Legal Issues and Challenges for Cardware Inc. - A Discussion

Meet the Cardigans

The Cardigan family has made a name for themselves in the sweater industry by designing sweaters for a variety of uses and for a wide target audience ranging from toddlers to business professionals. Cassandra, whom everyone calls Candie, is the CEO of Cardware Inc., Camoni is the spokesperson for the sweater line, and Candie models the lines in the professional sphere. They often use their mother, Camille, as a business consultant for input about various new ideas and marketing because she was the manager of her son’s glove company. Cora and Caley, Camille’s two youngest daughters from her second failed marriage to Bo Jenkins, are co-office managers of their headquarters located in Silkadonia.

The Cardigans are an equal opportunity employer. Gabbie has been hired to answer phones for Cardware between the hours of eight and noon daily with a 1-hour lunch break followed by reception work from the time of hire, Gabbie was informed of the hours and the importance of being available to answer calls promptly. Additionally, she was told that there is a high volume of calls in Cardware. As such, it is essential that Gabbie make sure that if she is ill or has a vacation day, she give Cardware reasonable notice so that a suitable substitute could help answer the telephone and take messages. One Monday morning, Gabbie announced that she was now a member of the New Freedom Ocean Peace Church. Further, that she would need to have an hour off twice a week to observe her new found religious practices of going to the beach and meditating and praying.

She also indicated on the day of her announcement that she is very excited and will be observing her first religious requirement that day. Cora reminds Gabbie of the terms of Gabbie’s employment and tells her that Cardware will not be able to provide accommodation for Gabbie’s religious activity. Discuss whether or not Cardware is obligated under the First Amendment to provide reasonable accommodation or not. Be sure to provide an engaging and substantive response indicating your understanding of her constitutional right to the free exercise of her religion. Do you agree? Why or why not?

Justify your answer using information from your Reading in Chapter 1. In your response, be sure to:

1. Discuss the establishment clause.
2. Discuss how employers must reasonably accommodate employees’ religious beliefs.

As you know, Cardware likes to delve into clothing styles for a wide target audience. Recently, it came up with a name for its slogan which Cardware has placed on the right front of its jersey sweaters. It also has a boomerang symbol with the words, “Just Use It.” underneath it. The well-known athletic clothing manufacturer Nike® found out about the Cardigans use of a slogan they claim is similar to their own and now want to bring a lawsuit against Cardware Inc. Discuss whether or not Nike has a case. Be sure to discuss the principals associated with trademark infringement and give your opinion whether or not you think the two slogans are confusingly similar or not.

Slogans and Trade Dress Infringement

HINT: Place phrase words such as “Famous Legal Trade Dress” and “Slogan Infringement”

The Cardigans through Cardware have introduced a new “Let’s Keep Warm” matching clothing line for toddlers and children up to age six and their dolls. The clothing line is unique as the sweaters have charms on them that are suitable for a variety of occasions. For example, there are Valentine’s Day sweaters with various hearts attached to the pockets. Included in this newest production are matching clothes for dolls that have the exact small charms and buttons that the toddler/children line has on them. Kendra, a 4-year old was given a sweater for her and her doll for her birthday. One of the charms, a birthday cake, fell off of one of the pockets of Kendra’s doll’s sweater, as the stitching did not secure the charm in place. Kendra picked it up and put it in her mouth to show her doll that the cake was delicious. Unfortunately, she began to swallow the charm. Luckily, her mother was walking by Kendra’s room where she was playing and saw the toddler choking. She was able to retrieve the small item from her airway. Kendra, however, is now devastated and not only has a cut in her esophagus from the charm but is distraught and is having nightmares over her or her doll wearing their matching sweaters.

Please look at the following website of the Consumer Product Safety Commission.

Consumer Product Safety Commission.

Would you report the incident to the Consumer Product Safety Commission? Explain.

Discuss whether you would sue the manufacturer/Cardware based on negligence or strict liability.

