Posted by Connor Lynch. 

An article from The Wall Street Journal titled, “General Motors May Face Punitive Damages Over Ignition Switches” is a perfect example of short-run profit maximization versus long-run profit maximization. As of November 9, General Motors can face punitive damages in several lawsuits regarding defective ignition switches in millions of vehicles. Although those vehicles have all been recalled, the defective part has been linked to more than 100 deaths.

U.S. Bankruptcy Judge Robert E. Gerber has linked GM to the deaths and injuries caused by the defective part in millions of their vehicles. After the case has been discussed, “Texas lawyer Robert Hilliard, who represents people suing GM for injuries and deaths tied to the defective ignition switch, called the decision ‘a major win’ for plaintiffs, contending that punitive damages are the only way to properly compensate victims who have been harmed by the defect.” Although it seems as if it was a complete loss for the defendant, a GM spokesperson said the company disputed the statement that the ruling was an utter victory for plaintiffs.

Punitive damages are damages intended to deter the defendants and others from getting involved in conduct that is similar to the actions that formed the basis of the lawsuit. Punitive damages are also used to punish corporations for wrongdoing such as selling defective products. Those defective products usually lead to death/injury which often can lead to large awards from the jury. It is unclear to what the punitive damages of this case will amount to: “Judge Gerber at one point in his ruling suggested GM’s punitive damages exposure could amount to millions, if not billions, of dollars, though any actual exposure will depend on whether legal claims against the company are settled or ultimately successful.”

This is not the first time that General Motors has been involved with a defective product recall resulting in punitive damages. Last year GM agreed to pay $35 million for failing to alert the public about the specific defect in a timely manner. Judge Gerber’s ruling stems from separating the “Old GM” and “New GM” because of the controversial belief that GM has retained liabilities pertaining to their restructuring.

“Old GM” had so many problems at one point that they were forced to restructure and become a new and reformed company. This has resulted in product-liability, “GM, as part of the bankruptcy restructuring, agreed to assume responsibility for future product-liability cases involving older vehicles, or those under the purview of Old GM.” General Motors’ reconstruction has allowed them to avoid several lawsuits because of their “bankruptcy shield.” Judge Gerber has ruled that “New GM” may be held responsible for the recent defective ignition switch that has caused over 100 deaths. Punitive damages may be sought out to the extent of new GM’s knowledge on the subject matter involving the defective ignition switch. Because of all the injuries/deaths, there are over 1,000 plaintiffs represented by Texas attorney, Mr. Hilliard. General Motors seems as if it is doomed to pay more money in punitive damages in addition to the $575 million they have paid recently to settle cases involving defective products.

Connor is an accounting/finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Justin Gandhi.

In current news, a Russian billionaire investor has decided to confront Morgan Stanely in court, due to insider trading practices. Insider trading is the illegal practice of trading on the stock exchange to one’s own advantage through having access to confidential information. This is illegal and unethical.

The Russian billionaire claims that Morgan Stanely illegally sold a company based on information in the peak of the financial crisis. The claim is that Morgan Stanely obtained it information through the company’s lender. Morgan Stanely’s trader immediately began short-selling the stock before the company would have to liquidate its stock and default. Morgan Stanely made 4.6 million dollars apposed to losing 6.6 million from the illegal information received.

Morgan Stanley claims it was simply hedging against exposure to risk. This trial is still in process. Be on the look out to hear more about the open arguments, defenses, and the final decision.

Justin is a finance major at the Stillman School of Business, Seton Hall University, Class of 2017.

Posted by Connor Lynch.

An article from The Wall Street Journal titled, “Toshiba Shares Fall After Loss, Lawsuits” involves an accounting scandal within the Toshiba Corporation. On Monday, Toshiba Corp. shares fell 7.5% after the company shocked the public with their poor financial results. Because of the decrease in share price, the Toshiba Corporation is suing their former executives that are in connection with an accounting scandal which may show prolonged legal uncertainties.

For the latest sixth month period, the technology giant Toshiba released statements that showed a $733 million loss. Investors were surprised by both the huge economic loss and the odd time period for releasing the financial statement. After showing a $1.12 billion dollar profit in the previous year, the publicly traded company is in an obvious state of distress. The corporation is not in a good state as of recently, “Equally unusual was Toshiba’s disclosure that it had sued three former presidents and two other executives, seeking to recover ¥300 million in connection with the scandal. Toshiba has said it overstated profits by ¥155 billion over seven years, prompting the resignation of then-CEO Hisao Tanaka in July.” In the lawsuits, the CEO and two other chief officers are said to have exhibited lax oversights on the financial statements of the company. This accounting scandal has led to several lawsuits that are reflecting poorly on the corporation for obvious reasons.

