The legal environment of business a critical thinking approach

Martha Stewart and Peter Bacanovic 4 2 Introduction to Law and the Legal Environment of Business 15 Natural Law School 18 Positivist School 19 Sociological School 19 American Realist Sc

THE LEGAL

ENVIRONMENT

BUSINESS OF

A C r i t i c a l T h i n k i n g A p p r o a c h

S I X T H E D I T I O N

ENVIRONMENT

BUSINESS OF

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Library of Congress Cataloging-in-Publication Data

Kubasek, Nancy.

The legal environment of business : a critical thinking approach / Nancy K.

Kubasek, Bartley A Brennan, M Neil Brown — 6th ed.

p cm.

ISBN-13: 978-0-13-266484-4

ISBN-10: 0-13-266484-4

1 Industrial laws and legislation—United States 2 Business law—United

States 3 Trade regulation—United States I Brennan, Bartley A II

Brown, M Neil III Title.

NANCY K KUBASEK AND M NEIL BROWNE

In memory of Professor Thomas Dunfee

of the Wharton School of Finance

BARTLEY A BRENNAN

P A R T O N E

Introduction to the Law and the Legal Environment

of Business 1

5 Constitutional Principles 99

8 Ethics, Social Responsibility, and the Business Manager 202

P A R T T W O

Private Law and the Legal Environment of Business 261

15 Intellectual Property 394

P A R T T H R E E

Public Law and the Legal Environment of Business 477

APPENDIX A The Constitution Of the United States 763

APPENDIX B Uniform Commercial Code (2000 Official Text), Article 2 769

GLOSSARY 783

INDEX 797

vii

1 Critical Thinking and Legal Reasoning 2

United States of America v Martha Stewart and Peter Bacanovic 4

2 Introduction to Law and the Legal Environment

of Business 15

Natural Law School 18

Positivist School 19

Sociological School 19

American Realist School 20

Critical Legal Studies School 20

Feminist School 20

Law and Economics School 21

The Legislature as a Source of Statutory Law 21

The Judicial Branch as a Source of Case Law 23

The Executive Branch as a Source of Law 25

Administrative Agencies as a Source of Law 25

ix

Classifications of Law 26

Criminal Law and Civil Law 26

Public and Private Law 27

Substantive and Procedural Law 27

Original versus Appellate Jurisdiction 33

Jurisdiction over Persons and Property 34

World-Wide Volkswagen Corp v Woodson, District Judge

of Cook County 35

Subject Matter Jurisdiction 37

West Virginia University Board of Governors for and on Behalf

of West Virginia University v Richard Rodriguez 39

The Federal Court System 42

State Court Systems 42The Actors in the Legal System and their Relationship

The Attorney 45

The Judge 46

The Jury 48

Criticisms of the Adversary System 49

The Pretrial Stage 50

On the Internet 69

4 Alternative Tools of Dispute Resolution 70

Hall Street Associates, L.L.C v Mattel, Inc. 75

Methods of Securing Arbitration 76

Southland Corp v Keating 77

Ignazio v Clear Channel Broadcasting, Inc., et al. 80

Selection of an Arbitrator 84

Common Uses of Arbitration 85

Problems with Arbitration 86

Private Trials 88

Use of Court-Annexed ADR in the State and Federal

Systems 89

Differences between Court-Annexed and Voluntary ADR 90

Mitsubishi Motors Corp v Soler Chrysler-Plymouth 92

William Jefferson Clinton v Paula Corbin Jones 102

The Commerce Clause as a Source of Federal Authority 104

Gonzales v Raich 106

The Commerce Clause as a Restriction on State Authority 108

United Haulers Association, Inc v Oneida-Herkimer Solid Waste Management Authority 110

The First Amendment 114

Central Hudson Gas & Electric Corp v Public Service Commission of New York 116

The Fourth Amendment 121

The Fifth Amendment 123

D.A.B.E., Inc v City of Toledo 126

The Fourteenth Amendment 128

The Flexibility of Law 135

Changes in the Ways Courts Function 136

Challenges to the Limits and Powers of Government 137

Janet Reno, Attorney General of the United States, et al., Appellants v American Civil Liberties Union, et al., Appellee 137

