2009
Betty formed and became president and sole shareholder of a startup company, ABC, Inc. (ABC), which sells a daily on-line calendaring service. ABC retained Lucy, a lawyer, to advise it about a new trademark. As ABC was very short on cash, Lucy orally proposed that, in lieu of receiving her usual $200 per hour fee, she could become a 1% owner of ABC. On behalf of ABC Betty orally agreed. Lucy performed 20 hours of legal work and received her ABC stock shares. Years later, Lucy would sell her shares back to Betty for $40,000. While Lucy was performing legal services for ABC, she discovered certain representations by ABC that were false and misleading and caused customers to pay for services they would never receive. She reported her discovery to Betty, who told her to ignore what she had found. After Lucy finished her legal work for ABC, she reported the false and misleading representations to a state consumer protection agency. Betty sold all of her interest in ABC, including the shares previously held by Lucy, and formed and became president and sole shareholder of another startup company, XYZ, Inc. (XYZ). After Lucy had finished her work for ABC and closed that file, she was retained by a new client, Donna, in a trademark dispute with XYZ.
What ethical violations, if any, has Lucy committed? Discuss.
Answer according to California and ABA authorities.
Copyco, Inc. (―Copyco‖), a maker of copy machines, was incorporated in State A. Most of Copyco’s employees work in State B at its sole manufacturing plant, which is located in the southern federal judicial district of State B. Copyco also has a distribution center in the northern federal judicial district of State B. Sally is a citizen of State B. Sally was using a Copyco copy machine at Blinko, a copy center within the northern federal judicial district of State B, when the machine started to jam. When Sally tried to clear the jam, she severely injured her hand. She underwent several surgeries at a nearby hospital. Her physician believes she may never recover the full use of her hand. Sally filed a lawsuit against Copyco as the sole defendant in the State B northern district federal court. Her complaint alleges that Copyco was negligent and that she has suffered physical injury, and also seeks damages of $100,000, exclusive of costs and interest. The federal court has subject matter jurisdiction to hear Sally’s lawsuit on the basis of diversity of citizenship. Copyco, however, moved for a change of venue to the southern federal judicial district of State B. The court denied Copyco’s motion. Sally wishes to obtain from Blinko a copy of the maintenance records for the copy machine that caused her injuries. Questioning the extent of the injuries Sally alleged, Copyco wishes the court to compel Sally to appear for an examination by both a physician and a psychologist of Copyco’s own choosing. 1. Was the federal court correct to deny Copyco’s motion for change of venue? Discuss. 2. (a) Is Sally entitled to a copy of the maintenance records? Discuss. (b) If so, how must she proceed to obtain them? Discuss. 3. (a) Is Copyco entitled to an order to compel Sally to appear for an examination by a physician and an examination by a psychologist chosen by Copyco? Discuss. (b) If so, how must it proceed to obtain such an order? Discuss.
[Evidence]
Dustin has been charged with participating in a robbery in California on the morning of March 1. (1) At Dustin’s trial in a California state court, the prosecution called Wendy, who was married to Dustin when the robbery took place. Dustin and Wendy divorced before the trial and Wendy was eager to testify. During the direct examination of Wendy, the following questions were asked and answers given: (2) Prosecutor: You did not see Dustin on the afternoon of March 1, is that correct? Wendy: That is correct. (3) Prosecutor: Did you speak with Dustin on that day? Wendy: Yes, I spoke to him in the afternoon, by phone. (4) Prosecutor: What did you discuss? Wendy: He said he’d be late coming home that night because he had to meet some people to divide up some money. (5) Prosecutor: Later that evening, did you speak with anyone else on the phone? Wendy: Yes. I spoke with my friend Nancy just before she died. (6) Prosecutor: What did Nancy say to you? Wendy: Nancy said that she and Dustin had ―pulled off a big job‖ that afternoon. (7) Prosecutor: Did Nancy explain what she meant by ―pulled off a big job‖? Wendy: No, but I assume that she meant that she and Dustin committed some sort of crime. Assuming all proper objections, claims of privilege, and motions to strike were timely made, did the court properly allow the prosecution to call the witness in item (1) and properly admit the evidence in items (2) - (7)? Discuss. Answer according to California law.
[Torts]
ConsumerPro, a consumer protection group, published a manual listing the names, addresses, telephone numbers, and specialties of attorneys who represent plaintiffs in tort cases. The manual also included comments rating the attorneys. The manual was distributed by ConsumerPro to its members to aid them in the selection of an attorney should they need one. Paul was listed in the manual as an attorney who litigates automobile accident cases. In the related comments, the manual stated that ―Paul is reputed to be an ambulance chaser and appears to handle only easy cases.‖ Paul sued ConsumerPro for defamation, alleging injury to reputation and requesting general damages. ConsumerPro moved to dismiss for failure to state a claim on which relief could be granted, on the grounds that (1) the statement was non-actionable opinion, (2) Paul failed to allege malice or negligence under the United States Constitution, (3) Paul failed to allege special damages, and (4) in any event, the statement was privileged under the common law. How should the court rule on each ground of the motion to dismiss? Discuss.
