Category Archives: Blog Business Law

More Legal Woes for the NE Patriots

Posted by Frank Volturo.

Over the past two decades, the New England Patriots have been a force to be reckoned with in the NFL. They have won 6 Super Bowls since 2001, all with the same head coach and quarterback. However, as successful as they have been, they have had their fair share of scandals. In 2007, there was a scandal called “spygate” where Patriots coach Bill Belichick was charged with filming the practice of other teams. In 2015, there was a scandal called “deflate-gate” where Patriots QB Tom Brady was suspended 4 games for tampering with the air pressure of footballs. Three weeks ago, the Patriots celebrated their sixth Super Bowl since the turn of the century. But, over the past week, another scandal has risen.

Patriots owner Robert Kraft has been accused of soliciting prostitution at a massage parlor in Florida. This comes less than three weeks since the Patriots won the big game. Now, Kraft faces a lawsuit. Kraft has already been charged since the evidence is there. He was caught on camera twice at a massage parlor in Jupiter, Florida. He was caught once the day of the AFC Championship game and once the day before. If Kraft does end up getting convicted, he could potentially face up to two years in prison (one per incident), but usually there is a settlement of a fine and community service.

Soliciting somebody to commit prostitution is a major crime and Kraft will definitely be held accountable one way or another. On top of a fine and community service, the NFL will likely suspend Kraft for at least a few games and fine him as well. They may even decide to take draft picks from the Patriots if the situation is bad enough. Kraft is one of 25 people caught soliciting prostitution at this spa since police installed cameras in January. While they will all face legal action, the spa is in much more trouble. They are being accused of sex trafficking. It has been said that they have been taking women from different countries and having them work at the spa and offer prostitution. This is a major felony if they get charged.

Overall, this situation is messy on all sides. As a businessman or businesswoman, one always needs to act as if somebody is watching them at all time. Being a billionaire like Kraft, you have to know that you are not the average person. In this case, even the average people involved all got caught as well. Even when you are in private, you must think like the whole world knows what you’re doing.

Frank is a student at the Stillman School of Business, Seton Hall University.

https://www.bostonglobe.com/metro/2019/02/25/here-what-know-about-new-details-robert-kraft-case/19V375xc2AMYqq3rYgz6VM/story.html

https://www.foxbusiness.com/business-leaders/patriots-owner-robert-krafts-prostitution-charges-could-result-in-nfl-fine-suspension

Honda Ridgeline Recall

Posted by Ethan Atiles.

This past week news had broken that Honda would be contacting 106,683 Ridgeline owners about an issue regarding their mid-size pickup truck’s fuel pump. It was made known that contact with various cleaning solutions or other acids could potentially cause a crack in the fuel pump feed port to crack, such crack could lead fuel leakage that lead to potential fire hazards. The National Highway Traffic Safety Administration had reported saying that dealers will replace the fuel pump and install fuel pump covers free of charge if needed.

The actions taken by both Honda and their respected dealers are very efficient and safe. Once the issue was made known precautionary actions were taken to not only save lives, but from the company’s standpoint, helping maintain their image. Injuries and even deaths that could have arisen as a result of malfunctions within the fuel pump would have been detrimental to Honda as a company.

The amount of lawsuits Honda could have potentially faced would have left a big mark on the company. Not only would they have had to have dealt with the medical bills of everyone affected, there would have also had to have been sorts of compensations in an attempt lighten the moods of their customers. Then even on top of that, whatever else individuals felt they were entitled to Honda would have most likely had to have been dealt in court.

Damages that could have possibly affected areas around the incident also would have deserved some services from Honda as well. Finally, Honda would have had to deal with lawful actions presented by those dealerships who sold the cars in the first place as they would feel not responsible and feel Honda should cover their clients.

Honda’s quick reaction to vocalize the issue most definitely prevented maybe various lawsuits that could have risen, thus saving large amounts of money, and overall, the company’s reputation and legitimacy to the public.

Ethan is a student at the Stillman School of Business, Seton Hall University.

https://www.sfgate.com/news/article/Honda-recalling-over-100K-pickups-that-could-13624989.php

https://www.nhregister.com/news/article/Honda-recalling-over-100K-pickups-that-could-13624989.php

Huawei and Corporate Espionage

Posted by William Steck.

Huawei, a multi-national, Chinese-based telecom company has again found itself in the headlines for the wrong reason. This time the corporation is facing several new lawsuits accusing it of corporate espionage.