Privacy versus Employment-at-Will 149

Michael A Smyth v the Pillsbury Co. 149

Summary 154

Crime 163

Criminal Procedure 164

The Corporation as a Criminal 169

Arguments in Support of Corporate Liability 170

Arguments in Opposition to Corporate Liability 171

Imposition of Liability on Corporate Executives 171

United States v Park 172

Imposition of Liability on Lower-Level Corporate Criminals 175

Factors Encouraging the Commission of White-Collar Crime 175

Sentencing of White-Collar Criminals 176

The Racketeer Influenced and Corrupt Organizations

Act (RICO) 189

False Claims Act 189

Rockwell International Corp v United States 191

Sarbanes-Oxley Act 193

Whistleblower Protection Act 193

8 Ethics, Social Responsibility, and the Business

Individual Codes of Ethics 208

Corporate Codes of Ethics 210

Industry Codes of Ethics 211

Professional Codes of Ethics 212

Bates v State Bar of Arizona 214

Fog Cutter Capital Group v Securities and Exchange Commission 221

Code of Conduct for Transnational Corporations 222

9 The International Legal Environment of Business 228

Political Dimensions 229

Economic Dimensions 230

Cultural Dimensions 231

Corruption and Trade 231

United States v Kay 232

Legal Dimensions 234

Crosby v National Foreign Trade Council 237

Trade 238

International Licensing and Franchising 239

Foreign Direct Investment 240

In re Union Carbide Corp Gas Plant Disaster v.

Union Carbide Corp. 241

Expropriation of Private Property 243

Sovereign Immunity Doctrine 244

Keller v Central Bank of Nigeria 244

Act-of-State Doctrine 245

Republic of the Philippines v Ferdinand E Marcos 246

Export and Import Controls 246

Legal and Economic Integration as a Means of Encouraging

The World Trade Organization 249

The European Union 250

North American Free Trade Agreement 254

P A R T T W O

Definition 263

Sources of Contract Law 263

Classifications of Contracts 264

Fox v Mountain West Electric 265

Audito v City of Providence 266

Competent Parties 278

Legal Object 279

Moore v Midwest Distribution, Inc. 280

Contracts for the Sale of an Interest in Land 281

Contracts to Pay the Debts of Another 281

Contracts Not Performable in One Year 282

Sale of Goods of $500 or More 282

Iacono v Lyons 282

Nonbusiness Contracts 283

Types of Third-Party Beneficiary Contracts 284

Discharge by Performance 290

Plante v Jacobs 290

Discharge by Mutual Agreement 292

Discharge by Conditions Precedent and Subsequent 293

Architectural Systems, Inc v Gilbane Building Co. 293

Discharge by Impossibility of Performance 294

Discharge by Commercial Impracticability 294

Facto v Pantagis 295

Monetary Damages (“Legal” Remedies) 296

Shirley Parker v Twentieth Century Fox Film Corp. 297

Arrowhead School District No 75, Park County, Montana v James A Klyap, Jr. 298

Review Problems 305

Intentional Torts against Persons 318

Nemet Chevrolet, Ltd v Consumeraffairs.com, Inc. 321

Ellen Johnston v One America Productions, Inc. 325

Intentional Torts against Property 329

Intentional Torts against Economic Interests 329

Elements of Negligence 331

Defenses to Negligence 333

Vicki Lynn Shultz v Cheney School District No 360 335

Strict Liability Torts 336

13 Product and Service Liability Law 342

Negligence 343

Donna S Riegel v Medtronic, Inc. 350

Strict Liability in Contract for Breach of Warranty 352

Williams v Braum Ice Cream Store, Inc. 354

Strict Liability in Tort 357

Welge v Planters Lifesavers Co. 358

Susan Calles v Scripto-Tokai Corp et al. 360

Liability to Bystanders 363

Definition of Real Property 374

Extent of Ownership 374

Fee Simple Absolute 375

Condominiums and Cooperatives 377

Burton Stevens v Elk Run Homeowners’ Association, Inc. 378

Voluntary Transfer of Personal Property 388

Involuntary Transfers of Personal Property 388

Case Problems 391

Federal Trademark Dilution Act of 1995 398

Victor Moseley and Kathy Moseley et al., dba Victor’s Little Secret v.

