F1. Acquirer, Inc. (Aco) and Target, Inc. (Tco) are corporations. All sales and purchases described below were conducted through a national stock exchange.
On December 1, 1986, Aco bought 120,000 Tco shares for $5 per share, thereby becoming a 12 percent Tco shareholder. Aco never previously owned any Tco stock. Aco immediately notified Tco's chief executive officer, Dan, that it had made the purchase and that it was considering a tender offer for the rest of Tco's stock at $9 per share.
The next day, Dan's personal lawyer, Len, warned Dan not to buy Tco stock until Aco's stock purchase and acquisition plans became public. On the same day, Dan told his son, Sam, about the proposed acquisition.
On December 3, 1986, Len and Sam each bought 10,000 Tco shares for $5 per share.
On December 4, 1986, Aco filed appropriate disclosure documents with the Securities and Exchange Commission (SEC), and Aco and Tco separately issued press releases about the stock purchase and the proposed acquisition.
On December 5, 1986, Len and Sam each sold their 10,000 Tco shares for $8.50 per share. Aco sold its Tco shares for $9 per share on February 15, 1987.
Dan has neither sold not purchased any Tco stock since he learned of the acquisition plan.
1. What, if any, are the liabilities of Aco under SEC rule 16(b)? Discuss.
2. What, if any, are the liabilities of Dan under SEC rule 10b-5? Discuss.
3. What, if any, are the liabilities of Sam under SEC rule 10b-5? Discuss.
4. What, if any, are the liabilities of Len under SEC rule 10b-5? Discuss.
[Constitutional Law]
F2. The Pacific State Legislature has enacted the "Pacific Home Television Movie Control Act" in response to numerous demands by parents of young children. The Act provides:
1. lt is unlawful for any person or enterprise to transmit motion pictures via a cable television system to a home television receiver in Pacific in violation of this Act.
2. No motion picture rated by the National Movie Rating Board as "R" (restricted, (restricted, to be viewed when accompanied by an adult only), or "X" (adults only) shall be transmitted to any household in Pacific so as to be received except between 12: 01 a. m. and 4:30 a.m. local time.
3. Any person or enterprise that violates this Act is subject to a fine of not less than $100 nor more than $500 per household in Paicific that subscribes to that violator's transmission system.
4. This Act does not apply to any cable television system owned and operated by a a governmental subdivision of Pacific.
The president of Microsystem (Micro) , a company which owns and operates a cable television system in Pacific, has retained you to consider bringing a suit challenging the validity of the Act. She claims that enforcement of the Act by Pacific will bankrupt her company. Both market studies and practical experience in the cable television industry have confirmed that "R" and "X" rated movies are a significant revenue source for Micro in Pacific. Micro shows "R" rated motion pictures staring at 8:00 p.m. and shows "X" rated motion pictures starting at 10:00 p.m. "R" and "X" rated motion pictures were described as "lewd" and "violent" by some legislators as reason for adoption of the Act.
Micro has successfully marketed its cable television motion picture service to over 20,000 subscribers to households in Pacific, most of whom subscribe to Micro's special "R" and "X" channel at an additional charge of $10 per month per housbold. You contemplate filing an action for declaratory relief for Micro as the plaintiff in federal court in Pacific against the Pacific Department of Justice (DJ), which is charged under state law with enforcement of the Act, as the defendant.
What arguments under the United States Constitution should you make against the validity of the Act, what defenses would you expect DJ to assert as to each argument, and how should the federal court decide these contentions? Discuss.
[Real Property] [Torts] [Remedies]
F3. Owen owned an unzoned 50-acre tract that was unimproved. He divided it into 45 one- acre lots with access roads. Owen offered the 45 lots for sale and told each prospective purchaser of the purely residential nature of the entire 50-acre tract. He sold 30 of the lots to 30 different purchasers and retained ownership of a block of 15 contiguous lots located on the easterly edge of the tract. The deed delivered to each purchaser contains the following language:
The grantee agrees for himself and his successors in title that the land hereby conveyed shall be used only for residential purposes and no structure other than a single-family residence together with appropriate out-buildings shall be construed thereon.
Within five years of the first of Owne's sales, all of the 30 purchasers had recorded their deeds from Owen and had built substantial one-family residences on their lots.
