Study
.odt
School
Rowan University**We aren't endorsed by this school
Course
LAWJ 5229
Subject
Law
Date
Dec 16, 2024
Pages
10
Uploaded by AgentGalaxy16416
Sentences)1.Limited Liability Company (LLC):An LLC is a hybrid business structure that provides the limited liability protection of a corporation with the tax advantages of a partnership. The members of an LLC are not personally liable for the debts or obligations of the company, meaning their personal assets are protected. LLCs also allow flexibility in management and are typically easier to form and operatethan corporations.2.Limited Liability Partnership (LLP):An LLP is a business structure where partners have limited personal liability for the partnership’s debts or actions of other partners. It is popular among professional service providers, such as law firms and accounting firms. Each partner is shielded from personal liability arising from another partner’s misconduct or negligence.3.Operating Agreement:This is a legal document that outlines the internal operations of an LLC, including the roles and responsibilities of members, profit distribution, and procedures for decision-making. While not always required by law, an operating agreement helps prevent disputes among members. It serves as the governing document for the LLC and is legally binding.4.Probable Cause:Probable cause refers to the standard of reasonable belief, based on facts, that a crime has been committed or that evidence of a crime can be found. It is required for law enforcement to obtain search or arrest warrants. The standard is lower than “beyond a reasonable doubt” but higher than mere suspicion.5.Dissolution:Dissolution is the formal process of closing or terminating a business entity, such as a corporation, partnership, or LLC. It can occur voluntarily, by agreement of the owners, or involuntarily, through legal or administrative action. Once dissolved, the business must wind up its affairs, including paying off debts and distributing remaining assets to owners.6.Corporation:A corporation is a legal entity that is separate and distinct from its owners, known as shareholders. It has the ability to enter contracts, own property, and be held liable independentlyof its owners. Corporations offer limited liability protection to shareholders, but they are subject to more regulation and taxation than other business forms.7.Business Judgment Rule:The business judgment rule protects corporate directors from liability for decisions made in goodfaith, with due care, and in the best interest of the corporation. Courts defer to directors’ decisions if they were informed and made without conflicts of interest. The rule encourages risk-
taking and innovation while shielding directors from excessive litigation.8.Piercing the Corporate Veil:This legal doctrine allows courts to hold shareholders personally liable for a corporation’s debts or actions if the corporation is used for fraudulent or improper purposes. It typically applies whenthe corporation is undercapitalized, fails to follow corporate formalities, or is used to shield illegal activities. Piercing the corporate veil is an exception to the rule of limited liability.9.Duty of Care (Corporation):The duty of care requires corporate directors and officers to make informed and reasonable decisions for the benefit of the corporation. This includes conducting due diligence and avoiding gross negligence in their decision-making. Breaches of this duty can lead to liability for harm caused to the corporation or its shareholders.10.Duty of Loyalty (Corporation):The duty of loyalty mandates that corporate directors and officers prioritize the corporation’s interests over personal gain. They must avoid conflicts of interest and self-dealing and disclose any potential conflicts to the board. Violations can lead to lawsuits and removal from their positions.11.Common Stock:Common stock represents ownership in a corporation and provides shareholders with voting rights and the potential for dividends. Common stockholders are the last to be paid if the company dissolves or goes bankrupt. It is the most common form of equity ownership in corporations.12.Prospectus:A prospectus is a legal document issued by a company offering securities for sale to the public, such as during an initial public offering (IPO). It provides detailed information about the company’s operations, financial condition, and risks. Investors use the prospectus to make informed decisions about buying the securities.13.Sarbanes-Oxley Act (2002):The Sarbanes-Oxley Act (SOX) was enacted in response to major corporate scandals like Enron and WorldCom. It establishes stricter regulations for financial reporting, corporate governance, and auditor independence to prevent fraud. Key provisions include the requirementfor CEOs and CFOs to certify financial statements and the creation of the Public Company Accounting Oversight Board (PCAOB).14.Insider Trading Laws:These laws prohibit trading stocks or other securities based on material, nonpublic information obtained through a breach of trust. Insider trading undermines investor confidence and is punishable by both civil and criminal penalties. Laws like the Securities Exchange Act of 1934 govern the prosecution of such offenses.
