BLAW Exam Preparation

Issue: Are Jackson and Justin Timberlake employees or independent contractors of CBS Corps.
and as such should CBS Corps. be held responsible for the actions of their performers?

Rule: The Respondeat Superior Doctrine “holds employer’s and or principal’s legally
responsible for the wrongful acts of an employee or agent that occurs within the scope of their
employment so long as it is within the normal course of business practice”.

Application: Justin Timberlake and Jackson were hired by CBS Corps. to put on a performance
during the 2004 Super Bowl and while CBS did give recommendations to the kind of wardrobe
and choreography that they thought would be good for the performance, Jackson and Timberlake
continued on with their rehearsal and ultimately had the final say in how they wanted to conduct
themselves. During the halftime show, Justin Timberlake got a little too aggressive and tore a
part of Jackson’s bustier, revealing her right breast. CBS acknowledged that it did not agree to
deviate from the script or a change in wardrobe, and gave a public apology for their indecency
that was caused by their performers. The FCC received a few complaints due to the indecent
scene and fined CBS $550,000 as a result of the actions that took place. The FCC is arguing that
under the Respondeat Superior Doctrine, CBS should be held accountable for their employees
actions when the indecency occurred and in the case of CBS hiring performers to put on a show,
we must figure out whether or not they are actually employees of the company or independent
contractors.

Employees don’t have compensation rights, they aren’t usually paid in lump sum, in
merchandising sales or ticket sales. They are paid strictly in wages or salary. As we know,
Jackson and Timberlake were paid in a lump sum by CBS worth millions of dollars to put on a
performance and an employee would never get that kind of compensation. Jackson and
Timberlake were never forced to follow company guidelines which includes scripts, uniforms,
and hours like an employee would but were given recommendations over how they wanted to
conduct their performance, which would make them independent contractors not employees. So
the FCC’s claim of using Respondeat Superior against CBS Corps. for indecency would not hold
up in a court of law because it's not substantiated by the evidence of the case.

Conclusion: The Third Circuit Court of Appeals ruled in favor of CBS Corps. and concluded
that Justin Timberlake and Jackson were not employees of CBS Corps. but independent
contractors, so the damages of $550,000 were overturned as the court found that there was not
enough Substantial evidence by the FCC to prove that CBS were at fault for the indecency that
occurred.

Rule: The Employment Agreement acknowledged that North Atlantic was “engaged in
specialized work and as such any information, research data, and marketing tools that were
developed by [North Atlantic] or any subsidiary or affiliate are strictly confidential and [Haber]
agreed not to disclose confidential information, trade secrets, or knowledge other than to [North
Atlantic] and its affiliates”.
Application: North Atlantic Inc. designs and manufactures electronic equipment in the
development and systems operations of ships, tanks and aircrafts. They bought TMI in an asset
purchase agreement and Haber had part ownership over the business at the time of sale. As such,
they made Haber president of the TMI division. North Atlantic acquired TMI so that they could
use its network of clients to expand their business operations and in doing so they reached an
employment agreement which included a non-disclosure clause so that Haber wouldn’t be able to
disclose trade secrets, or other information during his tenure and including after he left. Haber
left North Atlantic Inc. in 1997 and went to work for Apex, who is also a competitor in the
industry. It was at this point in time that Haber decided to use confidential information from
North Atlantic regarding their clients list of information and other trade secrets to benefit Apex.

In accordance with the Employment Agreement that he signed when he was under
employment by North Atlantic, he was prohibited from using certain confidential information,
trade secrets, or knowledge that could put the company and its operations at jeopardy. As such,
his efforts to undermine their core business practices and contact North Atlantic clients was a
violation of his fiduciary duty towards his previous employer and is a breach of contract. As
such, North Atlantic filed a complaint in november of 1997 claiming that Apex and Haber
misappropriated confidential trade secrets and so they fought to get an injunction to prevent
Apex and Haber from disclosing any kind of information relating to their core businesses or
secrets that they might have solicited from its clients. The judge as a result followed through
with the injunction on the basis that there was a real possibility that North Atlantic Inc. could
have suffered irreparable damage without it.