V Secret Catalogue, Inc et al. 400

Fair Use Doctrine 403

Zomba Enterprises, Inc.; Zomba Songs, Inc., Plaintiffs-Appellees v.

Panorama Records, Inc., Defendant-Appellant 403

Copyrights in the Digital Age 406

RealNetworks, Inc v DVD Control Copy Association,

Types of Agency Relationships 414

Alberty-Vélez v Corporación de Puerto Rico 416

Expressed Agency or Agency by Agreement 418

Agency by Implied Authority 418

Penthouse International v Barnes 419

Agency through Ratification by Principal 420

Agency by Estoppel or Apparent Authority 420

Principal’s Duties to Agent 420

Agent’s Duties to Principal 421

Cousins v Realty Ventures, Inc. 421

Gossels v Fleet National Bank 423Principal’s and Agent’s Liability to Third Parties 424

Contractual Liability 424

McBride v Taxman Corp. 424

E-Commerce: Intelligent Agents 425

Liability of Disclosed, Partially Disclosed Principals, and Undisclosed Principals 426

Liability of Undisclosed Principal 426

Factors Influencing a Business Manager’s Choice of

Enea v Superior Court of Monterey County 440

Limited Partnerships and Limited Liability Limited Partnerships 444

Joint Stock Company 445

Review Problems 450

Closely Held Corporation 454

Publicly Held Corporation 455

Multinational or Transnational Corporation 455

The Role of the Shareholders 460

The Role of the Board of Directors 462

The Role of the Officers and Managers 462

Fiduciary Obligations of Directors, Officers, and Managers 463

Beam v Stewart 464

Smith v Van Gorkom 466

The Uniform Limited Liability Act 469

LLC Characteristics 469

Creative Resource Management Inc v Soskin 469

Creating a Limited Liability Company 470

P A R T T H R E E

Introduction to Administrative Law and Administrative

Administrative Law 479

Administrative Agencies 480

Vonage Holdings Corp v Minnesota Public Utilities Commission 493

Cassandra Jenkins v American Express Financial Corp. 504

Coverage 505

Recoverable Benefits 506

The Claims Process 507

Benefits of the Worker’s Compensation System 507

The Occupational Safety and Health Act of 1970 511

Occupational Safety and Health Administration 512

Occupational Safety and Health Review Commission 514

National Institute for Occupational Safety and Health 516

Implementation of the OSH Act 516

Electronic Monitoring and Communication 516

Fraser v Nationwide Mutual Insurance Co. 517

Structure of the Primary U.S Labor Legislation and the Mechanisms

The Wagner Act of 1935 529

The Taft–Hartley Act of 1947 530

The Landrum–Griffith Act of 1959 530

The National Labor Relations Board 531

Board Rules 536

Unfair Labor Practices by Employers 537

Progressive Electric, Inc v National Labor Relations Board 538

Gaetano & Associates, Inc v National Labor Relations Board 541

Unfair Labor Practices by Employees 542

Organizing the Appropriate Unit 543

Brown University and International Union, United Automobile,

Aerospace and Agricultural Implement Workers of America,

UAW, AFL-CIO, Petitioner 544

Thinking Critically about Relevant Legal Issues 554

Applicability of the Acts 560

Equal Work 562

Defenses 562

Remedies 563The Civil Rights Act of 1964, as Amended (Title VII), and the Civil

Applicability of the Act 564

Proof in Employment Discrimination Cases 564

Teresa Harris v Forklift Systems, Inc. 568

Lilly Ledbetter Fair Pay Act of 2009 579

Applicability of the Statute 581

Proving Age Discrimination 581

Jones v National American University 582

Statutory Defenses 583

Enforcement Procedures 584

Remedies under ADEA 585

23 Environmental Law 600

Alternative Approaches to Environmental

Tort Law 601