Developer had an option to purchase a five-acre parcel named The Highlands in City from Owner, and was planning to build a residential development there. Developer could not proceed with the project until City approved the extension of utilities to The Highlands parcel. In order to encourage development, City had a well-known and long-standing policy of reimbursing developers for the cost of installing utilities in new areas. Developer signed a contract with Builder for the construction of ten single-family homes on The Highlands parcel. The contract provided in section 14(d), ―All obligations under this agreement are conditioned on approval by City of all necessary utility extensions.‖ During precontract negotiations, Developer specifically informed Builder that he could not proceed with the project unless City followed its usual policy of reimbursing the developer for the installation of utilities, and Builder acknowledged that he understood such a condition to be implicit in section 14(d). The contract also provided, ―This written contract is a complete and final statement of the agreement between the parties hereto.‖ In a change of policy, City approved ―necessary utility extensions to The Highlands parcel,‖ but only on the condition that Developer bear the entire cost, which was substantial, without reimbursement by City. Because this additional cost made the project unprofitable, Developer abandoned plans for the development and did not exercise his option to purchase The Highlands parcel from Owner. Builder, claiming breach of contract, sued Developer for the $700,000 profit he would have made on the project. In the meantime, Architect purchased The Highlands parcel from Owner and contracted with Builder to construct a business park there. Builder’s expected profit under this new contract with Architect is $500,000. What arguments can Developer make, and what is the likely outcome, on each of the following points? 1. Developer did not breach the contract with Builder. 2. Developer’s performance was excused. 3. In any event, Builder did not suffer $700,000 in damages. Discuss.
Stage, Inc. (―SI‖) is a properly formed close corporation. SI’s Articles of Incorporation include the following provision: ―SI is formed for the sole purpose of operating comedy clubs.‖ SI has a three-member Board of Directors, consisting of Al, Betty, and Charlie, none of whom is a shareholder. Some time ago, Charlie persuaded Al and Betty that SI should expand into a new business direction, real estate development. After heated discussions, the board approved and entered into a contract with Great Properties (―GP‖), a construction company, committing substantial SI capital to the construction of a new shopping mall, which was set to break ground shortly. Although Charlie remained enthusiastic, Al and Betty changed their minds about the decision to expand beyond SI’s usual business. SI was struggling financially to keep its comedy clubs open. Al and Betty decided to avoid SI’s contract with GP in order to devote all of SI’s capital to its comedy clubs. Last month, GP approached Charlie about another real estate project under development. GP was building a smaller mall on the other side of town and was seeking investors. Aware that Al and Betty were unhappy about the earlier contract with GP, Charlie believed that SI’s board would not approve any further investments in real estate. As a result, Charlie decided to invest his own money in the endeavor without mentioning the project to anyone at SI. Meanwhile, Al and Betty have come to suspect that Charlie has been skimming corporate funds for his personal activities, and, although they have little proof, they want to oust Charlie as a director. 1. Under what theory or theories might SI attempt to avoid its contractual obligation to GP and what is the likelihood of success? Discuss. 2. Has Charlie violated any duties owed to SI as to the smaller mall? Discuss. 3. Under what theory or theories might Al and Betty attempt to oust Charlie from the Board of Directors and what is the likelihood of success? Discuss.
[Torts]
Patty is in the business of transporting human organs for transplant in City. She is paid only upon timely delivery of a viable organ; the delay of an hour can make an organ nonviable.
David transports gasoline over long distances in a tank truck. Recently, he was hauling gasoline through City. As David was crossing a bridge in City, his truck skidded on an oily patch and became wedged across the roadway, blocking all traffic in both directions for two hours.
Patty was delivering a kidney and was on the bridge several cars behind David when the accident occurred. The traffic jam caused Patty to be two hours late in making her delivery and made the kidney nonviable. Consequently, she was not paid the $1,000 fee she would otherwise have received.
Patty contacted Art, a lawyer, and told him that she wanted to sue David for the loss of her fee. “There isn’t a lot of money involved,” she said, “but I want to teach David a lesson. David can’t possibly afford the legal fees to defend this case, so maybe we can put him out of business.”
