law\" page, you can click either on the \"Negligence\" link near the center of this webpage OR on the \"Negligence\" link under the \"Accident & Injury Law\" column on the right hand side of this webpage (either one takes you to http://injury.findlaw.com/accident-injurylaw/negligence.html online). From there, you can choose a number of different articles discussing subtopics of negligence, such as a \"Negligence Overview\" (specifically at http://injury.findlaw.com/accident-injury-law/negligence-background.html) or the \"Elements of a Negligence Case\" (specifically at http://images. findlaw.com/optimost/accident-injury-law/elements-of-a-negligence-case2.html), containing a brief discussion of \"Damages,\" with a glossary link. For less obvious topics/links, a good place to start is the \"Search FindLaw\" link at the top of the home page or any of the topic webpages. This search feature can be frustrating (as it is for \"punitive damages\"), because it frequently leads to basic glossary-type definitions and not much else. However, on some pages, clicking on the definition or on one of the links below the definition will lead to a more substantive (and useful) discussion. For example, typing in \"recklessness\" as a topic in the \"Search FindLaw\" box, yields a list of links, including one for a basic \"Recklessness - Findlaw\" article (located online at http://injury.findlaw.com/accident-injury3 [205:0416/2CSU_CaseAnalysisAssignment_Rev.4_Mathias_Beatty7e] FINANCE 205 - LEGAL AND REGULATORY ENVIRONMENT OF BUSINESS I Instructor: Prof. Mark S. Simonian Case Analysis Assignment - Spring Quarter, 2016 law/recklessness.html) that provides a good discussion of recklessness torts and damages for them). 3. RESEARCH - (Continued) A second fine, wide-ranging legal library/database is the Legal Information Institute (LII), located at https://www.law.cornell.edu online. The \"Search all of LII...\" feature, in the upper right-hand corner of LII's home page, is not that helpful. So instead, click either on the \"Wex legal encyclopedia\" link in the \"Legal Resources\" section, near the center of the page, which takes you to the \"Wex\" page (at https://www.law.cornell.edu/wex online) OR on the \"More...\" listing under the drop down list from the \"LEGAL ENCYCLOPEDIA\" link at the top of that page, which takes you to the \"Wex Articles\" page (https://www.law.cornell.edu/wex/wex_artcles, (which, for clarity's sake, ends with \"wex_articles\"). If you click on \"Browse\" link near the top of the \"Wex\" webpage (first of the two choices, above), you will be taken to the comprehensive list of Wex topics/links page (at https://www.law.cornell.edu/wex/all online). From there, you may click on a letter link at the top of the page (because the topics/links are organized alphabetically). For example, by clicking on the letter \"P,\" you bring up all topics/links beginning with that letter (still online at https://www.law.cornell.edu/wex/all), including \"Punitive damages\" (scrolling way down the page). Click on the \"Punitive damages\" topic/link, taking you to a webpage (online at https://www.law.cornell.edu/wex/punitive_damages - specifically, for clarity's sake, \"punitive_damages\" online) that contains a brief definition and links to leading U.S. Supreme Court cases on the subject. If you click through to the \"Wex Articles\" page (second of the two choices, above), you will find a selected list of short Wex articles, which you may browse, depending on your interests, such as by clicking on the link for \"Negligence\" under the \"accidents & injuries (tort law)\" sub-section (taking you to https://www.law.cornell.edu/wex/negligence online). Yet another online resource, The Free Dictionary (located at http://www.thefreedictionary.com/online) defines terms such as \"punitive damages\" through the \"TheFreeDictionary\" button and the \"Search\" box (type in \"punitive damages\") at the top of its homepage (leading to http://www.thefreedictionary.com/punitive+damages). Clicking on the \"Legal Dictionary\" tab (light blue near the top of the definition page or in the left margin of the homepage) link leads to a helpful descriptive history of the development of punitive damages and a decent discussion of their merits and pitfalls (online at http://legal-dictionary.thefreedictionary.com/ punitive+damages). [205:0416/2CSU_CaseAnalysisAssignment_Rev.4_Mathias_Beatty7e] 4 FINANCE 205 - LEGAL AND REGULATORY ENVIRONMENT OF BUSINESS I Instructor: Prof. Mark S. Simonian Case Analysis Assignment - Spring Quarter, 2016 f. CAUTION: General \"Google\" or \"Bing\" or \"Yahoo!