15.Criminal Procedure:Criminal procedure refers to the rules and laws governing the process of adjudicating criminal cases. It includes safeguards like the right to a fair trial, protection against self-incrimination, andthe right to counsel. The goal is to balance law enforcement authority with individual rights.16.Burden of Proof:This is the legal standard determining which party must prove their case and to what extent. In criminal cases, the prosecution bears the burden of proving guilt “beyond a reasonable doubt.” In civil cases, the plaintiff must prove their claims by a “preponderance of the evidence.”17.Elements of Criminal Fraud:Criminal fraud requires the prosecution to prove specific elements, including (1) intentional deception, (2) knowledge of falsity, (3) reliance by the victim, and (4) harm or loss caused to thevictim. Each element must be proven beyond a reasonable doubt to secure a conviction.18.Title:A title is the legal right to own, use, or transfer property. Titles are typically documented through deeds in real estate or certificates in vehicles. Clear and valid title is crucial for establishing ownership rights and avoiding disputes.19.Easement:An easement is a legal right to use another person’s property for a specific purpose, such as access to a road or utility lines. Easements can be created by agreement, necessity, or prescription. They do not transfer ownership but impose a burden on the property.20.Life Estate:A life estate grants an individual the right to use or occupy property during their lifetime, after which the property passes to a designated person (the remainderman). Life estates are often used in estate planning to balance current and future ownership interests.Detailed Case Summaries – Topics/Cases to Know1. EEOC v. Abercrombie & Fitch Stores, Inc. (2015)•Facts:Samantha Elauf, a practicing Muslim, applied for a job at Abercrombie & Fitch. She wore a hijabto her interview but did not explicitly inform the employer that it was for religious reasons or that she needed an accommodation. Abercrombie had a “Look Policy” that prohibited headwear. Although the interviewer gave her a high score, the regional manager decided not to hire her because her hijab would violate the policy. The EEOC sued Abercrombie on her behalf, allegingreligious discrimination under Title VII of the Civil Rights Act of 1964.
•Issue:Can an employer be held liable for religious discrimination if they make a hiring decision based on a religious practice without direct knowledge or notice from the applicant?•Decision:The Supreme Court ruled 8-1 in favor of the EEOC. The Court held that Abercrombie’s decision not to hire Elauf was motivated by her religious practice, even though she did not explicitly request an accommodation. The Court clarified that Title VII prohibits actions based on an applicant’s religious practice, regardless of whether the employer has “actual knowledge.”•Significance:This case reinforced the principle that employers cannot consider religious practices when making employment decisions, even indirectly. It emphasized that intent to discriminate is sufficient to violate Title VII.2. Headfirst Baseball LLC v. Elwood (2017)•Facts:Headfirst Baseball LLC, an organization running youth sports programs, sought to expel a member, Elwood, citing alleged misconduct. The operating agreement did not explicitly outline procedures for expelling members or resolving disputes over dissociation. Elwood challenged his expulsion, claiming it was invalid because the agreement did not authorize it.•Issue:Can an LLC expel a member without explicit authorization in its operating agreement?•Decision:The court ruled in favor of Elwood, finding that the LLC lacked the authority to expel him because the operating agreement was silent on the matter. Without clear terms in the agreement, the LLC could not unilaterally impose dissociation or expulsion.•Significance:This case highlighted the importance of having comprehensive operating agreements in LLCs toaddress issues like dissolution, dissociation, and expulsion of members. It emphasized the needfor clarity in governing documents to avoid disputes.3. Smith v. Van Gorkom (1985)•Facts:The board of directors of Trans Union Corporation approved a merger with a company led by Van Gorkom, Trans Union’s CEO. The board approved the merger within hours of hearing the proposal, without fully reviewing the financial terms or seeking independent advice. Shareholders challenged the decision, alleging that the directors breached their duty of care by failing to adequately inform themselves before approving the deal.
•Issue:Did the directors of Trans Union breach their fiduciary duty of care by approving the merger without proper due diligence?•Decision:The Delaware Supreme Court ruled in favor of the shareholders. The court held that the directors were grossly negligent in their decision-making process, which violated the duty of care. The court emphasized that the business judgment rule does not protect directors who fail to act on an informed basis.•Significance:This landmark case established stricter standards for directors’ decision-making processes. It highlighted the need for directors to conduct thorough due diligence and make informed decisions to avoid liability.4. Kaufman v. Trump’s Castle Funding (1991)•Facts:Investors purchased bonds from Trump’s Castle Casino. They later claimed that the offering documents contained material misrepresentations and omissions regarding the financial risks ofthe project. Trump’s Castle argued that the documents included sufficient warnings and disclaimers about the risks.•Issue:Does the inclusion of cautionary language in offering documents shield the issuer from liability for alleged misrepresentations?•Decision:The court applied the bespeaks caution doctrine, which states that forward-looking statements accompanied by meaningful cautionary language cannot be the basis for securities fraud claims. The court found that the warnings in the documents adequately informed investors of the risks, dismissing the claims.•Significance:This case clarified the application of the bespeaks caution doctrine in securities fraud cases, protecting issuers from liability when they provide clear and specific risk disclosures.5. United States v. McGee (2014)•Facts:McGee, a financial adviser, used confidential information from a client to purchase stock in a company that was about to be acquired. He earned significant profits from these trades and waslater charged with insider trading under the misappropriation theory, which applies when someone uses confidential information in violation of a duty of trust.
