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Business Ethics 2016 - Case Study Guides (6) - Torts and Strict Liability

Business Ethics 2016


Case study guides and online resources (2016)





Chapter 6


Torts and Strict Liability



  1. Answers to Critical Legal Thinking Cases


6.1   Assumption of the Risk

Yes, riding the mechanical bull was an open and obvious danger for which Lilya had voluntarily assumed the risk. The court found the danger stemming from riding the mechanical bull was the open and obvious characteristic of the ride: the possibility of falling off the mechanical bull. Plaintiff John Lilya had previously seen a patron and his friend be tossed off the mechanical bull, and Lilya himself had been thrown from the mechanical bull prior to boarding the bull for his fateful ride. The supreme court of Alabama stated, “Additionally, the very name of the ride—“Rolling Thunder”—hanging on a banner above the ride, gives a somewhat graphic indication of what is the very nature of bull riding: an extremely turbulent ride, the challenge of which is to hang on and not fall off.” The court concluded “Volenti non fit injuria” (a person who knowingly and voluntarily risks danger cannot recover for any resulting injury). The supreme court of Alabama held that riding a mechanical bull and being thrown and injured by the bull is an open and obvious danger and that Lilya had voluntarily assumed the risk when he rode the bull and was thrown and injured. The state supreme court affirmed the grant of summary judgment in favor of defendant Gulf State Fair. Lilya v. The Greater Gulf State Fair, Inc., 855 So.2d 1049, 2003 Ala. Lexis 57 (Supreme Court of Alabama, 2003)


6.2   Negligence


No, the utility companies are not negligent. The utility poles were legally placed twenty-five feet from Edgewood Avenue at the far edge of the companies’ easement right of way. It was Sarah Mitchell, who was driving the car, with the backing of Adam Jacobs and David Messer, who decided to jump the “big hill” on Edgewood Avenue. In a 40 miles per hour zone, Mitchell crested the hill at 80 miles per hour, went airborne, and landed on the road and spun out of control with the car hitting the two utility poles owned by defendants Bell Telephone Company and Indianapolis Power & Light Company. The court found that it was the negligence of Mitchell that caused the accident and the death of the passenger Adam Jacobs, and not the fault of the utility companies. And it was Jacobs, whose mother brings this lawsuit, who suggested that they jump the hill. The court of appeals stated, “It strains reason to suggest that the utility companies should foresee the sort of wilful disregard for the law and personal safety that indisputably led to this accident. There is nothing to suggest that the poles’ location is inherently dangerous to those who engage in the ordinary and normal public use of Edgewood Avenue.” The court of appeals held that the defendants were not negligent and affirmed the trial court’s grant of summary judgment to the defendant utility companies. Carter v. Indianapolis Power & Light Company and Indiana Bell Telephone Company, Inc., 837 N.E.2d 509, 2005 Ind. App. Lexis 2129 (Court of Appeals of Indiana, 2005)


6.3   Negligence

Yes. The court held that Clancy was negligent when he fell asleep at the wheel while driving his truck and hit and injured Dianna Goad, who was driving a motorcycle on the other side of the road. The court held that Clancy owed a duty to drive his vehicle safely, and he did not do so by falling asleep at the wheel. Clancy did not mean for the accident to happen, but nonetheless he has been negligent. Clancy was the actual cause and proximate cause of the accident, and of causing the injuries to Dianna. Prior to the accident, Dianna was an active and athletic person. She was an avid runner, often jogging three-and-a-half miles a day. She belonged to a health club where she regularly trained with free weights. Dianna enjoyed rollerblading, hiking, and cross country skiing. Dianna also worked full-time in a managerial accounting position where she planned to work until she retired.

      The court found that the injuries Dianna received in the accident as a result of Clancy’s accident were catastrophic. She spent two weeks in a coma. Surgeries were performed to medically amputate her leg above the knee and to set her broken pelvic bones and her broken elbow. Dianna’s spleen could not be repaired and was inevitably removed, resulting in an increased lifetime risk of infection. Dianna has endured multiple skin graft procedures. At the time of the trial, Dianna had undergone seven surgeries, taken more than 6,800 pills, and her medical expenses totaled more than $368,000. Furthermore, Dianna’s medical expenses and challenges continue and are expected to continue indefinitely. In addition, Dianna has been fitted with a “C-leg,” a computerized prosthetic leg. A C-leg needs to be replaced every three to five years at full cost. The trial court took judicial notice that Dianna’s life expectancy is 35.4 years. The jury returned a verdict finding Clancy 100 percent at fault for the accident and awarded Dianna $10 million in compensatory damages. The court of appeals affirmed the judgment of the trial court finding Clancy liable for negligence and upheld the jury verdict awarding Dianna $10 million in damages. Clancy v. Goad, 858 N.E.2d 653, 2006 Ind. App. Lexis 2576 (Court of Appeals of Indiana, 2006)


