Week 5 Questions
3. An employee was discharged for violating the company’s no-solicitation rule in its factory and offices. The employee had persisted in soliciting union membership on company property during lunch periods.
The company argued that its no-solicitation rule would have been enforced against not merely union solicitation but any solicitation. How would you decide? Why? [See: Republic Aviation Corp. v. NLRB, 324 U.S. 793 (U.S. Sup. Ct.).]
4. Having advised Exchange Parts Co. that it was conducting an organizational campaign, the union petitioned the NLRB for an election to determine whether it would be certified as the bargaining agent of the company’s employees.
During the organizational campaign, while the granted certification election was pending, the company announced five additional benefits for the employees, two of which were announced only a few days before the election. In the election, the employees Page 697voted against being represented by a union.
The union then filed a complaint with the NLRB, charging the company with an unfair labor practice because it granted benefits while the campaign was taking place and the election was pending.
The union argued that the company’s actions interfered with the freedom of choice of the employees to determine whether they wished to be represented by the union. For whom would you decide? Why? [See: NLRB v. Exchange Parts Co., 375 U.S. 405 (U.S. Sup. Ct.).]
1. Jennifer Yauger owned a loft in uptown Silverton. Robert Tomba and Gary Jorgen were partners in a mail-order business in Middletown called NASCAR Collectibles. To open an outlet in Silverton, Tomba and Jorgen leased the loft from Yauger.
As part of the agreement, Yauger received $2,650 in rent each month. Later, Tomba and Jorgen set up a website and began an online auction house for NASCAR collectibles, similar to eBay.
They were successful beyond their highest expectations, making more than $2 million in their first year of operation. When another online auction house offered Tomba and Jorgen $60 million for their site, they accepted the offer without hesitation.
When Yauger heard about the deal, she claimed that she was a partner and demanded a $20 million payment, a sum equal to a one-third share of the sale price.
When the case went to court, Yauger pointed to her monthly payments and labeled those payments a share of the profits. She argued that this payment demonstrated that she was a partner, based on proof of existence. Should the court grant Yauger partner status and give her a share of the proceeds from the sale of the business? Explain.
5.Shane ran a liquid fertilizer business. As part of the operation of the business, Shane paid Svoboda a specified amount per acre to spread the fertilizer on his clients’ crops.
Svoboda’s per acre payments remained steady, despite Shane’s profits or losses. Frisch was injured while filling a tank truck that was supposed to haul the fertilizer to Svoboda’s tractor.
Frisch sued both Shane and Svoboda, claiming that Svoboda was sharing in Shane’s profits and was therefore a partner. Was Frisch correct? Explain. [See: Frisch v. Svobada, 157 N.W.2d 774 (NE).]
6. Summers and Dooley formed a partnership for the purpose of operating a trash collection business. The business was operated by the two men, and when either was unable to work, the nonworking partner provided a replacement at his own expense.
Summers approached Dooley and requested that they hire a third worker. Dooley refused. Notwithstanding Dooley’s refusal, Summers, on his own initiative, hired a worker. Summers paid the employee out of his own pocket.
Dooley, upon discovery that a third person had been hired, objected. He stated that the additional labor was not necessary and refused to allow partnership funds to be used to pay the new employee.
After paying out more than $11,000 in wages without any reimbursement from either partnership funds or his partner, Summers brought suit in the Idaho state courts.
The trial court held that Summers was not entitled to reimbursement for the wages he had paid the employee. On appeal, did the Supreme Court of Idaho uphold the trial court’s decision? Explain. [See: Summers v. Dooley, 481 P.2d 318 (ID).]
6. Spence was a promoter in the incorporation of a new business. The new corporation had not yet been formed when he bought Huffman’s employment agency to serve as the nucleus of that corporation.
Eventually, the corporation was formed, but it never generated enough cash to pay Huffman for the employment agency. Huffman sued Spence, attempting to hold him personally liable for the amount due.
Spence claimed that the corporation was liable and that his personal assets were not a proper target of the suit. Was Spence correct? Explain. [See: Spence v. Huffman, 486 P.2d 211 (AZ).]
3. Smith, a shareholder, filed suit against the board of directors of a corporation in which he had owned stock. Smith claimed that he and other shareholders had not received top dollar for their shares when their corporation had merged with another.
Consequently, they sought either a reversal of the merger or payment from the directors to make up for their losses. The directors, Smith argued, had violated their duty of due care because they based their decision on a 20-minute speech by the CEO.
Also, the directors had not even looked at the merger documents, let alone studied them. Furthermore, the directors had not sought any independent evaluation by outside experts. For their part, the directors argued that because their decision was made in good faith and was legal, they were protected by the business judgment rule. Were the directors correct? [See: Smith v. Van-Gorkon, 488 A.2d 858 (DE).]