Boomer et al v Atlantic Cement Co. 601

Government Subsidies Approach 603

Emission Charges Approach 603

Marketable Discharge Permits Approach 603

Direct Regulation Approach 604

Threshold Considerations 606

Content of the EIS 606

TOMAC v Gale Norton 607

Effectiveness of the EIS Process 608

The Federal Water Pollution Control Act 609

The Safe Drinking Water Act 609

Massachusetts v Environmental Protection Agency 611

The National Ambient Air Quality Standards 612

New Source Review 613

The Acid Rain Control Program 613

Climate Change 614

The Resource Conservation and Recovery Act of 1976 616

The Comprehensive Environmental Response, Compensation,

and Liability Act of 1980, as Amended by the Superfund

Amendment and Reauthorization Act of 1986 618

The Toxic Substances Control Act of 1979 619

The Federal Insecticide, Fungicide, and Rodenticide

Act of 1972 619

Business Aspects of Voluntary Pollution Prevention 621

Sustainable Development 621

The Need for International Cooperation 621

The Transnational Nature of Pollution 622

The Global Commons 623

Primary Responses of the United States 623

24 Rules Governing the Issuance and Trading of Securities 629

Summary of Federal Securities Legislation 631

The Securities and Exchange Commission 633Dodd-Frank Wall Street Reform and Consumer Protection

Oversight of Financial Problems by Regulatory Agencies 637

Risk Taking by Large Banks and Nonbanks 638

Executive Compensation 638

Too Big to Fail 638

Credit Rating Agencies 639

Securities and Exchange Commission v Edwards 643

Registration of Securities under the 1933 Act 644

Securities and Transactions Exempt from Registration under the 1933 Act 647

Resale Restrictions 650

Liability, Remedies, and Defenses under the 1933 Securities Act 650

Registration of Securities Issuers, Brokers, and Dealers 653

Disclosure: Compensation 656

Securities Markets 656

Proxy Solicitations 657

Tender Offers and Takeover Bids 659

Remedies and Defensive Strategies 660

Barbara Schreiber v Burlington Northern, Inc. 660

Securities Fraud 663

Stoneridge Investment Partners, LLC, et al v Scientific-Atlanta Inc., et al. 663

Securities and Exchange Commission v Texas Gulf Sulphur Co. 667

Liability and Remedies under the 1934 Exchange Act 669

The Wharf (Holdings) Limited v United International Holdings, Inc. 670

Short-Swing Profits 670

Legislation Governing Foreign Securities Sold

in the United States 674

Regulations and Offshore Transactions 675

Law and Economics: Setting and Enforcing Antitrust Policy 681

Goals of the Antitrust Statutes 683

Enforcement 684

Exemptions 686

Section 1: Combinations and Restraints of Trade 687

Williamson Oil Co v Philip Morris, USA 689

Leegin Creative Leather Products, Inc v PSKS, Inc., dba Kay’s Kloset,

Kay’s Shoes 693

Continental TV, Inc v GTE Sylvania 695

Section 2: Monopolies 698

Newcal Industries, Inc v Ikon Office Solutions 700

United States v Microsoft Corporation 702

Section 2: Price Discrimination 704

Section 3: Tying Arrangements and Exclusive-Dealing

Contracts 705

Section 7: Mergers and Acquisitions 705

Section 8: Interlocking Directorates 712

Federal Trade Commission Act of 1914 712

California Dental Association v Federal Trade Commission 713

Bank Merger Act of 1966 714

Transnational Reach of U.S Antitrust Legislation 714

Global Dimensions of U.S Antitrust Laws 715

Assignment on the Internet 719

26 Laws of Debtor–Creditor Relations

Rights of and Remedies for Creditors 723

Rights and Remedies for Debtors 724The Federal Bankruptcy Code and the Incorporation of the Bankruptcy Abuse Prevention and Consumer Protection