Identify potential manufacturer defenses. Explain.

Something to Think About: Should there have been a warning placed on the sweater or packaging?

Be sure to respond to the following checklist items:

Discuss whether or not strict liability and/or negligence would apply to the scenario.

Examine the doctrine you would utilize in a lawsuit against Cardware.

Discuss the various defenses available under the chosen tort.

If you state the law in your response, be sure to cite your source of information.

Elizabeth, a newly trained model tried to get a modeling position with Cardware, however, Candi thought that Elizabeth did not have enough experience on the runway and did not want to take a risk that she might not model Cardware’s clothing in a professional enough manner. Elizabeth was so angry when she was told that she did not get the position that she rushed home and immediately went to her Facebook page. She posted the following on her timeline: “Cardware uses cat gut to sew its sweaters and skirts together and there is mold inside of the clothing that does not sell! Repost if you are in protest of abusing animals to make a profit!” Within hours, sales at Cardware dropped, as Elizabeth’s 540 friends reposted Elizabeth’s post. Discuss what type of cause of action Cardware may be able to bring against Elizabeth. Also, can Cardware add CHEAPO who is Elizabeth’s Internet Service Provider to the lawsuit?

Product Liability and Negligence

Candi Cardigan, Cardware’s top model, requested Larry Viveron, a well-known clothes designer and friend to give his opinion on a picture of a navy-blue holiday show dress that she wanted to wear at the annual charity luncheon. Larry has designed several pieces for the Cardigans in the past. Larry was ecstatic and began designing a one-of-a-kind extravagant evening gown. The day before the holiday show, Larry had the beautiful sparkly dress delivered to Candi along with a bill for $9,800 Candi refused to pay Larry contending there was no offer. Discuss whether or not Candi made an offer to Larry to design the holiday gown.

Bo Jenkins, (Camille’s second ex-husband) and Camille have a sporting accessories store together. Camille bought Bo’s share of the store but continues to rent to him so that business can be conducted as usual. One of the biggest customer draws to the store is Bo, as he was a world famous international triathlon runner whose name has been endorsed by a multitude of sporting goods manufacturers. Bo has decided he and Rana, a former friend of Camille’s will be entering into European ventures together. As such, Bo has orally assigned his lease to Rana’s daughter Fauna. Bo has given Camille oral notice of the assignment. Fauna was a model and knows fashion and has sold items that would look great with some of the accessories in the store. Camille objects to the assignment claiming that the store is a specialty store and personal in nature and therefore cannot be assigned.

Please respond using the information from your Reading and be sure to do the following:

1. Discuss whether or not the assignment is valid.
2. Analyze whether or not the rights can be assigned or if they are prohibited under the basic rules of assignments.

Candie, Cardware’s model, advertised a one-of-a-kind black and white llama sweater that had an iPod slot on the inside left panel. The ad was placed online and read as follows:

One-of-a-kind black and white llama sweater as modeled by Candie Cardware. Worn only once in Barcelona’s Fashionista Extravaganza Fashion Show.

Includes iPod. $450. Free shipping. Contact me if interested at CCmodeling.com.

For some reason, the word “slot” that was to follow the word iPod and was cut off of the ad. Delilah saw the ad and thought, “Wow what a bargain! A one-of-a-kind Candie Cardware sweater and an iPod for $450 is something that cannot be beat.” Delilah immediately emailed her reply to Candie as follows: “What a great buy! I’ll take it. Please make sure the iPod is securely wrapped. Let’s meet so I can give you the amount of purchase in cash.” [Signed Delilah] Candie replied to Delilah, “I’m sorry there is no iPod with the sweater. It was supposed to be iPod slot.” [Signed Candie]

Online Defamation and Internet Service Provider Liability

Research whether or not there was a contract and

1. Discuss the UETA provisions concerning the meaning and records of signatures.
2. Discuss whether the above facts place the issue within the jurisdiction of the UETA.