Conclusion: The judge's ruling in this case was in favor of North Atlantic Instruments Inc. as it
concluded that Haber and Apex were in direct violation of their employment agreement with
North Atlantic Inc and breached their duty of care by trying to “solicit trade secrets after he left,”
which was strictly forbidden

Rule: "An agency relationship can be established through the agent’s actual or apparent authority
to act on behalf of the principal. Actual authority includes both express and implied authority.
Express authority is derived from specific instructions by the principal in setting out duties,
while implied authority is actual authority circumstantially proved. Apparent authority "is based
on (1) manifestations by the principal to the third party (2) that cause the third party to believe
reasonably that the agent has such authority." The principal may also be liable for the agent’s
conduct under the doctrines of Estoppel and Ratification.

Application: Under the Doctrines of Estoppel, Bluff Creek could be estopped from rejecting the
lease agreement if “the principal can be held liable for (1) causing a third party to believe that an
agent has the authority to act, or (2) has notice that a third party believes an agent has the
authority and does not take steps to notify the third party of the lack of authority." Clute stated in
his affidavit that Fleming was in charge of the day-to-day operations of the golf course, and so
C&J Leasing had reason to believe that Fleming had the apparent authority to act on behalf of
Bluff Creek and as such may be held liable to the transaction.

Also based on the principles of Ratification, “a principal may be liable when he

knowingly accepts the benefits of a transaction entered into by one of his agents” and you could
argue that the owner and director of Bluff Creek knowingly accepted the beverage cart when he
said that it was “an even trade for advertisement” in regards to their current practice that they
have with getting free “scorecard advertisements” and was later ratified when payments on the
cart were made from August 2004 through March 2005 and Clute was aware of the existence of
the beverage cart and did not disavow the transaction. While these facts do support a finding of
an agency relationship, an examination of Clute’s entire affidavit could also cause one to
conclude that Fleming did not have actual or apparent authority to enter into the lease and that
Clute did not ratify the transaction or act in any way that would estop Bluff Creek from rejecting
the transaction. Based on Clute’s statements, Fleming did not have the apparent or actual
authority to enter into any financial agreements or transactions for the purchase, lease, or
financing of capital assets like the beverage cart especially given the lease’s hefty amount of
$19,000.

It is customary in the golf industry to hire a PGA golf professional to manage the
day-to-day operations of a golf course, and that vendors are aware that such professionals do not
have the authority to enter into such agreements. Clute also argues that Bluff Creek never ratified
the lease agreement because when he saw the cart, he thought it was “an even trade for
advertisement” in regards to their current practice that they have with “scorecard advertisements”
which Bluff Creek is given for free in exchange for the advertisements on the cards. Clute also
refutes the doctrines of Estoppel and Ratification on the premises that he first learned of the lease
agreement through a collection letter that was received when Fleming was no longer employed
by Bluff Creek, and subsequently he immediately requested a copy of the lease when it could not
be found in their official records. Soon after he made the cart available for repossession after
determining the lease to be a “scam” and it currently “sits idle in Bluff Creek's garage”.

Conclusion: The court found that “reasonable minds” could come to different conclusions as to
whether or not Fleming had the authority to bind Bluff Creek to the equipment lease, and
reversed the district court’s grant of summary judgment in favor of Bluff Creek.

Rule: "An agent who makes a contract for an undisclosed principal or a partially disclosed
principal will be liable as a party to the contract. In order for an agent to avoid personal liability
on a contract negotiated on his principal’s behalf, he must disclose not only that he is an agent
but also the identity of the principal. A principal is unidentified if, when an agent and a third
party interact, and the third party lacks knowledge or reason to know both the principal's
existence and the principal's identity.”