6.4   Duty and Causation

No. The court held that the video and movie producers of the violent video games were not liable to the plaintiffs for selling and licensing violent video games and movies to Carneal, who killed the plaintiffs’ three children. The court applied negligence law and held that the defendants did not owe a duty to the plaintiffs and therefore were not liable for negligence. The plaintiffs also failed to prove that the video game producers were the proximate cause of the plaintiffs’ deaths. In reaching its decision, the court stated, “Our inquiry is whether the deaths of James, Steger, and Hadley were the reasonably foreseeable result of the defendants’ creation and distribution of their games, movie, and Internet sites. It appears simply impossible to predict that these games, movie, and Internet sites would incite a young person to violence. We find that it is simply too far a leap from shooting characters on a video screen (an activity undertaken by millions) to shooting people in a classroom (an activity undertaken by a handful, at most) for Carneal’s actions to have been reasonably foreseeable to the manufacturers of the media that Carneal played and viewed. Carneal’s reaction was not a normal reaction. Indeed, Carneal is not a normal person. Individuals are generally entitled to assume that third parties will not commit intentional criminal acts.” The court held that the defendant video game and movie producers and distributors were not liable to the plaintiffs. James v. Meow Media, Inc., 300 F.3d 683, 2002 U.S. App. Lexis 16185 (United States Court of Appeals for the Sixth Circuit)


6.5   Negligent Infliction of Emotional Distress

No. Defendant Skier’s Choice Inc. is not liable to plaintiff Colbert under the legal theory of negligent infliction of emotional distress. Colbert arrived on the scene after his daughter had fallen off a boat and witnessed the rescuers pulling his deceased daughter’s body from the water. The tort of negligent infliction of emotional distress allows bystander family members to obtain damages for foreseeable intangible injuries caused by viewing a physically-injured loved one shortly after a traumatic accident. The court held that the facts do not meet the “shortly thereafter” requirement for establishing a bystander relative’s cause of action for negligent infliction of emotional distress. Colbert was not at the scene either to witness his daughter’s drowning or soon enough thereafter to witness the final seconds of her disappearance under the lake’s surface. Instead, he arrived at least 10 to 15 minutes after learning that his daughter has fallen off a boat and disappeared in the lake. The court of appeals held that the elements for finding negligent infliction of emotional distress were not met in this case. Colbert v. Moomba Sports, Inc. and Skier’s Choice, Inc., 135 P.3d 485, 2006 Wash. App. Lexis 975 (Court of Appeals of Washington, 2006)


6.6   Supervening Event

No, defendant Cincinnati Incorporated is not liable to plaintiff Derek Braswell in strict liability for a design defect. When the press-brake was manufactured by Cincinnati, it contained several safety features that would have prevented the accident that happened in this case when Derek Braswell reached into the die area with his right hand to remove a jammed piece of metal and the machine crushed his right arm which had to be amputated. Here, some party or parties removed or disabled the important safety features that would have prevented the accident. The removal and disabling of the safety features was a supervening event that relieved Cincinnati from product liability. The U.S. court of appeals stated, “For defective design claims, the law exempts a manufacturer from liability if modifications or alterations to the product are responsible for the defect and are the intervening and superseding cause of the injuries.” The court also held that the inclusion of warnings on the machine satisfied Cincinnati’s duty to warn. Had these instructions been followed, Braswell would not have been injured. The U.S. court of appeals affirmed the U.S. district court’s decision that granted summary judgment to Cincinnati Incorporated. Braswell v. Cincinnati Incorporated, 731 F.3d 1081, 2013 U.S. App. Lexis 19451 (United States Court of Appeals for the Tenth Circuit, 2013)



VII. Answers to Ethics Cases


6.7   Ethics Case

No. Walmart did not present sufficient evidence to prove that it should be protected by the merchant protection statute. Plaintiff Goodman sued Walmart for damages for false imprisonment when Walmart detained her for alleged shoplifting. Walmart defended, asserting that the merchant protection statute protected it from liability. In order to be shielded from liability under the merchant protection statute, a merchant must prove that there were reasonable grounds for the suspicion, the suspect was detained for only a reasonable time, and the merchant’s investigation was conducted in a reasonable manner. The court rejected Walmart’s defenses, including the shopkeeper’s privilege and its assertion that it had not maliciously prosecuted Goodman. The court awarded Goodman $200,000 in compensatory damages for her suffering. The court also decided that Walmart had acted so badly that it awarded Goodman $600,000 in punitive damages.