•Issue:Does the misappropriation of confidential client information for personal gain constitute insider trading?•Decision:The court upheld McGee’s conviction, affirming that the misappropriation theory applies to individuals who use nonpublic information in breach of a fiduciary duty or trust.•Significance:This case reinforced the reach of insider trading laws and the use of the misappropriation theoryto prosecute individuals who exploit confidential information for personal benefit.6. Riley v. California (2014)•Facts:After Riley was arrested for firearm possession, police searched his smartphone without a warrant. Evidence from the phone was used to charge him with additional crimes. Riley argued that the search violated his Fourth Amendment rights.•Issue:Can law enforcement search a smartphone without a warrant as part of a search incident to arrest?•Decision:The Supreme Court unanimously ruled that warrantless searches of smartphones violate the Fourth Amendment. The Court recognized the vast amount of personal information stored on modern devices and ruled that a warrant is generally required for such searches.•Significance:This case set a precedent for protecting digital privacy and limited the scope of warrantless searches during arrests.7. Grande v. Jennings (2012)•Facts:Grande purchased a home where the previous owner, now deceased, had hidden large amounts of cash. When the money was discovered, the deceased owner’s estate claimed ownership, while Grande argued it was abandoned property that now belonged to her.•Issue:Does the discovery of hidden cash in a7. Grande v. Jennings (2012) (continued)
•Issue:Does the discovery of hidden cash in a purchased property constitute abandonment, allowing the finder to claim ownership?•Decision:The Arizona Court of Appeals ruled in favor of Grande, determining that the money was abandoned property because there was no evidence that the previous owner intended to retain ownership after selling the house. Under the principle of ownership by possession, Grande, as the current property owner, had the legal right to keep the cash.•Significance:This case highlights the importance of property rights and ownership by possession, especially when dealing with abandoned or hidden personal property. It clarifies that once property is abandoned, the finder or current owner can claim it.8. Ziva Jewelry v. Car Wash Headquarters (2001)•Facts:A Ziva Jewelry employee left $850,000 worth of jewelry in his car, which was stolen while the car was being serviced at a car wash. Ziva sued the car wash, claiming it was responsible for the loss under the legal concept of bailment, where a person or business is entrusted with another’s property for safekeeping.•Issue:Does a car wash create a bailment relationship that makes it responsible for the theft of valuables left inside a vehicle?•Decision:The Alabama Supreme Court ruled in favor of the car wash, finding that no bailment relationshipexisted because Ziva did not notify the car wash of the jewelry or entrust it to their care. The car wash’s responsibility was limited to the car itself, not its contents.•Significance:This case clarified the limits of liability in bailment relationships, emphasizing that businesses are not liable for the loss of undisclosed personal property unless explicitly entrusted with it.9. Smith v. Van Gorkom (Additional Detail)•Facts:The case revolved around the decision by Trans Union’s board of directors to sell the company to Pritzker in a leveraged buyout at $55 per share. The directors approved the deal after a brief, two-hour presentation by CEO Jerome Van Gorkom, without independently verifying the valuation or consulting financial experts. Shareholders filed a derivative lawsuit, alleging that theboard failed to fulfill its fiduciary duties.
•Issue:Did the Trans Union board of directors violate their fiduciary duty of care by approving the merger without adequate due diligence?•Decision:The Delaware Supreme Court held the directors liable for breaching their duty of care. The courtemphasized that the business judgment rule protects directors only when decisions are made with sufficient information and a reasonable basis. The directors’ lack of inquiry and reliance solely on Van Gorkom’s presentation constituted gross negligence.•Significance:This case became a cornerstone in corporate law, reinforcing the standards for directors’ fiduciary duties and the requirement for informed decision-making. It also underscored the limitsof the business judgment rule in protecting directors from liability.If you’d like more detail about any specific case or term, let me know!1. Limited Liability Company (LLC)A business structure where owners are not personally responsible for the company’s debts.2. Limited Liability Partnership (LLP)A partnership where all partners have limited personal liability for the business’s debts or actions.3. Operating AgreementA document that outlines the rules and management structure for an LLC.4. Probable CauseReasonable grounds to believe a crime has been committed, used for getting warrants or making arrests.5. DissolutionThe process of officially ending or closing a business.6. CorporationA legal entity separate from its owners, offering them limited liability for business debts.7. Business Judgment Rule
A principle protecting corporate directors from being sued if they act in good faith and make reasonable decisions.8. Piercing the Corporate VeilHolding the owners personally responsible for business debts if they misuse the corporate structure.9. Duty of Care (Corporation)Corporate directors must make decisions carefully and responsibly, using good judgment.10. Duty of Loyalty (Corporation)Corporate directors must act in the best interest of the corporation, avoiding personal conflicts ofinterest.11. Common StockA type of ownership in a corporation, giving shareholders voting rights and a share of profits.12. ProspectusA document explaining investment opportunities, risks, and financial details to potential investors.13. Sarbanes-Oxley Act of 2002A law that improves corporate accountability and prevents fraud in publicly traded companies.14. Insider Trading LawsRules preventing people with confidential company information from unfairly trading stocks for personal gain.15. Criminal ProcedureThe steps and rules that the government follows to investigate and prosecute crimes.16. Burden of ProofThe obligation to prove a claim in court; in criminal cases, the government must prove guilt beyond a reasonable doubt.17. Elements of Criminal FraudKey parts of proving fraud: intentional deception, reliance by the victim, and financial harm.18. TitleLegal ownership of property or a document proving ownership.
19. EasementThe right to use someone else’s land for a specific purpose, like building a road or accessing utilities.20. Life EstateThe right to use and live on property for your lifetime, after which it goes to someone else.