Application: In the early 1990s, Jesse Derr created a corporation, JCDER Inc., to operate his
construction business. At some point, Derr began referring to the corporation as J.D.
Construction Co. Inc., but no corporation by that name was ever created. JCDER Inc. remained
the official name for purposes of organization and filing with Maine’s Secretary of State. Derr
never filed with the Secretary of State a statement of intention to do business under the assumed
name J.D. Construction Co. Inc. The name JCDER Inc. was nowhere in the contract, and the
Treadwells were unaware of the existence of JCDER Inc. when they signed the agreement.
 Around Thanksgiving 2003, the Treadwells visited the site and found that Derr had
abandoned the job with the house unfinished because the company was not making any money
on the job. The Treadwells had paid Derr approximately $91,000 before construction halted and
the Treadwells found many problems with the structure, including twisted studs and other lumber
that had to be replaced. The Treadwells hired new contractors to fix and finish the project, for
which they paid a significant sum.

None of the documents the Treadwells received from J.D. Construction Co. indicated that
the company’s real name was JCDER Inc. or reveal the existence of the principal and so under
the rule that governs undisclosed or partially disclosed principals, “an agent will be held liable as
a party to the contract” and be held personally responsible for damages when contracts are not
performed properly. As such, the trial court should have pierced the corporate veil and held Derr
personally responsible because he made up a non-existent company (J.D. Construction Co.),
failed to disclose the existence of JCDER, Inc, its identity and the agency relationship that he had
with the company in question.

Conclusion: Court reversed in favor of the Treadwells. Derr’s use of an assumed trade name was
not sufficient to disclose his agency relationship with JCDER, Inc. and therefore the company
would be classified as an unidentified or partially disclosed principal. So, under the law, Derr
would be personally liable for performance of contracts entered into as agent for the non-existent
J.D.Construction, Co. Inc., or the undisclosed principal JCDER, Inc.

Rule: Under the Doctrine of Respondeat Superior, “an employer and or principal may be held
vicariously liable for the intentional tort of its employees or agent if the plaintiff produces
sufficient evidence showing “(1) the agent’s wrongful acts were in the scope of his employment;
or (2) that the acts were in furtherance of the business of the employer; or (3) that the employer
participated in, authorized, or ratified the wrongful acts”.

Application: Lisa Corvo and Thomas Bonds were engaged to be married. They had gotten
engaged in Paris without an engagement ring. When they returned to the United States, they
purchased a specially made ring in the shape of the Eiffel Tower with a diamond mounted on it.
The diamond cost $40,000. Sometime thereafter Corvo contacted DIRECTV to initiate satellite
television services in her house. On February 20, 2013, Corvo and Bonds were working from
home when Raymond Castro and Daniel McLaughlin from DIRECTV arrived to perform the
installation. Mr. Bonds let both men inside the house, advised them where to install the
equipment, and then resumed working. At one point, while Castro and McLaughlin were still
working on the installation, Corvo and Bonds experienced an interruption in their Internet
access, and, as a result, Bonds went to check with Castro and McLaughlin. Corvo noticed that
the door to the master bedroom was almost closed, which she thought was strange. Thus, she
opened it, which startled McLaughlin, who was standing behind the door. When the installation
was complete, Castro provided Corvo and Bonds with a lengthy overview of the services and
Castro left after Bonds finished the paperwork for the installation.

After Castro left, Corvo went to the master bedroom to retrieve her handbag, and jewelry,
and she noticed that the three-carat diamond was missing from the center of her engagement
ring. The prongs on the ring were sticking out and were bent. As such, we have to apply the facts
of the case to the Doctrine of Respondeat Superior and figure out whether or not the employees
actions could be justified as a betterment to the principal and whether it could be constituted
under the scope of their employment since it was a unusual deviation from normal practices.
Synergies3 and DIRECTV argue that the act of stealing from customers of DIRECTV is not in
line with their core business practices of providing satellite television services and is such an
unusual event from what usually occurs, that they should have been granted a judgment against
Corvo and Bond’s claim, alleging Respondeat Superior liability. In extending the liability
primarily to the employees, the motive behind the act does not defeat liability, unless it can be
shown that the employee acted from their own personal motives having no relation to the
business of the employer.

