BUS 416 Business Administrative Law

1-Instructions

Respond to the Discussion Question posted by your instructor (by Thursday) and respond to at least two peer’s posts (by Sunday).

Facts

Pauline McKee, an 87-year-old grandmother, was attending a family reunion at the Isle Casino Hotel Waterloo, a combination hotel and casino. One evening she and several members of her family gambled at the casino. McKee was playing a penny slot machine called Miss Kitty. A person wins at the Miss Kitty game by lining up different combinations of symbols from left to right on the slot machine screen. The game includes a button entitled Touch Game Rules in the lower left-hand corner of the screen. Tapping this button displays the rules that govern the game and a chart describing potential winning combinations of symbols. These rules do not mention any additional bonus, jackpot, or prize available to a person playing the Miss Kitty game. The rules state MALFUNCTION VOIDS ALL PAYS AND PLAYS. A sign posted on the front of the machine reiterates MALFUNCTION VOIDS ALL PAYS AND PLAYS. McKee did not read the rules before she played the slot machine.

While playing the game, McKee won $1.85 based on how the symbols had lined up on the slot machine screen. However, at the same time a message appeared on the screen stating Bonus Award $41797550.16. The casino paid McKee $1.85 but refused to pay the alleged bonus, claiming it was an error and not part of the game. McKee sued the casino in district court to recover $41,797,550.16. The casino introduced evidence that the appearance of the bonus on the screen was an error in the computer system of the game. The casino made a motion for summary judgment, which was opposed by McKee. The district court held that the rules of the Miss Kitty game were an express contract between McKee and the casino. The court granted summary judgment to the casino. McKee appealed.

Issue
Was there a contract between the parties that provided for the payment of a bonus when playing the Miss Kitty slot machine?

Language of the Court
Gambling contracts are governed by traditional contract principles. We agree with the district court that the Miss Kitty rules of the game are the relevant contract here and that they form an express contract. Further, it is undisputed the rules of the Miss Kitty game did not provide for any kind of bonus. Hence, in our view, McKee had no contractual right to a bonus. Nor is it relevant that McKee failed to read the rules of the game before playing it. It is sufficient that those rules were readily accessible to her and she had an opportunity to read them. On the play in question, the alignment of the reels entitled McKee to a prize of $1.85, and the casino paid it to her, fulfilling its side of the contract.

Decision
The Supreme Court of Iowa affirmed the district courts grant of summary judgment in favor of the casino.

Critical Legal Thinking Questions

Do you believe that this case was decided correctly?

How many people do you think read the rules of slot machine games before playing the games?

Additional Discussion point: Do you read the instructions or rules for games of chance, video games, or software that you purchase to use?

2-Instructions

Complete the assignment posted by your instructor.

Facts
Mark Zuckerberg, Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra were schoolmates at Harvard University. The Winklevoss twins, along with Narendra, started a company called ConnectU. They alleged that Zuckerberg stole their idea and created Facebook, and they filed a lawsuit against Facebook and Zuckerberg. The court ordered the parties to mediate their dispute. After a day of negotiations, the parties signed a handwritten, one-and-one-third-page Term Sheet & Settlement Agreement. In the agreement, the Winklevosses agreed to give up their claims in exchange for cash and Facebook stock. The Winklevosses were to receive $20 million in cash and $45 million in Facebook stock, valued at $36 per share.

The parties stipulated that the settlement agreement was confidential and binding and may be submitted into evidence to enforce it. The agreement granted all parties mutual releases. The agreement stated that the Winklevosses represented and warranted that they have no further right to assert against Facebook and have no further claims against Facebook and its related parties. Facebook became an extremely successful social networking site, with its value exceeding over $30 billion at the time the next legal dispute arose.

Subsequently, in a lawsuit, the Winklevosses brought claims against Facebook and Zuckerberg, alleging that Facebook and Zuckerberg had engaged in fraud at the time of forming the settlement agreement. The Winklevosses alleged that Facebook and Zuckerberg had misled them into believing that Facebook shares were worth $36 per share at the time of settlement, when in fact an internal Facebook document valued the stock at $8.88 per share for tax code purposes. The Winklevosses sought to rescind the settlement agreement. The U.S. district court enforced the settlement agreement. The Winklevosses appealed.

Issue
Is the settlement agreement enforceable?

Language of the Court
The Winklevosses are sophisticated parties who were locked in a contentious struggle over ownership rights in one of the worlds fastest-growing companies. They brought half-a-dozen lawyers to the mediation. When adversaries in a roughly equivalent bargaining position and with ready access to counsel sign an agreement to establish a general peace, we enforce the clear terms of the agreement.

There are also very important policies that favor giving effect to agreements that put an end to the expensive and disruptive process of litigation. For whatever reason, the Winklevosses now want to back out. Like the district court, we see no basis for allowing them to do so. At some point, litigation must come to an end. That point has now been reached.