Within fifteen years of the first of Owen's sales, land surrounding the 50-acre tract was substantially developed and became of a mixed residential and commercial character. This development resulted in a great increase in the value of Owen's 15 remaining lots of commercial use. Owen then sold those remaining lots to Bob, who now has commenced construction of a shopping center.
Prior to purchasing Owen's lots, Bob asked Owen if there were any restrictions on those lots, and Owen told him there were none. Bob also examined Owen's direct chain of title prior to his purchase and discovered no indication of the restrictions.
The owners of the original 30 lots (Homeowners) learned of the sale by Owen to Bob and Bob's intended use of the 15 lots only when the shopping center construction began. Homeowners promptly objected to Bob about his construction contending that he is restricted to using the 15 lots he purchased from Owen for single-family residence purposes. They also contend that the shopping center will generate excessive traffic, exhaust fumes, and noise near their homes.
What are Homeowners' rights and remedies against Bob? Discuss.
[Torts]
F4. Harold grows roses in his flower garden. To keep the roses in good health, he applies ROSEBRITE, an insecticide solution manufactured by Acme and sold in spray cans. On several occasions Harold has read a warning printed on the spray can which admonishes:
DO NOT ALLOW THIS SOLUTION TO GET IN EYES OR ON EXPOSED PARTS OF BODY. EXTREMELY TOXIC. DO NOT DRINK. IF CONSUMED, CALL DOCTOR IMMEDIATELY. MANUFACTURER IS NOT LIABLE FOR INJURIES CAUSED BY THIS PRODUCT.
Last week, while Harold was applying ROSEBRITE to the roses, his telephone rang. He left the spray can of ROSEBRITE on the lawn, went inside to answer the phone, and forgot about the ROSEBRITE.
The next day, Johnny, age 5, a neighbor's child who had come over to play with Harold's son, went into the yard, picked up the spray can, and sprayed some ROSEBRITE on his arms. He thought the can was filled with perfume because he noticed a picture of roses on the spray can and he could not read. He became ill almost at once. The children were at the time under the care of a teenaged babysitter, Sarah.
Sarah had been in the house watching television and had not heard Johnny leave the house. Johnny came into the house crying and obviously ill. He pointed to the ROSEBRITE spray can and told Sarah that the "perfume" made him sick. Sarah looked at the spray can and read the warning. Realizing the gravity of the situation, she called an ambulance and got Johnny to the hospital. Johnny suffered cramps, blurred vision, and diarrhea. He was hospitalized for several days.
Though the warning on the spray can did not mention it, washing the exposed area with soap and water would have minimized Johnny's injuries.
What are Johnny's rights against:
1. Acme? Discuss.
2. Harold? Discuss.
[?]
F5.
Answer
[?]
F6
Answer
[Evidence]
J1. An automobile, owned and operated by Paul, collided with a taxicab driven by Don and owned by Cabco, Paul and Don were injured. Vicky' a passenger in Paul's automobile, suffered a broken leg. While she was undergoing necessary surgery to repair the fracture, she suffered a cardiac arrest and died. Action was brought in state court by Paul against Cabco for personal injuries. The parties stipulated to the above facts.
At the trial by jury the following occurred:
1. Paul testified "After the accident, I went over to the cab. Don was hurting real bad, and Don said, "This wouldn't have happened if I hadn't been in such a hurry to pick up a fare."
2. Cabco's counsel asked Paul on cross-examination if he had ever had a traffic accident. Paul answered: "No." Cabco's counsel then introduced a properly authenticated copy of a three-year-old unrelated conviction of Paul for vehicular manslaughter, a felony.
3. Vicky's physician, Doc, testified as a witness for Cabco that while Vicky was being prepared for surgery, he asked her how the accident happened, and she responded: "Don't tell anybody, Doc, but Paul and I were smoking marijuana. I dropped the lighted joint, and Paul had his head down looking for it when we hit the cab."
Assume that in each instance all appropriate objections were made. Were the items of evidence properly admitted? Discuss.