Furthermore, there was no evidence indicating that the theft or conversion was done for
Synergies3’s or DIRECTV’s benefit or in furtherance of their interests. Moreover, there is no
evidence indicating that Synergies3 or DIRECTV authorized or participated in theft and
conversion or later ratified the conduct so as to give rise to any direct liability for theft or
conversion. Based on those circumstances, there was no factual dispute regarding Synergies3’s
and DIRECTV’s vicarious or direct liability forCastro’s and McLaughlin’s actions that require
resolution by the jury; accordingly, the trial court should have entered a judgment as a matter of
law in favor of Synergies3 and DIRECTV on Corvo and Bonds’s claims asserting liability based
on the doctrine of Respondeat Superior because there was not enough evidence to prove that the
employee’s were acting for the interest of their employer or within the scope of their
employment.

Conclusion: The Appeals Court reversed partly in favor of DIRECTV and Synergies3 Inc. and
ruled that the judgment of Respondeat Superior Doctrine should have been overturned by the
trial court but that the vicarious and direct liability caused by the employees should still stand
according to the resolution by the jury.

Rule: “Workers’ compensation must be work-related and the injury must (1) arise out of the
employment and (2) happen in the course of the employment”.

Application: An injured worker bears the burden of proof and risk of non-persuasion with regard
to every element of a claim. Four independent tests were established from the Smart case to
determine whether an injury that occurs during a recreational activity comes within the course
and scope of the employment. (1) It occurs on the premises, during a lunch or recreational
period, as a regular incident of the employment. (2) The employer brings the activity within the
orbit of the employment by expressly or impliedly requiring participation or by making the
activity part of the service of the employee. (3) The employer derives substantial direct benefit
from the activity beyond the intangible benefit of an improvement in employee health and
morale that is common to all kinds of recreation and social life. (4) The employer exerts
sufficient control over the activity to bring it within the orbit of the employment.

This case concerns an injury that occurred on the employer’s premises, during normal
working hours, during the claimant’s lunch hour. Thus, the injury would be compensable under
the first test listed up above if the activity during which it occurred was “a regular incident of the
employment”. The Worker’s Compensation Board determined that the ALJ took an “overly
narrow” view of the evidence and confined the analysis to the specific event in which the
claimant was injured rather than considering the event in context, as part of the annual,
month-long fundraising campaign. In other words, the Board determined that the ALJ applied an
incorrect legal standard to the evidence and that the evidence supported a work related injury
occurring within the scope of employment and within the premises.

The relay race in which the injury took place occurred within company premises and was
not an isolated annual charitable event but part of a month-long campaign that the employer
allowed its employees to conduct in the workplace annually. An employer clearly has the right to
control all activities that occur on its property. Although the claimant’s employer did not control
the United Way fundraising campaign directly, it permitted the campaign to be conducted. on its
business premises and facilitated the campaign by permitting payroll deduction to be used for
contributions; allowing workers to attend a one-hour United Way presentation while on the
clock; allowing at least some organizational activities to be performed by workers while on the
job; and allowing events such as the relay race to be conducted on the premises, during the lunch
hour.

Conclusion: The Kentucky Supreme Court affirmed the decision of the Court of Appeals in
ruling that the injury was within the scope of employment (and therefore the employee was
entitled to workers’ compensation benefits).

Rule: "Title VII of the Civil Rights Act of 1964, Section 2000e-2 (m), states that an employer
commits an unlawful employment practice when the complaining party demonstrates that race,
color, religion, sex, or national origin was a motivating factor for any employment practice, even
though other factors may have also motivated the practice."

Application: Martin Gaskell applied for the position and, initially, was regarded by the Search
Committee as the leading candidate. He was far more qualified and experienced than any of the
other applicants. Gaskell’s candidacy hit some snags, though. members of the Search Committee
discovered articles, lecture notes, and public statements by Gaskell revolving around the theme
of “Modern Astronomy, the Bible, and Creation.” These raised concerns that Gaskell was a
“creationist.” Several Search Committee members perceived that Gaskell blended religious
thought with scientific theory, which they believed would adversely affect his ability to perform
the outreach functions of the job. Cavagnero again contacted Gaskell’s supervisor at UNL and
according to the supervisor, a handful of students had mentioned in their teacher evaluations that
it was refreshing to have a professor who believed in God, but that otherwise, Gaskell’s views on
religion had not interfered with his work.