Decision
The U.S. court of appeals upheld the decision of the U.S. district court that enforced the settlement agreement.

Critical Legal Thinking Questions

Should the Winklevosses have had their claims of fraud decided by the court?

Did anyone act unethically in this case?

What are the reasons you do or do not read these documents?

3-Instructions

Respond to the Discussion Question posted by your instructor (by Thursday) and respond to at least two peer’s posts (by Sunday).

Facts
John Reaves is the sole owner and president of a small business called Speedsportz, LLC, which is in the business of refurbishing exotic automobiles. Reaves had been in this business for about 30 years when he met Angela Lieben. Shortly after meeting, they started dating and Lieben moved in with Reaves, who hired her as his companys office manager and bookkeeper. Liebens duties included paying bills, reconciling bank statements, and entering information in the companys accounting software. Several years later, Reaves ended their relationship and terminated Liebens employment. Reaves then discovered irregularities in the companys bank statements, checks that were written by unauthorized and forged signatures, cash that was missing, and unauthorized ATM withdrawals. Evidence showed that Lieben had previously been convicted of forgery. Lieben subsequently filed for personal bankruptcy. Speedsportz and Reaves filed documents with the bankruptcy court, alleging that Liebens debt from her defalcations was not dischargeable in bankruptcy because they had been committed by fraud or embezzlement.

Issue
Did debtor Liebens defalcations result from fraud or embezzlement and were therefore not dischargeable in bankruptcy?

Language of the Court
Dear Thief, she wrote in her diary, Im writing this letter to understand you better and ask why youre such a dominant archetype in my life. Debtor Angela Lieben says this was just part of a fictional short story she was writing. Plaintiff John Reaves claims this letter was evidence that his former bookkeeper stole money from him. Entries in Liebens diaries and personal emails implicate her in this type of conduct against Reaves. The court finds that Lieben is liable to Speedsportz for the unauthorized transactions and concludes that these debts are nondischargeable because she committed fraud and embezzlement.

Decision
The U.S. bankruptcy court held that Lieben had committed fraud and embezzlement and was liable to Speedsportz for $49,232. The bankruptcy court ruled that this amount owed to Speedsportz could not be discharged in Liebens bankruptcy.

Critical Legal Thinking Questions

1. Did Lieben act ethically in this case?
2. Could Reaves have prevented the fraud and embezzlement by keeping better track of his companys financial affairs?
3. As an additional question for this posting: Entering into a relationship is challenging at times. Will this case encourage you to look into a potential partner’s background closer? And if you found some wrong doing, would this change your mind about moving forward with a personal relationship?

4-Instructions

Complete the assignment posted by your instructor.

Facts
Constance Barr was the sole owner of The Stone Scone, a business operated as a sole proprietorship. Based on documents signed by Barr on behalf of The Stone Scone, Fleet Bank approved a $100,000 unsecured small business line of credit for The Stone Scone. Fleet Bank sent a letter addressed to Barr and The Stone Scone, which stated, Dear Constance H Barr: Congratulations! Your company has been approved for a $100000 Small Business Credit Express Line of Credit. The bank sent account statements addressed to both The Stone Scone and Barr. For four years, Fleet Bank provided funds to The Stone Scone. After that time, however, The Stone Scone did not make any further payments on the loan, leaving $91,444 unpaid principal. Bank of America, N.A., which had acquired Fleet Bank, sued The Stone Scone and Barr to recover the unpaid principal and interest. Barr stipulated to a judgment against The Stone Scone, which she had converted to a limited liability company, but denied personal responsibility for the unpaid debt. The trial court found Barr personally liable for the debt. Barr appealed.

Issue
Is Barr, the sole owner of The Stone Scone, personally liable for the unpaid debt?

Language of the Court
The trial record contains sufficient evidence that Barr is personally liable for the debt owed to Bank of America. The evidence demonstrates that, at the time Barr acted on The Stone Scones behalf to procure the small business line of credit, she was the owner of The Stone Scone and the sole proprietor of that business. An individual doing business as a sole proprietor, even when business is done under a different name, remains personally liable for all of the obligations of the sole proprietorship. As the sole proprietor of The Stone Scone when that sole proprietorship entered into the agreement for a line of credit with Fleet Bank, Barr became personally liable for the debts incurred on that line of credit account.

Decision
The supreme judicial court affirmed the trial courts judgment that held Barr personally liable, as the sole proprietor of The Stone Scone, for the sole proprietorships unpaid debt owed to Bank of America.

Critical Legal Thinking Questions

Why are sole proprietors personally liable for the debts of their business?

Did Barr act ethically in denying responsibility for The Stone Scones debts?

WRITE MY PAPER