J2. Pat, a resident of State X, was involved in an automobile accident in State Y with Dan. Pat sued Dan in State X Municipal Court alleging personal injury damages of $200,000. Dan was served with process in State Y in the manner authorized by the State X "long arm statute" which provides that the courts of State X "may exercise jurisdiction on any basis not inconsistent with the Constitution of the United States." Although he is a resident of State Y, Dan spends approximately six weekends a year in State X at a small vacation cabin in which he has a one-eighth ownership interest.
Dan moved for dismissal on the ground that Municipal Court lacked personal jurisdiction over him. The motion was denied. Dan filed an answer asserting that Pat's negligence caused the accident, and the case proceeded to trial. The jury returned a verdict in favor of Pat in the amount of $100,000. Both State X and State Y have rules making contributory negligence a complete defense in a negligence suit.
Dan appealed on the grounds that: (1) Municipal Court lacked personal jurisdiction over Dan, and (2) Municipal Court lacked jurisdiction to hear controversies exceeding $10,000. Although the jurisdictional limit for Municipal Court was $10,000, the appellate court ruled that Dan had waived his right to contest both personal jurisdiction over him in Municipal Court and Municipal Court's subject matter jurisdiction to hear the case. The appellate court affirmed the judgment and it became final.
Subsequently, Bob, a bystander who had been slightly injured in the collision, filed a complaint in State X Municipal Court against Dan and Pat for damages of $10,000, alleging negligence. Pat answered and filed a cross-complaint against Dan for damages to Pat's car arising from the collision.
Based upon the above facts, the following motions were made: Bob moved for summary judgment against Dan on the issue of negligence; Pat moved for summary judgment against Dan on the issue of negligence and for summary judgment against Bob; Dan moved for a summary judgment against Pat.
1. Was the Municipal Court correct when it ruled it had personal jurisdiction over Dan? Discuss.
2. Was the appellate court correct when it ruled Dan had waived his right to contest Municipal Court's personal jurisdiction over him and Municipal Court's subject matter jurisdiction to hear controversies exceeding $10,000? Discuss.
3. Should Bob's motion for summary judgment against Dan be granted? Discuss.
4. Should Pat's motion for summary judgment against Dan be granted? Discuss.
5. Should Pat's motion for summary judgment against Bob be granted? Discuss.
6. Should Dan's motion for summary judgment against Pat be granted? Discuss.
[Remedies]
J3. Sam owned Blackacre and Whiteacre, two unimproved vacant tracts of land.The county assessor's records listed each tract as containing 10 acres. Without having seen either tract, but having checked the assessor's records, Bob telephoned Sam and said, "I offer to buy Blackacre and Whiteacre for $20,000,$10,000 now and $10,000 in one year." Sam responded, "O.K., I'll have the papers ready tomorrow." The following day Bob paid Sam $10,000, and the parties signed a land sale contract prepared by Sam's lawyer. The contract described the property as "Blackacre, containing 20 acres, more or less," and did not mention Whiteacre. The contract was otherwise consistent with oral communications between Bob and Sam.
The contract did not contain language making time of the essence.
During the next 12 months the following events occurred:
A. Bob sold his interest in the contract to Cal for $10,000. Cal notified Sam of his purchase.
B. The announcement of a proposed freeway increased land values in the area from $1,000 per acre to $3,000 per acre.
C. Bob, Sam, and Cal each learned that while Blackacre contained 10 acres,
Whiteacre contained only 7 acres.On the date the final payment was due, Cal tendered $7,000 to Sam and demanded deeds to Blackacre and Whiteacre. Sam rejected the tender and two days later notified Cal that the purchaser 's interest in the contract was"terminated because of non-payment."
Land values in the area are continuing to increase rapidly.
What rights and remedies, if any, does Cal have? Discuss.
[Trusts]
J4. A was the owner in fee simple of a parcel of real property on which there was a building housing five tenants who carried on separate businesses in the building. In 1980, A entered into a new 10-year written lease with B, one of those tenants. In the lease, A covenanted to keep the leased premises "in good repair and condition throughout the term of this lease." Part of the property to the rear of the building consisted of a parking lot exclusively controlled and maintained by A for the convenience of his tenants and their customers.