Art agreed and, concluding that he could not prove negligence against David, decided that the only plausible claim would be one based on strict liability for ultrahazardous activity. Art filed a suit based on that theory against David on behalf of Patty, seeking recovery of damages to cover the $1,000 fee Patty lost. The facts recited in the first three paragraphs above appeared on the face of the complaint.
David filed a motion to dismiss. The court granted the motion on the grounds that the complaint failed to state a cause of action and that, in any event, the damages alleged were not recoverable. It entered judgment in David’s favor.
David then filed suit against Patty and Art for malicious prosecution.
1. Did the court correctly grant David’s motion to dismiss on the grounds stated? Discuss.
2. What is the likely outcome of David’s suit for malicious prosecution against Patty and Art? Discuss.
Alex, an attorney, represents Dusty, a well-known movie actor. Dusty had recently been arrested for battery after Vic reported that Dusty knocked him down when he went to Dusty’s home trying to take photos of Dusty and his family. Dusty claims Vic simply tripped.
Paul, the prosecutor, filed a criminal complaint against Dusty. Suspecting that Paul was anxious to publicize the arrest of a high-profile defendant as part of his election bid for District Attorney, Alex held a press conference on the steps of the courthouse. He told the press: “Any intelligent jury will find that Dusty did not strike Vic. Dusty is the innocent victim of a witch-hunt by a prosecutor who wants to become District Attorney.”
Meanwhile, Paul received a copy of the police report describing Dusty’s alleged criminal behavior. Concerned that the description of Dusty’s behavior sounded vague, Paul asked the reporting police officer to destroy the existing police report and to draft one that included more details of Dusty’s alleged criminal behavior.
Paul interviewed Dusty’s housekeeper, Henry, who witnessed the incident involving Dusty and Vic. Henry told Paul that Dusty did not knock Vic down. Paul told Henry to avoid contact with Alex.
Paul has not been able to obtain Vic’s version of the events because Vic is on an extended trip abroad and will not be back in time for Dusty’s preliminary hearing.
Confident that Dusty is nevertheless guilty, Paul has decided to proceed with the preliminary hearing.
1. What ethical violation(s), if any, has Alex committed? Discuss.
2. What ethical violation(s), if any, has Paul committed? Discuss.
Answer according to both California and ABA authorities.
[Evidence]
While driving their cars, Paula and Dan collided and each suffered personal injuries and property damage. Paula sued Dan for negligence in a California state court and Dan filed a cross-complaint for negligence against Paula. At the ensuing jury trial, Paula testified that she was driving to meet her husband, Hank, and that Dan drove his car into hers. Paula also testified that, as she and Dan were waiting for an ambulance immediately following the accident, Dan said, “I have plenty of insurance to cover your injuries.” Paula further testified that, three hours after the accident, when a physician at the hospital to which she was taken asked her how she was feeling, she said, “My right leg hurts the most, all because that idiot Dan failed to yield the right-of-way.”
Officer, who was the investigating police officer who responded to the accident, was unavailable at the trial. The court granted a motion by Paula to admit Officer’s accident report into evidence. Officer’s accident report states: “When I arrived at the scene three minutes after the accident occurred, an unnamed bystander immediately came up to me and stated that Dan pulled right out into the path of Paula’s car. Based on this information, my interviews with Paula and Dan, and the skidmarks, I conclude that Dan
caused the accident.” Officer prepared his accident report shortly after the accident. In his case-in-chief, Dan called a paramedic who had treated Paula at the scene of the accident. Dan showed the paramedic a greeting card, and the paramedic testified that
he had found the card in Paula’s pocket as he was treating her. The court granted a motion by Dan to admit the card into evidence. The card states: “Dearest Paula, Hurry home from work as fast as you can today. We need to get an early start on our weekend trip to the mountains! Love, Hank.”
Dan testified that, as he and Paula were waiting for the ambulance immediately following the accident, Wilma handed him a note. Wilma had been identified as a witness during discovery, but had died before she could be deposed. The court granted a motion by Dan to admit the note into evidence. The note says: “I saw the whole thing. Paula was speeding. She was definitely negligent.”
Assuming all appropriate objections were timely made, should the court have admitted:
1. Dan’s statement to Paula about insurance? Discuss.
2. Paula’s statement to the physician? Discuss.
3. Officer’s accident report relating to:
a. The unnamed bystander’s statement? Discuss.
b. Officer’s conclusion and its basis? Discuss.
4. Hank’s greeting card? Discuss.
5. Wilma’s note? Discuss.
Answer according to California law.
In a recent statute, Congress authorized the United States Secretary of Transportation “to do everything necessary and appropriate to ensure safe streets and highways.” Subsequently, the Secretary issued the following regulations:
Regulation A, which requires all instructors of persons seeking commercial driving licenses to be certified by federal examiners. The regulation details the criteria for certification, which require a minimum number of years of experience as a commercial driver and a minimum score on a test of basic communication skills.
