Business Law Problem: After thorough consideration by senior leadership and its
ID: 365191 • Letter: B
Question
Business Law Problem:
After thorough consideration by senior leadership and its Board of Directors, Big Box, Inc. decided to begin carrying firearms and ammunition. Big Box has carried these products for approximately nine months. Sales have been brisk and have exceeded projections. Big Box’s principal supplier is On Target Firearms. On Target is a national wholesaler of firearms and ammunition that has been in business for more than 25 years and supplies all of the largest retail outlets in the country. Things have been going well.
Fred Steady arrives at work to find a package on his desk. Contained in the package is a citation from a federal court in Alaska. Big Box has been sued in a wrongful death action filed by Bob and Linda Smith, who reside in Alaska, relating to the death of their six-year-old son Kyle when a rifle manufactured by On Target and sold by Big Box allegedly misfired while being handled by Kyle’s older brother Kevin, who is 12. Bob Smith legally purchased the rifle from a Big Box location in Seattle, Washington as a gift for Kevin. The incident occurred in the Smith home in Juneau, Alaska. The suit also names On Target as a defendant.
Mr. Steady immediately calls Chuck Connors, CEO of On Target, to talk about the case. Mr. Connors tells Mr. Steady On Target has had reports of problems with the model allegedly involved in the Smith case. Mr. Connors tells Mr. Steady there have been four reports of this model firing when the safety is on and without pressure on the trigger. Despite these reports and additional testing by On Target, they have been unable to duplicate the events alleged in the complaints. None of the other incidents involved personal injury. Mr. Connors also indicates an investigative journalist has been looking into the complaints and is preparing to air a story on a national news program. On Target has refused to be interviewed for the piece, but it is anticipated the reporter will reach out to Big Box as well. Mr. Connors requests Mr. Steady decline the interview.
After these events, Mr. Steady has a lot on his mind and turns to his Legal Department for advice on a number of diverse issues.
ASSIGNMENT NO. 2:
Prepare a memorandum to Mr. Steady providing at least a one-paragraph answer to each of the following sets questions:
(1) Should Big Box contest jurisdiction or venue of the federal court in Alaska? If so, what is the likely outcome? Even if Big Box could successfully contest jurisdiction, are there practical reasons why they would want the case in Alaska? What is the likely outcome of the lawsuit as to Big Box?
(2) The model of the rifle involved in the Smith incident is the best-selling model for both On Target and Big Box. Big Box has sold thousands and has orders for thousands more from On Target. There has been no independent proof the defect alleged in the lawsuit exists, and no regulatory agency has taken any action. Should Big Box stop selling the rifle? Should Big Box recall the rifles it has already sold? Explain why or why not. Can Big Box cancel its future orders for this rifle with On Target? Why or why not?
(3) Should Mr. Steady participate in the interview with the reporter? Why or why not?
Explanation / Answer
(1) Should Big Box contest jurisdiction or venue of the federal court in Alaska? If so, what is the likely outcome? Even if Big Box could successfully contest jurisdiction, are there practical reasons why they would want the case in Alaska? What is the likely outcome of the lawsuit as to Big Box?
Answer : Even if Big Box did contest the jurisdiction or venue of the federal court in Alaska, it would be repealed in all likely hood since the incident took place in Juneau, Alaska. The likely outcome would be that Big Box's objection to the jurisdiction would be repealed. Big Box would want the case to remain in Alaskan jurisdiction because Alaskan gun laws allows anyone above the age of 21 to carry a gun under specific circumstances and places without the requirement of a permit. This would shield Big Box from any legal ramifications since the person who purchased the gun was Bob Smith. The outcome of the law suit could extend to vicarious liability as far as Big Box is concerned.
Repercussion of employee / vendor / supplier actions or Vicarious liability : is a scenario where one or more persons / group or an organisation is held responsible for the actions of another person / group or an organisation. From an organisational standpoint, the firm or the company could be held liable for the actions of its employees provided the action in question took place during the tenure of the employee's career in the organisation.
(2) The model of the rifle involved in the Smith incident is the best-selling model for both On Target and Big Box. Big Box has sold thousands and has orders for thousands more from On Target. There has been no independent proof the defect alleged in the lawsuit exists, and no regulatory agency has taken any action. Should Big Box stop selling the rifle?
Should Big Box recall the rifles it has already sold? Explain why or why not. Can Big Box cancel its future orders for this rifle with On Target? Why or why not?
Answer : While there is no immediate legal repercussion for big box in selling the model of the rifle involved in the Smith incident, there is the issue of reputational risk and a financial risk in case the outcome of the case favours the Smiths over On Target, even more so if its class action lawsuit. Which is why i think that Big Box should stop selling the rifle until the case is resolved and forgotten.
As far as recalls go , i think Big Box needn't issue a recall due to the low margin or alleged errors or misfires by the model of the rifle involved in the Smith incident.
Wether or not Big Box can or cannot cancel its future order for this rifle with On Target would depend on the type of purchase contract they have with On Target. If On Target refuses to cancel Bog Box's future order they could dispute it under the following legal claims
Express warranty & buyers reliance is a right to warranty facilitated by the federal Magnuson-Moss Warranty Act. This entitles a buyer to claim warranty as long as he or she is able to spot a valid defect or a reason for reimbursement / return or replacement of the product or service within a short duration of time from the date or time of purchase for any product or service rendered or sold at or above 15 USD $.
(3) Should Mr. Steady participate in the interview with the reporter? Why or why not?
Answer : Yes Mr Steady participate in the interview with the reporter but with a set of pre established questions that the interviewer should inform Mr Steady about in advance and give him ample time to prepare and agrees not to ask any question outside the pre set questions.
Here's why
Evasive action only breeds more curiosity. Whenever your mistakes in social media blow up in your face, always confront the problem, without evading or deflecting the issue when questioned about it. Transparency Builds trust and this point of time, being transparent about what happened and owning up to your mistake and trying to reason with the public and institution or an organization that everyone is human and vulnerable and equally susceptible to make such mistakes could win some sympathy. Because a lack of dialogue eliminates any benefit of doubt and more ambiguity only allows false reports to seep in.
There are times where the actions and the consequences that follow are so grave that the only solution to minimise damage and to save face for future opportunities is to take accountability in the present. Taking accountability before being expected to also shows character as long as you've already owned up to your mistakes and have separated your intentions from that of your vendor's.
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