A died in 1982, devising his entire estate to T in trust for the benefit of A's daughters, who survived him. During the administration of the estate, B's leased premises fell into disrepair, and although B demanded of A's executor that repairs be made, nothing was done. ln 1984, administration of A's estate was completed and T undertook administration of the trust. B demanded that T make repairs; T refused. B then spent $ 1 500 on repairs to the leased premises. After T became trustee, the surface of the parking lot developed several severe cracks making use of the lot hazardous. Tenants complained to T about the parking lot, but T refused to repair it. C, a customer of one of the tenants, fell because of the hazardous condition of the parking lot and suffered permanently disabling injuries. B sued T individually and as trustee for breach of covenant to repair leased premises. C sued T individually and as trustee in a personal injury action seeking damages that far exceeded the total of the trust assets.
1 . What should the result be each of these actions? Discuss.
2. ls T entitled to indemnification from the trust estate for any damages recovered against him individually? Discuss.
[Criminal Law] [Criminal Procedure]
J5. In response to a growing drug problem among students at a public high school, school officials began conducting unannounced searches of students. Bobby was a 17- year-old student who, along with all his classmates, was subjected to such a search. Under protest, Bobby obeyed the order of the assistant principal to empty his backpack, revealing a quantity of heroin and a copy of Sleaze, a magazine containing pictures of nude women. The principal turned the heroin and the magazine over to the police. The state charged Bobby with violating Criminal Code §§98 and 108. State law allows 17- year-olds to be tried as adults. Section 98 provides: "Possession of heroin is prohibited and punishable by 1-3 years imprisonment." Section 108 provides: "School students are prohibited from possessing obscene material on school property during school hours." "Obscene material," as used in Secion 108, is defined in Section 125 as: "material which depicts...nudity in such a manner as to appeal predominantly to the prurient interest of minors, and is patently offensive to prevailing adult standards regarding suitable material for minor." Prior to trial, Bobby moed to suppress the heroin and the magazine as fruits of an unlawful search and seizure. The court denied the motion.
Bobby also moved to dismiss the §108 charge, contending that he is constitutionally entitled to possess Sleaze.The court denied that motion. At trial Bobby sought to introduce evidence to prove that: 1) he did not know the heroin was in his backpack; and 2) he is a heroin addict, arguing that conviction and punishment under §98 would constitute cruel and unusual punishment in violation of the Eighth Amendment. The court ruled that the evidence was irrelevant and refused to admit it. Bobby has appealed following his conviction on both charges. How should the appellate court rule on Bobby's arguments that:
1 . The trial court erred in denying his motion to suppress the heroin and the magazine? Discuss.
2 . Section 108 improperly permits conviction of students for conduct protected by the First Amendment and the Fourteenth Amendment to the United the First Amendment and the Fourteenth Amendment to the United States Constitution? Discuss.
3. The trial court erred in excluding:
a. The evidence of his knowledge of the heroin? Discuss.
b. The evidence of his addition? Discuss.
[Community Property]
J6. In 1980, Harry and Wendy, a married couple, moved to California from State X where they had resided since their marriage in 1960. Under the laws of State X, a spouse's earnings are his or her separate property.
While married and residing in State X, Harry's accumulated earnings were used to purchase stock in Harry's name only and a residence in Harry's and Wendy's names as joint tenants. The residence was sold in 1980 and the proceeds of the sale were used to buy a California condominium, free and clear of any debt, in Harry's and Wendy's names as joint tenants.
Upon arriving in California, Harry purchased an auto repair business, using funds he had inherited. Each month, Harry withdrew from the proceeds of his repair business an amount equal to what he had been paid in his previous employment as an auto mechanic. He deposited the money in a checking account held jointly with Wendy. The account was used to meet all their monthly living expenses.
In 1982, Wendy was injured in a car accident caused by the negligence of Harry. Wendy used her insurance settlement she received for her injury to purchase savings bonds in her name.
In April 1985, Harry executed a will with a provision declaring the auto repair shop to be community property.
In January 1987, Victor obtained a judgment against Wendy for an injury he suffered when she struck him during a heated argument at a condominium association meeting the prior year. Wendy's attendance at the meeting had been over Harry's strenuous objection.
Which of the following properties will be subject to execution in satisfaction of Victor's judgment against Wendy, and to what extent?
1. The savings bond? Discuss.
2. The stock portfolio? Discuss.
3. The condominium? Discuss.
4. The auto repair business? Discuss.