In July, Mr. Tanaka had released a statement apologizing for the problems but denies knowing about any inappropriate accounting. Because of the lawsuits involving shareholders, the stock price of Toshiba has reached its lowest level since 2012. The scandal is viewed as a disaster and many officials are speculative that Toshiba may have more skeletons in their closet. Toshiba is now viewed as a corporation with a negative outlook with businesses that seem unprofitable and need restructuring. As of now, it is unclear of Toshiba’s true position because of the accounting scandal effects on their financial reports.

The difficulty that Toshiba is experiencing as of late is causing them to consider reconstructing the corporation. Earnings are deteriorating and this is not good for Toshiba, “Sales plunged and losses swelled in the company’s consumer electronics business, and earnings fell sharply in its semiconductor arm, a leading maker of flash memory chips for smartphones and other gadgets. The chip business has been Toshiba’s main money maker in recent years.” Because of the decreasing sales in Toshiba’s business market, it causes the public to wonder if the previous financial success was based solely upon accounting tactics.

Connor is a finance and accounting major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Elizabeth Wang.

Did you know that all the Apple employees had to show their bag(s) to store security while entering and exiting to and from their stores? Even on their breaks, they have to go through security screening. Former employees, Amanda Frlekin and Dean Pelle, initiated a class action lawsuit against Apple. It included 12,000 past and present workers among 52 stores throughout California.

This past July, the lawsuit was granted class-action status in San Francisco by U.S. District Judge William Alsup. The lawsuit claims that “Apple’s policy was demeaning and embarrassing and made them feel like they were being treated as criminals.”(Williams). Also, employees lost time standing in line for the security surveillance.

These searches were not avoidable. Apple’s claimed that employees were advised to opt to come in to work without bags to avoid this activity, and “the searches were so quick, there’s no need to pay out” (Williams).

Although they claim they lost time going through this security check, Apple does not have a better solution for this issue. I guess it is a theft prevention because their devices are small and expensive. The judge had granted the filing but had dismissed the lawsuit for now.

Elizabeth is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2016.

Sources:

Judge bins Apple Store end-of-shift shakedown lawsuit^[1]

Apple Class Action Lawsuit Is Dismissed^[2]

Ex-Apple bods suing Apple for bag searches get class …^[3]

^[1] Fiveash, K (2015). Judge bins Apple Store end-of-shift shakedown lawsuit … Retrieved November 13, 2015, from http://www.theregister.co.uk/2015/11/09/judge_dismisses_apple_store_shift_shakedown_lawsuit/.

^[2]Reuters (2015). Apple Class Action Lawsuit Is Dismissed – The New York … Retrieved November 13, 2015, from http://www.nytimes.com/2015/11/09/technology/apple-class-action-lawsuit-is-dismissed.html.

^[3]Williams, C (2015). Ex-Apple bods suing Apple for bag searches get class … Retrieved November 13, 2015, from http://www.theregister.co.uk/2015/07/17/apple_store_class_action/.

Posted by Justin Gandhi.

This case is about allowing the citizens of Texas to use license plates on their vehicles that contained use of the Confederate Flag. This was an issue of free speech and freedom of expression in the First Amendment. The State of Texas wanted to reject the use of the Confederate flag license plates because these state license plates show what the Government endorses, for example a license plate featuring the universities of Texas.

Endorsing the Confederate Flag gives Texas a very bad image because it is offensive to many people, due to the war over slavery and how thousands of people were killed during this war. The Supreme Court believes that the Confederate flag associates itself with organizations advocating expressions of hate directed toward people or groups that is demeaning to those people or groups. This is offensive and obscene speech/expression, so Texas has every right to reject these license plates because it will make sure that people know that the Texas Government does not endorse this.

Overall, the Texas Government will not include a Confederate battle flag on its specialty license plates and will reject any license plates that do.

Justin is a finance major at the Stillman School of Business, Seton Hall University, Class of 2017.

Posted by Elizabeth Wang.

Wal-Mart settled a class action lawsuit in California. Wal-Mart’s ex-employees filed lawsuit  claiming wage law violations; they did not have the 30–minute lunch break, which is required for employees for working of at least six hours in the state. The plaintiffs collected $57M in compensatory damages and $115M in punitive damages, according to the Associated Press. A similar lawsuit against Walmart in Texas, Oregon, and Colorado yielded a $50M settlement.

