CH35: The Agency Relationship

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3. Julianne Eisenberg was hired by Advance Relocation & Storage, a Danbury, Connecticut, warehouse. When she was hired, Advance did not inquire into any special skills that Eisenberg may have had, and it did not ask about her prior work experiences. Eisenberg and her coworkers were responsible for loading and unloading furniture from trucks at the Advance warehouse and customers' residences. They were paid on an hourly basis and were required to punch in and out. Eisenberg and her coworkers were occasionally sent home early if there was little to do, and they were sometimes asked to work on the weekend. At the warehouse, Advance gave Eisenberg orders, telling her where to go and what to do. At job sites, an Advance representative told the crew what objects each crew member, including Eisenberg, was to move. Eisenberg claimed that when she worked at Advance, she was sexually harassed and subjected to a hostile work environment, in violation of the Civil Rights Act of 1964. Advance argued that she was not an employee under the act, and therefore, she could not invoke its protections. Was Eisenberg an Advance employee? 4. Merrill Lynch, the investment firm, hired Elliot Jarvin as director of wealth management services. His duties included managing a team of 10 wealth managers who advised Merrill Lynch clients regarding their investment portfolios. When Jarvin joined Merrill Lynch, he brought with him 15 very wealthy clients to whom he provided investment services on behalf of Merrill Lynch. Unknown to Merrill Lynch, Jarvin had five additional clients, the five wealthiest of his clients. Jarvin continued to advise these clients on his own, retaining for himself all fees he charged for services provided to the five clients. In addition, to help him service the five personal clients, two members of his Merrill Lynch wealth management team frequently met with Jarvin's five personal clients to create investments plans for them. Has Jarvin breached a fiduciary duty owed to Merrill Lynch? 5. Catherine Creteau and her husband contracted with a travel agency, Liberty Travel, to arrange a trip to Jamaica. While staying in Jamaica in accommodations arranged by Liberty Travel, they were robbed at gunpoint. The Creteaus alleged that Liberty Travel either knew of safety issues with the accommodations or such information was available to Liberty Travel. What duty did the Creteaus allege their agent had breached? 6. When Perry Olsen died, his children placed his ranch in Vail, Colorado, up for sale. Perry's children retained Vail Associates Real Estate, a real estate broker, to sell the land for them. Vail Associates introduced the children to Magnus Lindholm, who wanted to buy Perry's ranch along with adjacent land owned by Perry's children. The children eventually decided to sell only Perry's ranch and not the children's land. Their asking price for Perry's ranch was $400 per acre. Before committing to buying Perry's ranch (because he needed more land), Lindholm asked Vail Associates to introduce him to Del Rickstrew, whose land also abutted Perry's ranch. Rickstrew refused to negotiate the sale through a real estate agent, so Lindholm negotiated directly with Rickstrew. Vail Associates did, however, introduce Rickstrew to Lindholm and provide a model contract to Lindholm. A month later, Lindholm agreed to buy Rickstrew's land for $6,000 per acre, subject to his buying Perry's ranch also. Vail Associates was not aware that Lindholm and Rickstrew had a contract or that the price was $6,000 per acre. Tvpage 35-19 months later, with Vail Associates's assistance, the children sold Perry's ranch to Lindholm for $400 per acre. Vail Associates received a commission from the sale. When the children discovered later that Rickstrew received 15 times as much for his acreage as did they for Perry's ranch, they sued Vail Associates for failing to disclose material information-that is, that Lindholm was negotiating with Rickstrew. Did Vail Associates breach a fiduciary duty? 7 . When Nitrogen Media was acquired by General Electric's NBC Universal unit, Nitrogen's vice president of finance, Babs Grogan, was terminated as a Nitrogen employee but hired by NBCU as an outside consultant. The term of Grogan's contract was three months, and her engagement with NBCU required her to assess business opportunities presented to NBCU, such as the financial value of newly created television shows. Grogan represented to NBCU that she had an MBA degree in finance and six years of experience in financial analysis. In fact, Grogan had falsified her academic record and possessed only an undergraduate degree in political science. In addition, she had no experience as a financial analyst, having delegated such work to coworkers for the past six years, although she took credit for their work. When NBCU asked Grogan to value the new TV show Car Shop, she delegated the task in part to a new MBA graduate, Roger Harvey, who was recently hired by NBCU and had virtually no on-the-job experience. As a result, Grogan and Harvey failed to perform a reasonable investigation into the facts regarding the