For years, Huawei has been seen as an industry leader, recently producing some of the first 5G compatible phones, but despite its advanced engineering tactics, Huawei has been banned from entering the U.S. marketplace. The ban stems from fear of government espionage shared by both U.S. government officials and consumers. Officials and consumers believe that if the company were to enter the U.S. marketplace, it would be pressured by the Chinese Government to create back doors in its products, leading to massive breaches in U.S. national security and consumers privacy.

Although allegations of corporate espionage are not new to Huawei, few have been able to prove it, until now. In a new report, the U.S. Justice Department states that in 2013, a Huawei engineer stole a robotic arm from a T-Mobile factory. After stealing this piece of highly coveted intellectual property, the engineer proceeded to photograph it and then return it the next day, claiming he had taken it by “mistake.” The report goes on to detail a Huawei bonus program created to incentivize its workers to steal information from competing corporations. Similar suits against Huawei are also underway in Texas, Australia, Britain, German, and Poland.

Unethical and illegal actions, like the ones taken by Huawei engineers, seriously damage companies that lose billions of dollars in trade secrets and intellectual property as well as society as a whole. This year at CES in Las Vegas, 5G was all the rage. New home Wi-Fi routers from D-Link and other manufactures will allow consumers to access the internet without the need for a cable modem. This could benefit those who work from home, as well as those who live in remote areas who could finally gain access the internet.

But allegations against Huawei continue to keep the technology out of reach for millions of people by reducing competition in the market and by inflating costs. Despite their current situation, former employees claim the company’s goal is to surpass the United States as the dominant technological superpower by 2025. In order for the U.S to remain as the dominant technological superpower, courts in the U.S and around the world will need to take a hard stance on corporate espionage and hold Huawei accountable for their actions. If not, corporations, governments, and consumers could be at risk to lose even more intellectual property and personal data.

William is a business student at the Stillman School of Business, Seton Hall University.

https://www.dallasnews.com/business/technology/2018/10/18/texas-courtroom-tech-firm-huawei-stands-accused-corporate-espionage-aid-china

https://www.washingtonpost.com/opinions/global-opinions/the-huawei-indictment-tells-a-story-of-deceit-and-corporate-espionage/2019/01/29/c2035abe-23f4-11e9-90cd-dedb0c92dc17_story.html?noredirect=on&utm_term=.b418cbdcd1a1

Democrats Want to Tax the Wealthy

Posted by Wenzhuo Li.

Recently, a proposal to tax wealth finds support across party lines, along with the premise that the government should combat inequality. As leading Democrats roll out proposals to increase taxes on the rich, the American people are largely behind them.

In my opinion, there are several advantages about this proposal:

  1. It can reduce the gap between the rich and the poor and improve the fairness of the society.
  2. It can increase the contribution of the rich to society and make them more socially responsible.
  3. It can make poor citizens have better social security like health insurance.

In this Ben Casselman and Jim Tankersley’s article it said, “She says she wants to tax wealthy Americans to pay for programs for veterans, children and the homeless”. We can know that tax wealthy policy has its social responsibility and role in public welfare.

In the article, Ms. Warren said “Across party lines, Americans want the very wealthiest families to pay their fair share so we can have an economy that works for everyone.” Taxing the wealthy can pay for the economy gap.

Even there are lots of advantages of this proposal, it still has shortcomings:

  1. People might lose job opportunities. Taxing wealthy will reduce the investment, so some middle-class workers like investment advisers or some companies.
  2. The government may lose the support of the rich.

Anyway, it’s a good proposal but it still faces challenges; it is a socially responsible policy, but it still needs to pass the test of time and society.

Wenzhuo is a student at the Stillman School of Business, Seton Hall University.

Source:

https://www.nytimes.com/2019/02/19/business/economy/wealth-tax-elizabeth-warren.html?register=facebook

Women Sue Yale Over a Fraternity Culture They Say Enables Harassment

Posted by Pennie Papamichael.

They are claiming that they were groped at fraternity parties and are arguing the idea that “the school has fostered an environment where alcohol-fueled gatherings at off-campus fraternity houses dictate the undergraduate social scene” (Women Sue Yale Over a Fraternity Culture They Say Enables Harassment). The lawsuit claims that Yale does not sponsor many social events or gatherings, so people continue to go to these fraternity parties to socialize and meet other students. The lawsuit specifically states, “Male students routinely controlled the admission, alcohol, lighting, and music for many Yale social gatherings. This dynamic created dangerous environments in which sexual misconduct thrived” (UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT). Most colleges and universities have ignored the many cases that have come up in order to protect their reputation, however, it seems as time has passed people are still continuously being sexually harassed and abused. The dean of the university responded by saying, “that Yale ‘plays no formal role in the organizations not affiliated with the university, including Greek organizations,’ the university was working on providing alternative social spaces and events on campus” (Women Sue Yale Over a Fraternity Culture They Say Enables Harassment). In the lawsuit these three women are fighting to have Yale and their fraternities tame their parties as well as forcing fraternities to allow women in and share all the benefits in the membership such as networks that can lead to jobs and internships.