In Pennsylvania, 150 workers had claimed that Wal-Mart was not paying for hours worked: “In one instance, one employee claimed 8 to 12 unpaid hours a month, on average.” Of course, Wal-Mart denied the allegations; their explanation is that they were testing a “flexible scheduling” policy, through the company called a shift rotation. Consequently, many full-time workers now are working in part-time schedules. This way, they claim that Wal-Mart is cutting its cost of salaries and do not have to pay employee benefits.

The lawyers of the Wal-Mart employees had to ask the court judge for an injunction from Wal-Mart to obey the legal lunch-break laws. Now, the company has to report this compliance for the next three years.

Wal-Mart has stores worldwide, mostly in United States, Canada, Argentina and Brazil. Today the company’s worth is $33.1 billion (Walmart^[1], Wikipedia, 2015). I was shocked to realize how many lawsuits were against this company. The salary of their employees are not sufficient, despite the company’s $285 billion in sales in 2015 in the U.S. Many of their full time employees had their working hours reduced to part time. I hope not only Wal-Mart but all business  can be a little more generous with their fortune profits and learn from these lawsuits.

Elizabeth is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2016.

Sources:

Walmart- Wikipedia

The Good, the Bad, and Wal-Mart^[1]

Wal-Mart Class Action Lawsuit^[2]

^[1] (2006). The Good, the Bad, and Wal-Mart – Wal-Mart. Retrieved November 13, 2015, from http://www.workplacefairness.org/reports/good-bad-wal-mart/wal-mart.php.

^[2] (2014). Wal-Mart Class Action Lawsuit | Wal-Mart Trucking Lawyers. Retrieved November 13, 2015, from http://www.wagnerjones.com/wal-mart-class-action-lawsuit/.

^[1] “Walmart – Wikipedia, the free encyclopedia.” 2011. 13 Nov. 2015

Posted by Steven Doolittle.

Daily fantasy sports are a huge part of the culture in the United States. DraftKings and FanDuel are two of the largest providers of daily fantasy sports and the New York State attorney general on Tuesday ordered those two fantasy sports companies to stop accepting bets from New York residents, due to their games constituting illegal gambling under the current state law. This decision has caused a major problem for the multibillion dollar industry, which has created a demographic of young people and partnerships with professional sports teams. Belief that this decision will continue into other states, a downward spiral for this industry is possible.

In 2006, fantasy sports that involved gambling were exempted from a prohibition against processing online financial wagering, because it was decided the games took more skill than luck. However, now with the offering of huge prizes on more individual sports leads to it being more luck- based, and therrfore, the decision is being questioned. As stated in the article, “The two companies can challenge the attorney general’s order in court. According to Joseph M. Kelly, a professor of business law at the State University College at Buffalo, the state would have to prove that chance is a material factor in fantasy sports, which would make it gambling.” There is a lot the needs to happen to finalize whether it can be classified as illegal.

“The attorney general’s office said daily fantasy sports ‘appears to be creating the same public health and economic problems associated with gambling.’” FanDuel and DraftKings argue that fantasy sports is a game of skill and legal under New York state law. Politicians are saying people are not allowed to play a game they love. It is a debate that will change the world of fantasy sports.

Steven is a student at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Mary Bonatakis.

With a number of lawsuits against Uber and other applications that beckon workers at the touch of an app, Miss Shannon Liss-Riordan has become one of the most important figures in Silicon Valley. Ms.Liss-Riordan is the Boston lawyer who is putting Uber on trial. The Uber case will come down to whether Uber can convince a jury that its classification of drivers as independent contractors and not employees of Uber, is suitable.

Ms.Liss-Riordan is representing drivers who say the car service company has illegally classified their field of work. Uber is claiming employees are considered “freelancers” and not actual Uber employees. A freelancer is someone who is self-employed. Since Uber is not declaring them as employees, they are not required to reimburse drivers for their expenses such as gas, or car damages. Ms.Liss-Riordan is also suing Lyft, Postmates and other applications like Uber. This huge lawsuit is putting Ms.Liss-Riordan in the middle of the debate over the standing of on-demand workers in the United States.

This case has been closely watched and will be continued in trial as early as next year. “A final verdict against Uber in this case could change how the firm does business with its drivers and send shocks through the on-demand economy” (Weber, Silverman). Uber’s lawyers have made it clear that they have no plans of settling and are willing to fight this case all the way to the Supreme Court. The lawyers are arguing that their app is used to connect car owners to people seeking rides and is not in charge of the fleet of drivers.