Regulation B, which requires that every bus in commercial service be equipped with seat belts for every seat.
Regulation C, which provides that states failing to implement adequate measures to ensure that bus seat belts are actually used will forfeit 10 percent of previously appropriated federal funds that assist states with highway construction.
The State Driving Academy, which is a state agency that offers driving instruction to persons seeking commercial driving licenses, is considering challenging the validity of Regulation A under the United States Constitution. The Capitol City Transit Company, which is a private corporation that operates buses within the city limits of Capitol City, is considering challenging the validity of Regulation B under the United States Constitution. The State Highway Department, another state agency, is considering challenging the validity of Regulation C under the United States Constitution.
1. What constitutional challenge may the State Driving Academy bring against Regulation A, and is it likely to succeed? Discuss.
2. What constitutional challenge may the Capitol City Transport Company bring against Regulation B, and is it likely to succeed? Discuss.
3. What constitutional challenge may the State Highway Department bring against Regulation C, and is it likely to succeed? Discuss.
[Civil Procedure] [Remedies] [Professional Responsibility]
Diane owns a large country estate to which she plans to invite economically disadvantaged children for free summer day camp. In order to provide the children with the opportunity to engage in water sports, Diane started construction to dam a stream on the property to create a pond. Neighbors downstream, who rely on the stream to irrigate their crops and to fill their wells, immediately demanded that Diane stop construction. Diane refused. Six months into the construction, when the dam was almost complete, the neighbors filed an application in state court for a permanent injunction ordering Diane to stop construction and to remove the dam. They asserted causes of action for nuisance and for a taking under the United States Constitution.
After a hearing, the state court denied the application on the merits. The neighbors did not appeal the ruling.
Thereafter, Paul, one of the neighbors and a plaintiff in the state court case, separately retained Lawyer and filed an application for a permanent injunction against Diane in federal court asserting the same causes of action and requesting the same relief as in the state court case. Personal jurisdiction, subject matter jurisdiction, and venue were proper. The federal court granted Diane’s motion to dismiss Paul’s federal court application on the basis of preclusion.
Infuriated with the ruling, Paul told Lawyer, “If the court can’t give me the relief I am looking for, I will take care of Diane in my own way and that dam, too.” Unable to dissuade Paul and after telling him she would report his threatening comments to criminal authorities, Lawyer called 911 and, without identifying herself, told a dispatcher that “someone is on his way to hurt Diane.”
1. Was the state court’s denial of Diane’s neighbors’ application for a permanent injunction correct? Discuss. Do not address substantive property or riparian rights.
2. Was the federal court’s denial of Paul’s application for a permanent injunction correct? Discuss. Do not address substantive property or riparian rights.
3. Did Lawyer commit any ethical violation when she called 911? Discuss. Answer according to both California and ABA authorities.
Polly, a uniformed police officer, observed a speeding car weaving in and out of traffic in violation of the Vehicle Code. Polly pursued the car in her marked patrol vehicle and activated its flashing lights. The car pulled over. Polly asked Dave, the driver, for his driver’s license and the car’s registration certificate, both of which he handed to her.
Although the documents appeared to be in order, Polly instructed Dave and his passenger, Ted: “Stay here. I’ll be back in a second.” Polly then walked to her patrol vehicle to check for any outstanding arrest warrants against Dave.
As she was walking, Polly looked back and saw that Ted appeared to be slipping something under his seat. Polly returned to Dave’s car, opened the passenger side door, looked under the seat, and saw a paper lunch bag. Polly pulled the bag out, opened it, and found five small bindles of what she recognized as cocaine.
Polly arrested Dave and Ted, took them to the police station, and gave them Miranda warnings. Dave refused to answer any questions. Ted, however, waived his Miranda rights, and stated: “I did not know what was inside the bag or how the bag got into the car. I did not see the bag before Dave and I got out of the car for lunch. We left the windows of the car open because of the heat. I did not see the bag until you stopped us. It was just lying there on the floor mat, so I put it under the seat to clear the mat for my feet.”
Dave and Ted have been charged jointly with possession of cocaine. Dave and Ted have each retained an attorney. A week before trial, Dave has become dissatisfied with his attorney and wants to discharge him in favor of a new attorney he hopes to select soon.
What arguments might Dave raise under the United States Constitution in support of each of the following motions, and how are they likely to fare:
1. A motion to suppress the cocaine? Discuss.
2. A motion to suppress Ted’s statement or, in the alternative, for a separate trial? Discuss.
3. A motion to discharge his present attorney and to substitute a new attorney in his place? Discuss.