\" searches for legal terms frequently lead to advertising (\"Need a Lawyer\") or attorney's opinions or articles advocating political/legislative action. You must sort through them carefully to determine their validity, accuracy, and efficacy. PHOTOS: (1) A typical Chicago-area Motel 6 facility - (2) A typical Chicago-area Motel 6 room - (3) Typical bedbug infestations - [205:0416/2CSU_CaseAnalysisAssignment_Rev.4_Mathias_Beatty7e] 5 FINANCE 205 - LEGAL AND REGULATORY ENVIRONMENT OF BUSINESS I Instructor: Prof. Mark S. Simonian Case Analysis Assignment - Spring Quarter, 2016 3. RESEARCH - (Continued) f. PHOTOS (Continued): (4) Typical bedbug bites - [205:0416/2CSU_CaseAnalysisAssignment_Rev.4_Mathias_Beatty7e] 6 FINANCE 205 - LEGAL AND REGULATORY ENVIRONMENT OF BUSINESS I Instructor: Prof. Mark S. Simonian Case Analysis Assignment - Spring Quarter, 2016 4. ANSWER the following questions: NOTE: Generally, the model of legal analysis has three steps: 1. 2. 3. State the law. Apply the facts (to the law). Come to a conclusion. However, you should pay particular attention to the format of the questions below, each of which sets out more detailed specifications, establishing a suitable framework for your essay answer. In addition, the questions are worded disjunctively, that is, in the alternative (as most of the essay questions on your exams will be). You need to choose either the \"If so\" or the \"if not\" portion to answer those questions. [HINT: You may answer each numbered question in 1 - 2 short paragraphs.] a. (10 Points for this Question) - [205:0416/2CSU_CaseAnalysisAssignment_Rev.4_Mathias_Beatty7e] 7 FINANCE 205 - LEGAL AND REGULATORY ENVIRONMENT OF BUSINESS I Instructor: Prof. Mark S. Simonian Case Analysis Assignment - Spring Quarter, 2016 Did the appellate Court uphold the trial Court's award of compensatory damages to the Mathiases and against Accor? If so, (1) explain the purpose of compensatory damages in civil litigation; and (2) citing specific facts from the case excerpt, explain why the appellate Court upheld the award of compensatory damages to the Mathiases (i.e., why what Accor did or didn't do that caused the Mathiases damage or loss, legally entitling them to compensation). Or, if not, (1) explain the purpose of compensatory damages in civil litigation; and (2) citing specific facts from the case excerpt, explain why the appellate Court overturned the award of compensatory damages to the Mathiases (i.e., why what Accor did or didn't do either caused the Mathiases no damage or loss or why the Mathiases were not legally entitled to compensation from Accor). b. (15 Points for this Question) - Did the appellate Court uphold the trial Court's award of punitive damages to the Mathiases and against Accor? If so, (1) explain the purpose(s) of punitive damages in civil litigation; (2) set forth the legal standards for the amount of an award of punitive damages, according to the appellate Court; and (3) citing specific facts from the case excerpt, explain why the appellate Court upheld the award of punitive damages to the Mathiases. Or, if not, (1) explain the purpose(s) of punitive damages in civil litigation; (2) set forth the legal standards for the amount of an award of punitive damages, according to the appellate Court; and (3) citing specific facts from the case excerpt, explain why the appellate Court struck down the award of punitive damages to the Mathiases. [205:0416/2CSU_CaseAnalysisAssignment_Rev.4_Mathias_Beatty7e] 8