      Did Walmart act ethically in this case? It could be argued that Walmart aggressively prosecuted Goodman when there was not sufficient evidence of possible shoplifting. In addition, bringing criminal charges without sufficient evidence violated Goodman’s right to be free from overaggressive acts of a large corporation. The court answered the question of ethics when it imposed punitive damages on Walmart for its conduct. Wal-Mart Stores, Inc. v. Goodman, 789 So.2d 166, 2000 Ala. Lexis 548 (Supreme Court of Alabama, 2000)


6.8   Ethics Case

Yes. Sta-Rite Industries, Inc. is liable to Peterson for strict liability. Lorenzo Peterson was injured when he swam to the bottom of a swimming pool to retrieve something that he thought his friend had hidden in a drain at the bottom of the pool. When Peterson slid the unattached drain cover aside and stuck his arm inside the drain, 300 to 400 pounds of pull of the drain pump held Peterson trapped underwater for 12 minutes before he was rescued. Peterson suffered irreversible brain damage. Evidence at trial showed that Sta-Rite’s drain covers are designed to screw down, but often a drain cover becomes loose. Further evidence showed that there had been more than 20 prior suction-entrapment accidents involving Sta-Rite’s drain covers and pumps. Previously, experts had designed a pool drain pump with a mechanism that would automatically shut off a pool drain pump when it detected that it was pulling more than it should. Sta-Rite did not install such safety features on its drain pumps, however. The court found that the underwater pool drain was defectively designed by Sta-Right because it did not contain a shut-off mechanism. The court found Sta-Rite strictly liable and awarded Lorenzo $32 million for past and future medical expenses and $72 million for pain and suffering.

      Based on the evidence, it can be concluded that Sta-Rite Industries did not act ethically in this case. The company had not redesigned its pool drain covers and pumps even though there had been more than 20 suction-entrapment accidents prior to the accident in this case. The jury believed Sta-Rite should have acted to redesign its pool drain covers and pumps to prevent catastrophic accidents like the one in this case from reoccurring. Sta-Rite Industries, Inc. v. Peterson, 837 So.2d 988, 2003 Fla. App. Lexis 1673 (Court of Appeal of Florida, 2003)














Free Business Ethics Resources

1. See full list of videos: 

Link 1 - Youtube channel www.youtube.com/ecomftu2012

Link 2 - Youtube channel 

2. Free Business Ethics - 2016 Ebooks (free download)

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University


3. Link to power point slides (Free Download)

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith


Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman


Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

4. Test Bank - Free download

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

Link - Test bank - free download 

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

Link - Test bank - free download


For Test Bankz, Quiz Answers and Case study Guides, email to: This email address is being protected from spambots. You need JavaScript enabled to view it.


Good Luck and Success, Enjoy Your Study !






Business Ethics 2016, Lecture, Video, Case Study Guides and Quiz, Test Bank, Free Download
Revel for Ethics and the Conduct of Business, 8th Edition, 2016, John R Boatright, Jeffery D. Smith
Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman
Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

1. Ethics in the World of Business
2. Ethical Decision Making
3. Ethical Theories
4. Whistle-Blowing
5. Business Information and Conflict of Interest
6. Privacy
7. Discrimination and Affirmative Action
8. Employment Rights
9. Health and Safety
10. Marketing and Advertising
11. Ethics in Finance
12. Corporate Social Responsibility
13. Governance, Accountability, and Compliance
14. International Business Ethics
Part I: Legal and Ethical Environment

1. Legal Heritage and the Digital Age
2. Ethics and Social Responsibility of Business
3. Courts, Jurisdiction, and Administrative Law
4. Judicial, Alternative, and E-Dispute Resolution

Part II: Constitution and Public Law
5. Constitutional Law for Business and E-Commerce
6. Torts and Strict Liability
7. Criminal Law and Cyber Crimes
8. Intellectual Property and Cyber Piracy

Part III: Contracts, Commercial Law, and E-Commerce
9. Formation and Requirements of Contracts
10. Performance and Breach of Contracts
11. Digital Law and E-Commerce
12. UCC Sales Contracts, Leases, and Warranties
13. Credit, Secured Transactions, and Bankruptcy

Part IV: Business Organizations, Corporate Governance, and Investor Protection
14. Small Business, General Partnerships, and Limited Partnerships
15. Limited Liability Companies, Limited Liability Partnerships, and Special Forms of Business
16. Corporations and Corporate Governance
17. Investor Protection and E-Securities Transactions

Part V: Agency, Employment, and Labor Law
18. Agency Law
19. Equal Opportunity in Employment
20. Employment Law and Worker Protection
21. Labor Law and Immigration Law

Part VI: Government Regulation
22. Antitrust Law and Unfair Trade Practices
23. Consumer Protection
24. Environmental Protection
25. Real Property and Land Use Regulation