Ms.Liss-Riordan opposes by saying there is no reason Uber can’t provide its drivers the basic labor protections. “She has logged victories in the field of wage and hour law, bringing employers including Starbucks Corp. and her alma mater, Harvard University, into compliance with state and federal laws governing workers’ pay and employment status. Strategically using each ruling to build the next, her cases have targeted FedEx Corp., cleaning firms, and a strip club called King Arthur’s Lounge over the classification of their workers” (Weber, Silverman). Ms.Liss-Riordan is using all of her resources to prove Uber wrong in their classification of workers. Ms.Liss-Riordan’s goal is to shape the definition of employment with all of our advancements in technology.

Ms.Liss-Riordan doesn’t believe this case will take out Uber completely but just reclassify drivers to get the benefits and reimbursements that they deserve. “The Uber case will be a key test of Ms. Liss-Riordan’s belief that New Deal-era labor laws are adequate to respond to the emergence of an on-demand economy” (Weber, Silverman). Although this case is only going to affect California Uber drivers Ms.Liss-Riordan hopes that this case will expand to the rest of the country.

Mary is an accounting and information technology major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Philip Lacki.

Trump’s tax plan will make it simpler to pay the government. After graduation, I plan on moving to Atlanta, GA and work for Delta Air Lines. Why am I getting into my future? Well because, U.S. companies pay the highest corporate taxes in the world, and as an aviation geek and enthusiast, U.S. Airlines pay some of the highest tax rates in the United States. U.S Airlines pay 38% in taxes, the highest in the industry. These numbers are ridiculous; only alcohol and tobacco companies pay these fees.

Delta Amsterdam, which is a foreign subsidiary based in the Netherlands of course, has a corporate tax rate of 25%. Delta has a large presence and hub at Schiphol Airport in Amsterdam and has brought some parts of its operations into the Netherlands. Donald Trump’s tax plan will help companies such as Delta come back into the United States and compete fairly.

Trump’s 15% tax rate will allow many U.S. based companies to be more competitive, provide more jobs, and operate more efficiently. Rates this high should be against the law and they need to be brought down. This post applies to business law because it applies to the laws of corporations and in this case, these companies aren’t being treated in a lawful way.

Philip is a public relations major at Seton Hall University with a minor in business administration at the Stillman School of Business, Seton Hall University, Class of 2017.

Posted by Frankie Panicucci.

Wells Fargo is a corporate bank with very high and unrealistic sales targets. To meet these unrealistic sales targets Wells Fargo employees were secretly opening millions of unauthorized bank and credit card accounts for customers without their knowledge. These unauthorized accounts that were created racked up fees and allowed Wells Fargo to make more money. The accounts that were created started all the way back in 2011. The company then learned of this behavior and fired about 5,300 employees over the years. In order to pull off the scheme, the employees transferred funds from a customer’s original account into a new one without their knowledge, and it is estimated that around 1.5 million accounts were created. Customers were then being charged for over drafting or not having enough of a minimum balance in the original account. Employees also submitted over five hundred thousand applications for credit cards without the customer’s knowledge. Some of these accounts were charged over $400,000 in fees.

Wells Fargo was eventually caught committing these crimes after being investigated by the Consumer Financial Protection Bureau (CPFB). Wells Fargo is being fined with the largest fine since the CPFB’s inception; a fine of $185 million and also must refund customers $5 million. Of the $185 million, $100 million will go to the CFPB’s penalty fund, $35 million to the Office of the Comptroller of the Currency, and $50 million will go to the City and County of Los Angeles. As part of the settlement Wells Fargo also needs to make changes to its “sales practices and internal oversight.” The CPFB declined to mention how the investigation began.

The initial suspicions of accounts being created for customers began when some customers complained to Wells Fargo about unauthorized accounts that were created on their behalf. L.A. City’s Attorney, Mike Feuer, says, “Consumers must be able to trust their banks.” Feuer sued Wells Fargo in May of 2015 in relation to the unauthorized accounts. Once the suit was filed, he began to receive calls and emails from customers regarding the issue. Wells Fargo hired a consulting firm to look into the allegations after the suit was filed. After the investigation Wells Fargo released an internal statement which says, “At Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action.”

Frankie is an economics and finance major at the Stillman School of Business, Seton Hall University, Class of 2019.