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The appropriate court for this lawsuit depends upon several factors. Three important

considerations include the following: personal jurisdiction, subject matter jurisdiction and

minimum contracts. Personal jurisdiction refers to the rights and power the court has to make a

decision regarding the party being sued in a case. In this case, personal jurisdiction is harder to

apply since the Novelty Now is in Florida, the men live in California and the plaintiff, Donald

Margolin, is in New York. In this case personal jurisdiction is given to New York because that is

where Mr. Margolin received the product that he ordered online.

Subject matter jurisdiction is the rights that a court has to hear certain types of cases.

What that means is things like probate cases are left to state courts whereas state courts do not

have the appropriate jurisdiction to hear patent cases. “Federal courts also have "exclusive"

subject matter jurisdiction over copyright cases, admiralty cases, lawsuits involving the military,

immigration laws, and bankruptcy proceedings” (Jurisdiction of the Federal Courts). Cases that

do not need to be heard at a federal level get handled by state courts. In this case because it

doesn’t fall under any of the cases the federal courts would handle listed above this would be

handled at the state court level.

Minimum contacts discuss whether it is appropriate for a state to assert personal

jurisdiction over a defendant from another state. In this case, if it were found that the defendant

has done business, visited, or lived in New York than personal jurisdiction would apply.
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Alternative dispute resolution (ADR) may be an option to resolve this dispute. ADR

refers to ways other than court to resolve a dispute. This can be done through using negotiation,

mediation, or arbitration. These alternative methods can be faster and ultimately a cheaper

alternative to going to court. Negotiation is “a bargaining process in which disputing parties

interact informally, either with or without lawyers, to attempt to resolve their dispute. Arbitration

is the resolution of a dispute by a neutral third party outside the judicial setting. Mediation is

when the disputing parties select a neutral party to help facilitate communication and suggest

ways for the parties to solve their dispute.” (Kubasek, Browne, Dhooge, Herron, & Barkacs,

2017).

Arbitration is more lenient in the way that it is handled rather than going through a court

setting. This allows for an arbitrator to be chosen and more specifically one can be chosen that

has experiences with the type of case needed. The other advantage to arbitration is that it can be

much less expensive than going through the courts and a judge since it tends to take less time

than litigation and less complicated than going through a court proceeding. There is however a

downside to using arbitration. Although it does tend to cost less than litigation, it can still be

expensive to get an experienced arbitrator. If a business or person is looking for a cheaper

solution this may not always be the best option. Another downside could also be a positive thing

given the circumstance which is confidentiality. Arbitration can be used to keep the situation

under wraps. It gives business’ the opportunity to keep things quiet which can help maintain their

reputation. It can also do the same thing for the coworker if they wanted to keep their identity

hidden or if they wanted to keep the situation quiet.

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Mediation can be helpful because it allows both parties to communicate and mutually come

to a decision that could benefit both sides. This allows both parties to control the outcome and

feel like they have more power in the decision and so that there are no surprises like what could

happen during litigation with a judge. Just like arbitration, another advantage to mediation is that

it can save both parties money. When using mediation, there is no need for lawyers although it is

possible to still involve them. One disadvantage to using mediation is that if one party has more

power or money, they can use that to their advantage and possibly have an unfair outcome.

Another disadvantage is that although both parties can participate, unless court ordered you can’t

force someone to participate and same thing with the agreement that is come to during

mediation.

In this case, Funny Face, Chris, Matt and Ian, and Novelty Now, may choose to use

mediation or arbitration. With Funny Face being a new business, it would be helpful to have the

confidentiality of using these options to keep the situation quiet and not ruin their reputation. In

using arbitration, this would be possible. This option also allows the company and the consumer

to handle the situation quickly and without spending a lot of the money they would by going

through litigation, which for a new company may be more within their budget. Mediation could

be a good place to start, however, due to the circumstances which caused Mr. Margolin’s face to

be permanently blue, it may be hard to negotiate terms with him. Meaning that arbitration may

be the only option in the long run and ultimately may be the best option for Mr. Margolin to get

the best resolution and most possible compensation. The downside to arbitration is that once a
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decision is made it can not be appealed by either party like in court. Unfortunately, that would

mean even if both parties are unhappy with the decision, the arbitrator’s word would be final.

“An individual or a corporation can be charged with and convicted of a crime. However,

there has been much debate over whether corporations should be held criminally responsible”

(Kubasek, Browne, Dhooge, Herron, & Barkacs, 2017). Chris, Matt and Ian could be subject to

corporate criminal liability. The primary crime that exists in this case is that of fraud. “Fraud

generally requires the following three elements: (1) a material false representation made with

intent to deceive, (2) a victim’s reasonable reliance on the false representation, and (3) damages.

(Kubasek, Browne, Dhooge, Herron, & Barkacs, 2017).” In this particular case, Chris made the

decision to have Novelty Now change the original formula and substitute in PYR which was not

approved by the FDA just to save money. Because of Chris’ decision and actions taken, Mr.

Mangolin’s face was permanently turned blue by Funny Face’s aftershave. With his face being

blue, Mr. Mangolin has incurred medical charges, damage to his face, and had his and his

company’s reputation ruined. Because Matt, Chris and Ian all own Funny Face and Funny Face

is responsible for the creation of the product and Novelty Now helped create the product they

could all be held responsible for the harm to Mr. Mangolin.

The ethical process of decision-making involves consideration of three key elements.

The three key elements follow the WPH business ethical decision-making process. WPH stands

for who, purpose, and how. The who is stakeholders would be the customers in this case, the

purpose/ values would be efficiency, and the how would be by substituting ingredients. In this
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case Chris thought that by substituting PYR in the aftershave it would be more efficient for the

company because it would minimize costs. Unfortunately, this did not end up working in their

favor and it ended up harming the consumer in the end.

References

Jurisdiction of the Federal Courts. (n.d.). Retrieved July 22, 2020, from

http://adacourse.org/courtconcepts/juris.html

Kubasek, N. K., Browne, M. N., Dhooge, L. J., Herron, D. J., & Barkacs, L. L. (2017).

Dynamic business law. New York, NY: McGraw-Hill Education.

Personal Jurisdiction. (n.d.). Retrieved July 19, 2020, from

https://www.law.cornell.edu/wex/personal_jurisdiction
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