University of Kentucky ultimately hired Timothy Knauer, a former student and employee
of UK’s Department of Physics and Astronomy. Although UK concedes that Gaskell had more
education and experience, it contends that it hired Knauer because he demonstrated more of the
qualities that UK wanted in its Observatory Director. Gaskell sued UK claiming that he was not
hired because of his religion in violation of Title VII. Title VII of the Civil Rights Act of 1964
provides that “it shall be an unlawful employment practice for an employer to discharge any
individual, or otherwise discriminate against an individual with respect to compensation, terms,
conditions, or privileges of employment, because of such individual’s race, color, religion, sex,
or national origin". Religion includes all “aspects of religious observance and practice, as well as
belief, unless an employer can demonstrate that he is unable to reasonably accommodate an
employee’s religious observance or practice without undue hardship being inflicted on the
business”.

If there is no direct evidence of discrimination, then the plaintiff carries the burden of
proving without a doubt that the evidence supports a prima facie case of discrimination. If the
plaintiff is able to prove a prima facie case, then the burden shifts to the defendant “to articulate
some legitimate, non discriminatory reason for the employee’s rejection”. If the defendant is able
to carry this burden, then the plaintiff must prove without a doubt of the evidence that the
legitimate reasons offered were not true reasons but were a pretext for discrimination. Although
UK argues that the McDonnell Douglas framework applies to this case, Gaskell contends that he
has presented direct evidence of discrimination. There is substantial evidence within the record
that Gaskell was a leading candidate for the position until the issue of his religion (as Gaskell
calls it) or his scientific position (as UK calls it) became an issue.

For direct evidence Gaskell brings forth an email discussion titled “The Gaskell Affair”
that took place between [Professor Thomas] Troland, the Search Committee Chair, to Cavagnero
just days prior to the Search Committee’s vote to recommend Knauer for the position and
thereby reject Gaskell. "It has become clear to me that there is virtually no way Gaskell will be
offered the job despite his qualifications that stand far above those of any other applicant.
However, the real reason why we will not offer him the job is because of his religious beliefs in
matters that are unrelated to astronomy or to any of the duties specified for this position. If
Martin were not so superbly qualified, so breathtakingly above the other applicants in
background and experience, then our decision would be much simpler.

Just by looking at the comments between the two, we can conclude that there was direct
evidence of religious discrimination. The university argued that because the job was not solely
about physics and astronomy within the university, Gaskell’s beliefs on biology and religion do
matter. Accordingly, based on Gaskell’s presentation of direct evidence of discrimination, UK’s
motion for summary judgment will be denied. To survive a defendant’s motion for summary
judgment, a Title VII plaintiff asserting a mixed-motive claim need only produce evidence
sufficient to convince a jury that (1) the defendant took an adverse employment action against
the plaintiff; and (2) “race, color, religion, sex, or national origin was a motivating factor” for the
defendant’s adverse employment action. "There is no dispute that UK’s decision not to hire
Gaskell was an adverse employment action. The issue, then, is whether Gaskell’s religion was “a
motivating factor.”

As set out above, Gaskell has presented direct and other evidence which, if believed,
establishes that his religion was a factor in UK’s employment decision. However, UK has also
come forward with other evidence that religion was not a motivating factor in its decision to hire
Knauer. UK notes that the only question that was asked of Gaskell regarding his statement on
evolution was posed by Cavagnero who was concerned that Gaskell would violate UK policy by
representing his own opinion as that of the University should he link his university web page to
his personal web page containing religious material.

UK contends that the Search Committee did not act improperly when it considered
Gaskell’s comments about evolution because Gaskell made those comments public not only
during his 1997 lecture at UK, but also by posting his lecture notes on his webpage. UK also
contends that it did not consider Gaskell’s religious beliefs, only his public comments that there
were scientific problems with the theory of evolution. According to UK, the Search Committee
was concerned that these publicly expressed views would impair Gaskell’s ability to serve
effectively as Observatory Director. The court ruled that UK’s motivation and decision not to
hire Gaskell is very fact intensive and difficult to determine at the summary judgment stage and
because UK has come forward with enough credible evidence to support its argument that
religion was not a motivating factor in its decision, Gaskell’s motion for partial summary
judgment will be denied.