TV show's value and to use appropriate valuations tools. Did Grogan and Harvey breach their fiduciary duty? 8. Mui Luu and Cu Tu Nguyen sold their Vietnamese calendar business to Con Tu. Luu and Nguyen agreed to continue to work for Con Tu for four years as managing agents of the business. During the time they were managing agents, Luu sent an e-mail to a competing calendar company that included 1,000 names and addresses, approximately 90 percent being names and addresses of Con Tu's customers. The competing business was controlled by Luu and Nguyen. Have Luu and Nguyen breached a fiduciary duty?Shelley Opp lived in California with her husband, Richard Opp, until they sought a divorce. Ten months later, Shelley contacted Soraghan Moving and Storage to move her personal property from California to Illinois. Shelley told Soraghan she wanted to insure her property for its full value of $10,000. Soraghan faxed to Shelley an \"Estimate/Order for Service\" form, which stated that Shelley intended to declare that the value of the goods shipped was $10,000. Shelley signed the form. According to Soraghan, it explained to Shelley that she or her representative must advise the mover at the time the shipment was picked up whether Shelley would like full replacement coverage of s10,000. According to Shelley, she was never informed that the person releasing her property in California would have to sign anything, declare any value for her property, or do anything other than give the movers access to her belongings. The estimate form also provided a location where Shelley could designate someone as her \"true and lawful representative,\" but she made no such designation. On the day of the move, the movers in California called Shelley in Illinois to tell her they would be late arriving at the California home due to a flat tire. Shelley then phoned Richard at his office and asked him to go to the house, open the door, and let the movers in. Shelley also told Soraghan that \"someone\" would be at the California home to give the movers access to her property. Richard met the movers at the house, and he signed the bill of lading on a line that indicated that he was Shelley's authorized agent, and he allegedly agreed to limit the carriers' liability for her property at 6o cents per pound. Richard also signed an inventory of the property that indicated that he was its \"owner or authorized agent.\" The truck carrying Shelley's belongings was struck by a train, damaging most of her property. Shelley inspected her damaged property and estimated its full replacement value to be over $10,000. Soraghan claimed that its liability was limited by the bill of lading to $2,625 because Richard had the actual and apparent authority to sign the bill of lading as Shelley's agent. What did the court rule? 7. The Work Connection (Connection) was a temporary employment agency that provided workers to customers for a fee. Doyle Olson, a sales representative for Connection, contacted Universal Forest Products (Universal). Olson spoke with Ken Von Bank, Universal's production manager, who had direct supervisory authority over temporary workers. Universal hired some of Connection's employees, including Wayne DeLage, to construct fence panels at its Shakopee plant. Olson gave to Universal work verification forms that were used as employee timecards. Universal filled out and signed the forms, which contained the worker's name, date, and hours worked. Submission of a completed, signed form was required for an employee to be paid, and Connection processed the forms through its payroll department. The work verification forms contained the following language: CUSTOMER AGREES TO THE TERMS AND CONDITIONS SET FORTH ON THE REVERSE SIDE HEREOF AND CERTIFIES THAT THE LISTED EMPLOYEES HAVE SATISFACTORILY PERFORMED SERVICES FOR THE HOURS SHOWN ABOVE. page 36-17 The back of the verification form stated the following: CONDITIONS OF UNDERTAKING: CUSTOMER agrees to indemnify, hold harmless and defend THE WORK CONNECTION against claims, damages, or penalties from any claims for bodily injury (including death), or loss of, and loss of use of, or damage to, property arising out of the use of or operation of CUSTOMER'S owned, nonowned, or leased vehicles, machinery or equipment by THE WORK CONNECTION employees. The parties never discussed the language on the back of the work verification form. The parties' oral agreement did not include a term that required Universal to provide workers' compensation insurance for Connection's employees. Nonetheless, Von Bank signed the verification forms for Universal from March 1995 through July 1995, when the office manager, Yvonne Kohout, took over signing duties. At some point, Universal ran out of original work verification forms. Kohout simply photocopied the front side of the form and, thereafter, submitted forms that were blank on the back. In August 1995, DeLage severed three of his fingers while operating a radial arm saw. DelLage received s$75,000 in workers' compensation benefits from Connection. Connection then asked Universal to indemnify it pursuant to the language on the back of the verification form. Was Universal found liable to Connection