Agency Relationships — Liability of Principals and Independent Contractors

Cora and Caley, Cardware’s co-office managers have determined that Cardware Inc. is growing so rapidly that they need to hire a part-time advertising manager to market Cardware’s latest business, “Designer Car Seat Covers.” Camille has recommended Nicole Marriott to fill the position. Nicole has freelanced with several big agencies and brings with her a wealth of knowledge, integrated advertising software, and a host of media contacts to further the interests of Cardware. Cardware provides Nicole with an office and use of its telephones and equipment, such as copy machine, fax machine, and computer, although Nicole may use her own computer if she wishes.

While visiting with Z-1, a leading car manufacturer, in an attempt to secure its business, Nicole recognized a former colleague Raquel Dean whom she knew to be sly with business tactics in stealing ideas. Raquel walked by Nicole and accidentally bumped into her causing Nicole to drop a pile of papers with diagrams and profit graphs from Designer Car Seat Covers. Nicole, thinking that Raquel was trying to take her ideas, doubled up her fist and punched Raquel in the face knocking out her two front teeth and bruising her left eye. Raquel filed suit against Cardware based on battery.

1. Whether or not Nicole is an independent contractor.
2. Discuss whether or not Cardware Inc. would be liable for Nicole’s torts/criminal acts if she is considered to be an independent contractor. Be sure to note the difference in outcome if she is determined to be an employee.

Ron Cardigan, son of Camille and Ray (Camille’s first husband) has met with Camille and Candie to form a limited liability company designed to be a place where young future clothing designers can work as part of an internship before entering fashion design school. Ron contributes 40% of the capital, and Camille and Candie each contribute 30%. Because it was Ron’s idea, he assumes he will receive more of the profits than Camille and Candie. Further, his contribution was greater than each of theirs. Camille and Candie feel they should all split the profits equally, as everyone has a unique talent that is being brought forth to run the new business. A dispute over the profits arises, and ultimately a court has to decide the issue.

1. What law will the court apply?
2. In most states, what will result?
3. How could this dispute have been avoided in the first place? Assess fully.

Justify your answer using information from your Reading and be sure to:

1. Assess the laws that govern the limited liability companies [Uniform Limited Liability Company Act (ULLCA)].
2. Evaluate how these laws frame our scenario and how a court would rule.
3. Conclude how Ron, Camille, and Candie could have avoided the dispute by creating an operating agreement and integrating operating procedures into a written agreement.

Cardware Inc. plans to take over First Class Purses & Accessories (FCPA) in an effort to coordinate elegant Cardware professional attire with items from FCPA that will complement Cardware’s fashion designs. Darla, owner of Darla’s Dummies, a mannequin manufacturer whom Cardware had used on numerous occasions happened to be delivering mannequins to Cardware’s principal place of business in Silkadonia. As she was bringing the last of the dummies down the hall to the room where the dummies are dressed, she paused to listen to a conversation coming from one of the open doors of the hallway she was using. Realizing that a profit could be made from FCPA’s stock, Darla called her broker and indicated that she wanted to purchase 50 % of the outstanding stock that was available for FCPA. Darla bought 2,000 shares of stock at $30 a share.

Cardware offered $50 a share and ultimately ended up paying $65 per share for FCPA stock. Darla was no dummy, as she made a $70,000 profit on her stock purchase.

The Securities and Exchange Commission (SEC) filed a suit in a federal district court against Darla and others for alleged violations of, among other things, SEC Rule 10b-5. [SEC v. Falbo 14 F.Supp.2d 508 (S.D.N.Y. 1998)]

Discuss the following, justifying your response using information from your Reading

1. Under what theory might Darla be liable?
2. Do the circumstances of this case meet all of the requirements for liability under that theory? Explain.
3. Examine the SEC Rule 10b-5.
4. Discuss whether or not Darla was liable under the misappropriation theory.