Conclusion: Gaskell’s motion for partial summary judgment was denied and UK’s motion for
summary judgment was also denied and so this case still remains pending.

Rule: “Under District of Columbia law, employment is presumed to be terminable at will by

either party, and the presumption is rebuttable by a showing that the parties intended that
termination be subject to specific preconditions”. An employment contract is “a legally
enforceable agreement, verbally or in writing, which defines the conditions of employment”.

Application: John Peterson began working for AT&T in October 2004. He was originally in an
hourly position covered by a collective bargaining agreement, which called for graduated
disciplinary measures before a covered employee could be fired. He excelled in the position and,
after about three years, was promoted to a salaried managerial position, which was not covered
by any collective bargaining agreement. Even though he resigned from the union at that point
and understood he would no longer be represented by the union or subject to the agreement. As a
national retail account executive, Peterson was required to travel by car regularly in his territory,
on average driving about 250 miles per week. Peterson was nominally fired for violating a
company policy, included in AT&T’s Code of Business Conduct, which required all employees
regardless of their job duties to report “any driving-related offense that involves intoxication”
and employees “whose job involves operation of a company-owned” or leased vehicle to “also
report all tickets, citations, arrests, charges, convictions, guilty pleas for any driving-related
offense other than parking tickets, equipment violations or other non-moving violations.”
Peterson had several infractions encompassed by the latter.

Both parties agreed that there was no written employment agreement that existed between
the two but the plaintiff contends that AT&T breached an employment agreement by terminating
him without first applying graduated disciplinary measures, which a former supervisor allegedly
orally conveyed to him when he was first promoted to a managerial position. AT&T counters that
it is entitled to summary judgment on this claim because, after ample discovery, the plaintiff has
failed to provide any admissible evidence to support this claim, other than his own self-serving
statement in his affidavit about an oral promise, which is contradicted by his deposition
testimony.

“It has long been common law in certain states that at-will employment and subsequently
employees may be discharged at any time and for any reason, except under certain circumstances
where an employer may be in violation of public policy by unlawfully discharging an employee
for refusing to violate a statute, municipal regulations or the constitution”. The plaintiff’s
recollection is severely undermined by the fact that in his deposition testimony he fully
understood that his new managerial position would require forfeiture of all of his rights that he
may have had while under a union which included the collective bargaining agreement’s
requirement of graduated warnings. The plausibility that such an oral agreement was made is
also undermined by the fact that the plaintiff, while at his deposition made the admission that
while he received documentation for performance quotas, he never received “any document that
discussed disciplinary procedures” for “policy violations”.

Due to the lack of evidence and corroboration to back up his claims of an oral agreement
being made, he was no longer subject to union protection, and without there being more
sufficient evidence on which a jury could reasonably conclude that the plaintiff’s at-will
employment was specially conditioned for him to receive the graduated disciplinary measures
prior to termination, the court would side with AT&T and grant a summary of judgment on the
plaintiff’s breach of contract claim. The plaintiff believes that the “real issue which led to his
termination had nothing to do with driving or failing to report anything or violating any rules”
and the idea “that he was fired for not reporting one or more speeding tickets is simply not true”.
Even if the plaintiff’s belief and argument are correct, this is not sufficient enough evidence to
prove a wrongful termination claim. “It has long been common law in certain states that at-will
employment and subsequently employees may be discharged at any time and for any reason, or
for no reason at all”. An exception to this rule would be when “an employer discharges an
employee unlawfully for refusing to violate a statute which is a violation of public policy”. The
plaintiff has no evidence to support his claim that a violation of “public policy” was breached by
AT&T and there is no evidence to suggest that AT&T violated public “statutes, municipal
regulations or the constitution”. As such the plaintiff was legally terminated for violating a
company policy that required immediate reporting of any driving offenses, which were
implemented to minimize the driving risks posed by its employees which benefits public policy
and limits liability for AT&T.

Conclusion: For the reasons that were mentioned above, The court has ruled in favor of AT&T
and granted them a summary judgment for both claims regarding wrongful termination and
breach of contract.