Part VII: Global Environment
26. International and World Trade Law

Part VIII: Accounting Profession
27. Accountants’ Duties and Liability
PART ONE Basic Principles

Chapter 1 Ethics and Business
1.1 The Nature of Business Ethics
ON THE EDGE: Was National Semiconductor Morally Responsible?
1.2 Ethical Issues in Business
ON THE EDGE: A Traditional Business
1.3 Moral Responsibility and Blame
ON THE EDGE: WorldCom’s Whistleblower
ON THE EDGE: Gun Manufacturers and Responsibility
Slavery in the Chocolate Industry
Aaron Beam and the HealthSouth Fraud

Chapter 2 Ethical Principles in Business
2.1 Utilitarianism: Weighing Social Costs and Benefits
2.2 Rights and Duties
ON THE EDGE: Should Companies Dump Their Wastes In Poor Countries?
ON THE EDGE: Working for Eli Lilly & Company
ON THE EDGE: Conflict Diamonds
ON THE EDGE: ExxonMobil, Amerada Hess, and Marathon Oil in Equatorial Guinea
Traidos Bank and Roche’s Drug Trials in China

PART TWO The Market and Business

Chapter 3 The Business System: Government, Markets, and International Trade
3.1 Free Markets and Rights: John Locke
3.2 Free Markets and Utility: Adam Smith
3.3 Free Trade and Utility: David Ricardo
3.4 Marx and Justice: Criticizing Markets and Free Trade
ON THE EDGE: Commodification or How Free Should Free Markets Be?
ON THE EDGE: Marx’s Children
3.5 Conclusion: The Mixed Economy, the New Property, and the End of Marxism
ON THE EDGE: Napster’s Lost Revolution
ON THE EDGE: Brian’s Franchise
The GM Bailout Accolade versus Sega

Chapter 4 Ethics in the Marketplace
4.1 Perfect Competition
4.2 Monopoly Competition
ON THE EDGE: Drug Company Monopolies and Profits
4.3 Oligopolistic Competition
4.4 Oligopolies and Public Policy
ON THE EDGE: Fixing the Computer Memory Market
ON THE EDGE: Oracle and Peoplesoft
Intel’s “Rebates” and Other Ways It “Helped” Customers
Archer Daniels Midland and the Friendly Competitors

PART THREE Business and Its External Exchanges: Ecology and Consumers

Chapter 5 Ethics and the Environment
5.1 The Dimensions of Pollution and Resource Depletion
5.2 The Ethics of Pollution Control
5.3 The Ethics of Conserving Depletable Resources
ON THE EDGE: Ford’s Toxic Wastes
ON THE EDGE: The Auto Companies in China
ON THE EDGE: Exporting Poison
The Ok Tedi Copper Mine
Gas or Grouse?

Chapter 6 The Ethics of Consumer Production and Marketing
6.1 Markets and Consumer Protection
6.2 The Contract View of Business Firm’s Duties to Consumers
6.3 The Due Care Theory
ON THE EDGE: The Tobacco Companies and Product Safety
6.4 The Social Costs View of the Manufacturer’s Duties
ON THE EDGE: Selling Personalized Genetics
6.5 Advertising Ethics
ON THE EDGE: Advertising Death to Kids?
ON THE EDGE: New Balance and the “Made in USA” Label
6.6 Consumer Privacy
Becton Dickinson and Needle Sticks
Reducing Debts at Credit Solutions of America

PART FOUR Business and Its Internal Constituencies

Chapter 7 The Ethics of Job Discrimination
7.1 Job Discrimination: Its Nature
ON THE EDGE: Helping Patients at Plainfield Healthcare Center
7.2 Discrimination: Its Extent
7.4 Affirmative Action
ON THE EDGE: Driving for Old Dominion
ON THE EDGE: Peter Oiler and Winn-Dixie Stores
Should Kroger pay now for what a Ralphs’ Employee did in the Past
Wal-Mart’s Women

Chapter 8 Ethics and the Employee
8.1 The Rational Organization
8.2 The Political Organization
8.3 The Caring Organization
ON THE EDGE: HP’s Secrets and Oracle’s New Hire
ON THE EDGE: Insider Trading or: What Are Friends For?
ON THE EDGE: Delivering Pizza
ON THE EDGE: Sergeant Quon’s Text Messages
ON THE EDGE: Employment at Will at Howmet Corporation?
Death at Massey Energy Company
Who Should Pay?
key words
Ethical Decision Making,
Ethical Theories,
Conflict of Interest,
Discrimination, Affirmative Action,
Employment Rights,
Health and Safety,
Ethics in Finance,
Corporate Social Responsibility,
Governance, Accountability, Compliance,
International Business Ethics,

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