History and Background 725

Bankruptcy Management and Proceedings 725

The Federal Trade Commission: Functions, Structure, and Enforcement Powers 736

Deceptive and Unfair Advertising 737

Federal Trade Commission v Verity International, Ltd. 738

Federal Trade Commission v QT, Inc. 739

Consumer Legislation 741Federal Laws Regulating Consumer Credit and Business Debt-Collection

Truth-in-Lending Act 745

Household Credit Services, Inc v Pfenning 747

Credit Card Accountability, Responsibility and Disclosure Act of

2009 748

The Electronic Fund Transfer Act 748

A Plastic Society 749

The Fair Credit Reporting Act 749

Safeco Insurance Co v Burr 750

Identity Theft and Credit Ratings 752

Equal Credit Opportunity Act 752

The Fair Credit Billing Act 753

The Fair Debt Collection Practices Act 754

Miller v McCalla, Raymer Padrick and Clark, LLC 755

Uniform Consumer Credit Code 757

Unfair and Deceptive Practices Statutes 757

Arbitration of Disputes 758

Global Dimensions of Consumer Protection Laws 758

APPENDIX A THE CONSTITUTION OF THE UNITED STATES 763

APPENDIX B UNIFORM COMMERCIAL CODE (2000 OFFICIAL TEXT),

The Legal Environment of Business: A Critical Thinking Approach, 6th

edition, is exactly what its name implies: a comprehensive textbook that not

only helps students develop a thorough understanding of the legal environment

of business, but also enhances their ability to engage in critical thinking and

ethical analysis Students thus develop the knowledge and skills necessary to

survive in an increasingly competitive global environment

The initial motivation for this book was the authors’ perceptions that there

was no legal environment book available that explicitly and adequately

facili-tated the development of students’ critical thinking skills Nor was there a book

that really integrated ethical analysis throughout the text

Some people may argue that the traditional method of case analysis allows

students to develop their critical thinking skills The problem with this approach,

however, is that it focuses only on the analytical skills, while ignoring the

eval-uative component that is really the essence of critical thinking; it also lacks an

ethics component To engage in critical thinking necessarily includes

considera-tion of the impact of values on the outcome being considered

The use of cases in the legal environment of business classroom, however,

can provide an excellent opportunity for the development of students’ critical

thinking abilities when the traditional case method is modified to emphasize

development of these critical thinking skills Additionally, as the students

enhance their critical thinking skills, their understanding of the substance of the

law also improves

The following components of The Legal Environment of Business: A Critical

Thinking Approach ensure that our goal of developing critically thinking

students who understand the important concepts of business law and the legal

environment of business is attained

• An explicit critical thinking model developed by the author of the

best-selling critical thinking textbook is set forth in the first chapter.

An eight-step model has as its base the traditional method of case analysis,

but adds crucial critical thinking questions that also incorporate ethical

analysis The steps are clearly explained, and students are encouraged to

ap-ply the steps to every case in the text

• Additional critical thinking and ethical analysis questions

incorpo-rated at the beginning of each chapter and after selected cases These

additional questions help to reinforce the skills emphasized in the model

• “Thinking Critically about Relevant Legal Issues” essays at the end of

each chapter, which give students additional opportunities to develop

their critical thinking skills These essays, found at the end of each

chap-ter, allow students to extend their use of their newly developed critical

think-ing skills beyond cases to the kinds of arguments they will encounter in their

daily lives

Other Points of Distinction

• Explicit links connecting the law to other disciplines This text is the

only legal environment book to respond to the call for more integration

among courses in colleges of business “Linking Law to Business” boxes

explicitly state how the law in an area directly affects or is affected by a

con-cept in one of the core areas of business, such as accounting, management,

and marketing These boxes appear in every chapter

• A balanced mix of classic and current cases This book contains many

of the most significant classic and contemporary cases, including key U.S.Supreme Court decisions handed down as recently as 2008 Wheneverpossible, cases were chosen that not only demonstrated important conceptsbut also contained fact situations that would interest students