The problem with this lawsuit is that “‘Yale often claims that the university cannot punish the fraternities because they are unregistered, off-campus organizations,’” (Women Sue Yale Over a Fraternity Culture They Say Enables Harassment). The women are fighting this by addressing the fact that the fraternities are “acting as extensions of Yale” because “Yale allows them to use the University’s name, email address, bulletin boards and campus facilities for recruitment” (Women Sue Yale Over a Fraternity Culture They Say Enables Harassment). The three women are Anna McNeil a junior, Eliana singer a sophomore, and Ry Walker 20. They all claim that they have been groped at fraternity parties in their first semesters. Furthermore, Ry Walker even explains that when she was about to go into the party, one of the fraternity members controlling who could go in, passed her over while white women could enter. Ry Walker stated, “We eat together, take classes together, exist in this coeducational place. But somehow because of the way Greek life operates on campus and the control they have over social spaces here, that means that on weekend nights, men are the only ones who have power” (Women Sue Yale Over a Fraternity Culture They Say Enables Harassment). Furthermore, the lawsuit also accuses the University of “violating Title IX of federal education law, which prohibits sex discrimination by institutions receiving federal funding, and breach of contract for not providing the educational environment it promised. It accuses the fraternities of violating the Fair Housing Act for offering housing only to men, and Yale and the fraternities of violating Connecticut’s law against discrimination in places of public accommodation” (Women Sue Yale Over a Fraternity Culture They Say Enables Harassment).

In my opinion, I believe that these three women have a lot of courage and resilience. They are trying to fight in order to make women feel safer on college campuses, which I believe is a great thing. However, I also believe that if these women feel unsafe during these fraternity parties their simple answer is to not attend. There are other ways to be included in social events which do not involve putting yourself in a dangerous situation. In my opinion, putting yourself at risk of danger is not worth a couple hours of “fun”. I agree that this is a serious situation that needs to be addressed, however I think that no matter how many lawsuits are filed for sexual harassment, it will never fully stop it, which is a terrible thing. People need to be able to make smart choices for themselves and understand the risks that they are putting themselves through at these fraternity parties.

Pennie is business undecided at the Stillman School of Business, Seton Hall University, Class of 2022.

http:// https://www.nytimes.com/2019/02/12/us/yale-fraternities.html

Capitol Forum’s Lawsuit Against Bloomberg

Posted by Anna Plank.

On February 7th, Capitol Forum (whose headquarters is in Washington DC) sued Blomberg (whose headquarters is in New York). In the physical lawsuit, Capitol Forum enhances on its business model by saying, “[our] reports are extensively researched and carefully written, often the product of months of work, and [our] subscribers rely on these reports to make investment and business decisions.” Bloomberg’s net worth is 57 billion dollars, and (as found on their website) they “deliver business and markets news, data, analysis, and video to the world, featuring stories from Businessweek and Bloomberg News.” While Bloomberg has a larger global presence, both companies are business news outlets that specialize in reporting accurate, detailed information about the business world.

However, Capitol Forum claimed (within their lawsuit): “(1) copyright infringement; (2) contributory copyright infringement; (3) misappropriation of proprietary information under the ‘hot news’ doctrine; and (4) tortious interference with contractual relationships, arising from Bloomberg’s illegal solicitation, receipt, and use of Capitol Forum’s copyrighted and proprietary reports.” The company claimed copyright infringement since all the articles and research that is carried out by Capitol Forum are their own materials. As such, they are the copyrighted products of Capitol Forum. Additionally, the “hot news’ doctrine” states that there is legal protection for works that have been published and have clear authorship as well as economic value that doesn’t diminish in a small period. This precedent was established in 1918 through International News Service v. Associated Press. Their fourth claim focuses on the relationship the company has with their paying customers. If their customers see that the articles are being outsourced to other, FREE distributors than they are less likely to continue their membership with Capitol Forum.

