Chapter Exercise #1 tests the students understanding of chapters 1 and 2. Please answer each question by identifying the correct issue, the rule, analysis, and conclusion (i.e. Issue, Rule, Analysis, Conclusion).
Chapter Exercise #1 1. Standing. The number of food poisonings in the city of Seattle, Washington, has been on the rise ever since the city has relaxed its permitting process to make it easier for people to own and operate their own food carts. In responses to concerns about the lack of tough food and health safety standards for food carts, the Washington legislature recently passed a law requiring all food carts to be inspected twice a year rather than annually. The second inspection will be unannounced. Failure to meet 10 out of 12 health and safety codes will result in significant fines and possible closure of the cart. The codes violations will then be publicly posted on the state’s website. Paulina, a retired school teacher from Vancouver, Washington, who has a passion for cooking, has always wanted to open her own food cart. She has saved enough money to start a little food cart business. But she hasn’t bought a food cart yet and plans to do so in a year. She is very upset about the new law. She does not want to be subjected to two inspections a year when she does decide to purchase a food cart, as they will undoubtedly disrupt her potential business. She is also worried that if the inspection was to occur on a day in which she is not prepared, then she would be heavily fined. Even if the fines were not heavy, she might lose customers as a result of the violations. She is also upset that the current food cart vendors are not doing anything about this law. Paulina decides to sue the State of Washington on the ground that the new law is unconstitutional. Leaving aside the merits of her case (whether or not the law is constitutional), does Paulina have standing to bring this lawsuit before a court? 2. Personal/Cyber Jurisdiction. Paulina finally makes the move to buy a food cart. She buys a used food cart. The seller tells her everything works well except certain parts of the plumbing system need to be updated but don’t have to be replaced. She does some research on the Internet and finds an outfit called BuilderCart in Portland, Oregon that builds and repairs food carts. She calls and speaks with its owner, Joe. Paulina asks Joe to update her food cart, but Joe declines and states that he only services food cart owners in the greater Portland areas. Joe, however, directs Paulina to his website for some self-help. She goes onto BuilderCart’s website and finds step-by-step instructions to diagnose and possibly fix the plumbing issue. Paulina does as instructed by the website. After spending a few hours trying to fix the problem herself, she finally calls another outfit in Vancouver to help her. The repairperson tells Paulina that she “really messed up” the entire plumbing system and that the initial problem could have been easily fixed by simply getting a new pipe. Now Paulina has to replace the entire system. Paulina is upset at BuilderCart website for giving her bad instructions that worsen the problem. She wants to sue BuilderCart in Washington State Court for the cost of replacing the plumbing system. Can the state court in Washington exercise personal or cyber jurisdiction over BuilderCart, who is from Oregon? Discuss. 2. Federal Jurisdiction. BuilderCart from Oregon orders three S-series fabrication machines from Maky & Bros, a manufacturer company from Idaho, to make custom parts for its food carts. They sign an agreement in which Maky & Bros would deliver three S- series machines to BuilderCart for the total price of $65,000. All machines are pre-installed and ready to go upon delivery. When the shipment arrives, BuilderCart has its technician test one machine. The machine seems to be running smoothly for about 5 minutes when it suddenly jams and explodes. The explosion also causes a small fire that destroys some other equipment in the room. The two other machines have no problem. BuilderCart sues Maky & Bros. for the cost of replacing the machine ($21,000) and damages to the facility ($15,000) in U.S. District Court for the District of Oregon (federal court). Maky & Bros. moves to dismiss the claims because it argued the federal court does not have jurisdiction to over these claims. Does the U.S. District Court for the District of Oregon have federal jurisdiction over this case? Discuss. 4. Arbitration. In addition to making machines, Maky & Bros. also manufactures wooden toys for children. Maky & Bros. signs a contact with Mars & Sons Paint, Inc. to provide the former with high-quality non-toxic paints made in the USA. The contract does not contain an arbitration clause requiring both parties to submit to arbitration should a dispute arise between them. Business relationship between both parties is going well until Maky & Bros. has to recall all toys painted with the last shipment of paints from Mars & Sons. Some third parties tested the toys and found high concentration of toxins. Maky & Bros. is advised by its attorneys that it has many possible claims against Mars & Sons. After intense negotiation between the parties, they verbally agree to submit their dispute to non-binding arbitration. At the arbitration hearing, the arbitrator decides against Mars & Sons and but awards Maky & Bros. only a fraction of the amount of money it originally sought. Maky & Bros. wants to sit aside the arbitrator’s award by appealing the decision to the court. Mars & Sons argues that the arbitrator’s decision is final and cannot be appealed. Can Maky & Bros. appeal the arbitrator’s award in this case? 5. Arbitration. Just when we think Mars & Sons’s legal troubles are over, the company learns of an employee issue that may become a big problem. Maria works for Mars & Sons in its accounting department. Maria asks for and is granted maternity leave for 3 months under the Family and Medical Leave Act (FMLA). On the day that she is supposed to return to work, she calls to ask about her schedule. She is told by the accounting manager that there is no job for her and that she needs to re-apply for another position. She contacts an attorney, who writes a letter to the company informing them that they have violated FMLA. The letter demands that Mars & Sons reinstate Maria immediately and compensate her for back pay in order to settle the employment discrimination claims she has against the company. Attorney for Mars & Sons replies that they have to arbitrate this dispute, and that Maria has no right to sue in court due to the mandatory arbitration agreement between her and the company. Mars & Sons sends Maria’s attorney the arbitration agreement that Maria signed when she started at the company 3 years ago. The agreement states that Maria agrees to arbitrate any and all disputes arising from her employment at Mars & Sons. Maria claims she didn’t know she had signed such an agreement. She says they just gave her a stack of paperwork and told her to sign everything and did not explain anything to her. Her attorney argue that the arbitration clause is unenforceable because she was not aware of it. Is this employment arbitration clause enforceable?