• Emphasis on the global environment Many of our students will be

working in countries other than the United States, and U.S companies willhave many dealings with foreign companies Thus, an understanding of theglobal environment is essential for today’s business student This textemphasizes the importance of the global environment by using both thestand-alone and infusion approaches Chapter 9 focuses explicitly on theglobal environment of business, and then we integrate global considerationsinto every chapter with our global dimensions sections and our “Compara-tive Law Corner,” which allows students to see how U.S law compares tothat of other nations around the world The feature can also sensitizestudents to the idea that if something is not working well in our country, itmight make sense to see how some other countries address similar issues.Examples include:

• Eminent domain in Germany

• The judicial system in Germany

• Corporate speech in Canada

• Unions in Sweden

• Pollution controls in Japan

• For Future Reading Feature We all want our students to become lifelong

learners, and we especially want them to continue learning about the law.But how do they know where to go? This feature, found at the end of eachchapter, provides a short list of books and articles related to the material ineach chapter that interested students may read to learn more about the newareas of law they have just discovered

New to This Edition

• Reorganized business organizations materials The coverage of forms ofbusiness organizations has been reorganized, and we have expanded ourcoverage of this area of law from one chapter into two

• Expanded coverage of intellectual property to allow greater discussion ofproperty issues This topic now appears in the new intellectual propertychapter

• Introduction of changes in the law, especially in the securities area, broughtabout by the 2010 Dodd-Frank Wall Street Reform and Consumer ProtectionAct incorporated into chapters 20, 21, 24, and 26

• Updated cases Cases in this edition have been significantly updated Wehave retained the classic cases from the previous edition, as well as thosethat students find especially interesting or that do an exceptional job of il-lustrating an important point of law All of the other cases have been re-placed by more current cases that will be of greater interest to our studentsand that capture the most current changes in the law Examples of new casesinclude:

• West Virginia University Board of Governors for and on behalf of West Virginia University, Plaintiff v Richard Rodriguez (Chapter 3)

• Hall Street Associates, L.L.C v Mattel, Inc (Chapter 4)

• Centocore, Inc v Patricia Hamilton (Chapter 6)

• Case problems Approximately one-third of the case problems from the fifth

edition have been replaced with more current case problems

• Revised “For Further Reading” sections Suggested readings at the end of

each chapter have been updated to emphasize more current legal issues

For Instructors

We offer a variety of both print and electronic supplements to meet the unique

teaching needs of each instructor Electronic versions of the supplements that

accompany this text are available for download by instructors only at our

Instructor Resource Center, at www.pearsonhighered.com/irc

• Instructor’s Manual

• Test Item File

• E-mail case updates Adopters of the book may subscribe to a list that will

provide regular case updates via e-mail, consisting of edited versions of

newly decided cases, as well as suggestions for where they would fit in the

text To subscribe, just send an e-mail to Nancy Kubasek at nkubase@bgsu

.edu and ask to be added to the CTLEB list

• PowerPoints

The author would like to acknowledge, with thanks, the following reviewers of

this text:

Robert Aalberts, University of Nevada, Las Vegas

Victor Alicea, Normandale Community College

Carlos Alsua, University of Alaska, Anchorage

S Catherine Anderson, Queens University of Charlotte

Teddy Jack Armstrong, Carl Albert State College

Janie Blankenship, Del Mar College

William Bockanic, John Carroll University

Heidi Bulich, College of Business, Michigan State University

Kimble Byrd, Rowan University

Glenn Chappell, Coker College

William Christian, College of Santa Fe

Linda Christiansen, Indiana University Southeast

Patrick Cihon, Whitman School of Management, Syracuse University

Michael Costello, University of Missouri–St Louis

Robert Cox, Salt Lake Community College

Jamey Darnell, Barton College

Regina Davenport, Pearl River Community College

Julia Derrick, Brevard Community College

Joseph Dworak, San Jose State University

Bruce Elder, University of Nebraska, Kearney

Gail Evans, University of Houston, Downtown

David Forsyth, ASU Polytechnic

Lucky Franks, Bellevue University

Samuel B Garber, DePaul University

Rosario Girasa, Pace University

Van Graham, Gardner-Webb University

John Gray, Loyola College in Maryland

David Griffis, University of San Francisco

Jason Harris, Augustana College

Norman Hawker, Haworth College of Business, Western Michigan University

Richard Hunter, Seton Hall University

Marilyn Johnson, Mississippi Delta Community College

Nancy Johnson, Mt San Jacinto Community College

Catherine Jones-Rikkers, Grand Valley State University

James Kelley, Notre Dame de Namur University

Lara Kessler, Grand Valley State University

Ernest King, University of Southern Mississippi

Audrey Wolfson Latourette, Richard Stockton College of New Jersey

Larry Laurent, McCoy College of Business, Texas State University

Marty Ludlum, Oklahoma City Community College

Vicki Luoma, Minnesota State University

Daniel Lykins, Oregon State University

Bryan Jon Maciewski, Fond du Lac Tribal and Community College

Maurice McCann, Southern Illinois University

George McNary, College of Business Administration, Creighton University

Don Miller-Kermani, Brevard Community College

David Missirian, Bentley College

Odell Moon, Victor Valley College

Henry Moore, University of Pittsburgh, Greensburg

Mark Muhich, Mesabi Range Community & Technical College

xxxv

Kimber Palmer, Texas A&M International UniversitySteve Palmer, Eastern New Mexico UniversityDarka Powers, Northeastern Illinois UniversityCharles Radeline, St Petersburg CollegeLinda Reid, University of Wisconsin–WhitewaterBruce Rockwood, College of Business, Bloomsburg UniversityRobert Rowlands, Harrisburg Area Community College

Ira Selkowitz, University of Colorado at Denver and Health Sciences CenterMary Sessom, Cuyamaca College

James Smith, Bellevue UniversityCraig Stilwell, Michigan State UniversityPamela Stokes, Texas A&M–Corpus ChristiKeith Swim, Jr., Mays Business School, Texas A&M UniversityHarold Tepool, Vincennes University

Daphyne Saunders Thomas, James Madison UniversityDavid Torres, Angelo State University

Kyle Usre, Whitworth CollegeDeborah Walsh, Middlesex Community CollegeJoe Walsh, Lees-McRae College

Dalph Watson, Madonna UniversityMary Ellen Wells, Alvernia CollegeJohn Whitehead, Kilgore CollegeJohn Williams, Northwestern State UniversityLevon Wilson, Georgia Southern UniversityRob Wilson, Whitworth College

Andrew Yee, University of San Francisco

University, where she teaches the Legal Environment of Business, Environmental

Law, and an Honors Seminar on Moral Principles For eight years she team-taught

a freshman honors seminar on critical thinking and values analysis She has

published another undergraduate textbook with Prentice Hall, Environmental

Law (7th ed 2010) and more than 75 articles Professor Kubasek’s articles

have appeared in such journals as the American Business Law Journal, the

Journal of Legal Studies Education, the Harvard Women’s Law Journal, the

Georgetown Journal of Legal Ethics, and the Harvard Journal on Legislation She

received her J.D from the University of Toledo College of Law and her B.A from

Bowling Green State University

Active in her professional associations, Professor Kubasek has served as

president of the TriState Regional Academy of Legal Studies in Business, and

president of the national professional association, the Academy of Legal Studies

in Business (ALSB) Committed to helping students become excited about legal

research, she organized the first Undergraduate Student Paper Competition of

the ALSB’s Annual Meeting, an event that now provides an annual opportunity

for students to present their original legal research at a national convention She

has also published several articles with students and has received her university’s

highest award for faculty–student research She states:

The most important thing that a teacher can do is to help his or her

stu-dents develop the skills and attitudes necessary to become lifelong

learn-ers Professors should help their students learn the types of questions to

ask to analyze complex legal issues, and to develop a set of criteria to

apply when evaluating reasons If we are successful, students will leave

our legal environment of business classroom with a basic understanding

of important legal concepts, a set of evaluative criteria to apply when

evaluating arguments that includes an ethical component, and a desire

to continue learning

To attain these goals, the classroom must be an interactive one,

where students learn to ask important questions, define contexts,

gen-erate sound reasons, point out the flaws in erroneous reasoning,

recog-nize alternative perspectives, and consider the impacts that their

decisions (both now and in the future) have on the broader community

beyond themselves

Green State University He is a graduate of the School of Foreign Service,

Georgetown University (B.S International Economics); the College of Law, State

University of New York at Buffalo (J.D.); and Memphis State University (M.A

Economics) He was a volunteer in the United States Peace Corps, was employed

by the Office of Opinions and Review of the Federal Communications

Commis-sion, and worked in the general counsel’s office of a private international

cor-poration Professor Brennan has received appointments as a visiting associate

professor at the Wharton School, University of Pennsylvania, and as a Research

Fellow at the Ethics Resource Center, Washington, D.C He is the author of

arti-cles dealing with the Foreign Corrupt Practices Act of 1977, as amended; the

business judgment rule; law and economics; and business ethics He has

pub-lished numerous articles in such journals as the American Business Law Journal,

University of North Carolina Journal of International Law, and the Notre Dame

University Journal of Legislation He is a coauthor of Modern Business Law

(3d ed.) He has testified on amending the Foreign Corrupt Practices Act beforethe Sub-Committee on International Economics and Finance of the House Com-merce, Energy, and Telecommunications Committee

director of IMPACT, an Honors Residential Learning Community CenteredAround the Principles of Intellectual Discovery and Moral Commitment, at BowlingGreen State University He received a J.D from the University of Toledo and aPh.D from the University of Texas He is the coauthor of seven books and morethan a hundred research articles in professional journals One of his books,

Asking the Right Questions: A Guide to Critical Thinking (6th ed.), is a leading text in the field of critical thinking His most recent book, Striving for Excellence

in College: Tips for Active Learning, provides learners with practical ideas for

expanding the power and effectiveness of their thinking Professor Browne hasbeen asked by dozens of colleges and universities to aid their faculty in devel-oping critical thinking skills on their respective campuses He also serves on the

editorial board of the Korean Journal of Critical Thinking In 1989, he was a

silver medalist for the Council for the Advancement and Support of Education’sNational Professor of the Year award Also, in 1989, he was named the OhioProfessor of the Year He has won numerous teaching awards on both local andnational levels He states:

When students come into contact with conflicting claims, they can react

in several fashions; my task is to enable them to evaluate these sive attempts I try to provide them with a broad range of criteria and at-titudes that reasonable people tend to use as they think their waythrough a conversation In addition, I urge them to use productive ques-tions as a stimulus to deep discussion, a looking below the surface of anargument for the assumptions underlying the visible component of thereasoning The eventual objectives are to enable them to be highly se-lective in their choice of beliefs and to provide them with the greatersense of meaning that stems from knowing that they have used their ownminds to separate sense from relative nonsense

Introduction to the

Law and the Legal

Environment of Business

Part One introduces the concept of critical thinking that provides the

framework for our study of the legal environment of business In

addition, we provide an overview of how the American legal system

works This overview requires us to understand alternative

philosophies of law, alternative philosophies of ethics, how the

constitutional foundations of our legal system work to resolve both

criminal and civil disputes, and alternative methods of resolving

disputes Part One concludes with a discussion of white-collar crime,

a major problem in the legal environment of business