While it seems Capitol Forum has sufficient grounds for their lawsuit, the Columbia Journal Review claims, “the Second Circuit rejected a misappropriation claim filed by Barclays, Merrill Lynch, and Morgan Stanley against a financial news site called Theflyonthewall.com.” Although Fly was taking these companies financial reports and republishing them, they did so completely under jurisdiction since they were giving all credit to each respective company. This lawsuit between Capitol Forum and Bloomberg seems to have a similar set up; however, since the hot news doctrine was put into place in 1918, before the dot com bubble exploded on the internet, it makes sense to begin to look at this law in a new light.
In conclusion to the lawsuit, Capitol forum demands for the court to declare that Bloomberg has indeed engaged in all activities listed and ask for compensatory damages in the amount of 150,000 dollars for each act of infringement. Additionally, Capitol Forum requested for a trial by jury and not by arbitration. As of now, there has been no update or response to this lawsuit, but it certainly has the potential to swing either way.

Anna is an accounting and IT major at the Stillman School of Business, Seton Hall University, Class of 2022.

Article Links:
https://www.cjr.org/united_states_project/hot-news-lawsuit-bloomberg.php

https://talkingbiznews.com/1/capitol-forum-sues-bloomberg-alleging-improper-use-of-its-content/

https://assets.documentcloud.org/documents/5731054/Bloomberg.pdf

A Comparison of Ponzi Schemes

Posted by Jiaqi Duan.

The “Ponzi scheme” originated from a man named Charles Ponzi (1882-1949). The investment plan is simple to say, investing in something and then getting a high return. However, Ponzi deliberately made this plan very complicated, so that ordinary people could not figure out.

In 1919, when the First World War was just over and the world economic system was in chaos, Ponzi used this confusion. He claimed that by purchasing some sort of postal bill in Europe and selling it to the United States, he could make money.

Since Ponzi, in less than 100 years, various “Ponzi schemes” have emerged around the world. With the process of China’s reform and opening up, the “Ponzi scheme” has also entered China in large numbers. In the 1980s, there was a “rat meeting” in the southern part of China, which was a replica of the “Ponzi scheme”. The more well-known “Ponzi scheme” improved version is a variety of pyramid schemes.

All scams have a common character. As we all know, the risk is proportional to the return is the investment of iron law, “Ponzi scheme” often does the opposite. Liars often attract investors, who do not know the truth of a high rate of return, and never emphasize the risk factors of investment. The return rates of various cases may vary, some are too high, such as Ponzi’s promised investment can get 50% return within 45 days, and some are stable and extraordinary returns, such as Madoff’s annual guaranteed return to customers. His was only about 10%, but he strongly stressed that “investment must be earned, there is no loss.” But in any case, scammers always try to design an investment path that is much higher than the average return of the market, and never reveal or emphasize the risk factors of investment.

There is also the use of funds to make up the replenishment characteristics. Since the promised return on investment cannot be achieved at all, the return on investment for the old customers can only be achieved by the participation of new customers or other financing arrangements. This puts a very high demand on the flow of funds for the Ponzi scheme. Therefore, the scammers always try to expand the scope of the client, broaden the scale of the funds absorbed, and get enough space for the funds to replenish. Most scammers never refuse to add new funds, because the scope is bigger, not only the benefits are more substantial, but the risk of capital chain breaks is greatly reduced, and the duration of scams can be greatly extended.

And there is also the pyramidal features of the investor structure. In order to pay the high return of investors first, the “Ponzi scheme” must continue to develop offline, attracting more and more investors through seduction, persuasion, affection, and connections, thus forming a “pyramid” style. Investor structure. A small number of insiders at the apex benefit from extracting a large number of participants from the bottom of the tower and the tower. Even the inscrutable Nasdaq’s former chairman of the board, Madoff, is inevitably entangled in the layman’s clichés, making extensive use of friends, family and business partners to develop “downline”, and some people get commissions for successful “investment”. The downline has developed a new “downline”, and the snowball type has grown into a “pyramid” structure.

Jiaqi is a student at the Stillman School of Business, Seton Hall University.

Work cited:
Dunn, Donald. The Incredible True Story of the King of Financial Cons, Ponzi, 2004.

The Laws Behind Your Data


Posted by Amy Chin.

Coming off the horizon of a myriad of data privacy scandals, legislators have called attention to the lack of federal regulation in the sector of consumer privacy. While some states, such as California, have taken charge and created statutes and regulations of their own, there exists no overarching federal statute. Many cases have fallen to the Federal Trade Commission (FTC) but even this federal agency lacks the substantial power needed to establish and enforce ethical data practices.

One of the most widely discussed scandals is Facebook’s sharing of personal user data first discovered in the case of the Cambridge Analytica scandal which questioned whether Facebook broke a consent decree to improve its privacy practices. The case made another public appearance recently in discussions with the FTC of a multi-billion dollar fine in response to this abuse of data. This would be the first significant fine issued joining the other approximately one hundred enforcement actions issued by the FTC in the past decade.

A common theme of this topic is the glacial pace of regulation and federal action in comparison to the everchanging speed of the technology it aims to regulate. With proponents pushing for legislation in Congress it still took two years for the Government Accountability Office (GAO) to author and publish the report on February 13th asking for the establishment of a “comprehensive federal privacy statute with specific standards.” The mixed bag of state statues, a limited FTC, and the judicially unexplored field of technology, the need for a universal policy is apparent.

Concerns over the misuse of data first arose from questions on the basis of ethics. Without official regulation the norms of business procedures are usually the only guiding factor in determining moral practices. Accordingly, since technology has advanced so quickly the industry has yet to pause long enough to set such universal standards. As a result, Zuckerberg and other companies avoided scrutiny for some time and have yet to be held accountable legally. These actions earned Zuckerberg the title of “digital gangster” from British lawmakers with the accusations that Facebook and similar tech giants were walking over the few rules and standards that had been set.

The nuance of data privacy in conjunction with consumer unawareness of where all their freely given data is being used leaves the field of data privacy exposed and with no direction. In the words of Rep. Frank Pallone Jr. (D-NJ.), who requested the GAO report, “consumers’ privacy is being violated online and offline in alarming and dangerous ways.” Lacking any concrete federal legislation or laws, the enforcement of data privacy standards has been anything but effective. While the GAO report is a step in the right direction, the fast pace of technology has lapped the subdued reaction of the government in creating effective laws to protect the information and data of its constituents.

Amy is a marketing and information technology management major at the Stillman School of Business, Seton Hall University, Class of 2022.

https://www.cnet.com/news/us-needs-an-internet-data-privacy-law-gao-tells-congress/

https://apnews.com/ea753cc557664ba9922666b220d4d9b4

A Reputation Tarnished by Corruption


Posted by Linnea Endersby

We are often told that one mistake can set fire to an entire reputation. This has been the case for the Nissan Chairman Carlos Ghosn. Up until recently, Ghosn was known for having a very successful career, but the uncovering of his corruption has permanently tainted all of his previous successes. Ghosn began his career working for Renault, a French automotive company, in 1996. When he first started with the company, the company was experiencing some financial difficulties. However, in approximately only year Ghosn was able to make the company profitable once again. Three years later, when Renault purchased a 36.8% stake in Nissan and Ghosn took over as the CEO of both companies, he was able to help dramatically reduce Nissan’s debt. It could be argued that the peak of his career came when Renault and Nissan combined with Mitsubishi and the three became the largest automotive group in 2017. All of these victories aside, what most people hear about Ghosn now is that he was recently arrested.

Carlos Ghosn, along with his associate Greg Kelly, were arrested by the Tokyo District Prosecutors Office when it was discovered that they were not reporting Ghosn’s full compensation. The two were responsible for underreporting $44.6 million. The compensation was not fully recorded in the Tokyo Stock Exchange, and so many other members of the company were not aware of how much Ghosn was actually gaining. After an intern al investigation Nissan found other incidences of misconduct, such as the use of company assets for personal use. In a statement to the press the current CEO of Nissan, said that he believes that this kind of corruption comes in part from placing too much power in the hands of one person. Nissan has officially released a statement saying that Ghosn will be removed from his positions within the company. After these findings, Ghosn’s reputation will be irreversibly damaged because of his financial misconduct.

The law acts as a guideline for how to do business. By stepping outside the law Ghosn not only tarnished his personal reputation, but also the company’s. Now the company is associated with scandal. It appears to me that Ghosn and Kelly committed all of these crimes simply because of greed. They were not satisfied with the amount of money they were making, and so they took it into their own hands to find ways to make more. As a business student this case only emphasizes the connection between ethics and business practices. Every decision that is made for a business should be made with the ethical impacts in mind. At the very least, even if the business is not overly concerned with being ethical it needs to be sure to remain within the law. Without these steps, the successes of a businessperson become irrelevant.

https://www.nbcnews.com/business/autos/nissan-chairman-arrested-hiding-millions-pay-n937901