BUS 206 Milestone One

Funny Face is located in California. Novelty Now Inc. is located in Florida.

Jurisdiction needs to be established. Personal jurisdiction gives a court the authority to
make decisions binding on the people involved in a civil case. Every state has personal
jurisdiction over persons within its territory. No state can exercise personal jurisdiction
and authority over persons outside its territory unless the persons have manifested
some contact with the state. In this case, personal jurisdiction exists due to the
frequent meetings between the two parties. However, the case study does not state
where these meetings take place.
Personal jurisdiction will be found if the persons involved in the litigation are
present in the state or are legal residents of the state in which the lawsuit has been
filed, or if the transaction in question has a substantial connection to the state. This
would not apply as the plaintiff lives in New York. However, the long-arm statute could
be enacted to gain jurisdiction over Funny Face who originates out of California
(Kubasek, p. 42).
Subject matter jurisdiction refers to the nature of the claim or controversy.
Subject matter jurisdiction is the power of a court to hear particular types of cases.
Federal courts deal with admiralty, bankruptcy, disputes of state against state, disputes
against the U.S., disputes of federal law, etc. None of these categories apply. A
diversity-of-citizenship case must meet both requirements that the plaintiff does not live
in the same state as the defendant, and the case controversy issues cannot exceed
$75,000. This could apply as both parties reside in different states, and if there is a
product safety concern, medical costs and damages could easily exceed $75,000
(Kubasek, p. 44).
Minimum contacts is the contact required between a party and a state in order
for the courts of that state to constitutionally assert power of that party within specific

boundary. This would apply as Funny Face sold their product through their website,
reaching anyone, anywhere (Kubasek, p. 42).
Alternative dispute resolution is a method for disagreeing parties to come to an
agreement without litigation. This could be utilizing negotiation, mediation, or
arbitration. Because this case does not involve contracts, labor, insurance,
environment, securities, technology, or international trade, ADR may be applicable
(Kubasek, p. 68). Arbitration has a benefit of lower associated costs than trial; this
would be good for Novelty Now. Benefits to both Funny Face, Novelty Now, and Donald
Margolin is that all parties get to choose who serves as arbitrator. The arbitrator has
expertise which makes the parties believe a better and fair decision will be reached.
The downside to arbitration is that because it is final, it is difficult to appeal arbitration
rulings. This could affect all parties involved if the arbitrator has made an obvious
mistake. Additionally, because arbitration panels are being used, previous advantages
are going away. There are greater costs associated with a panel of arbitrators, rather
than one person arbitrating. This could negatively affect all three parties (Kubasek, p.
71).
Mediation is the attempt to settle a legal dispute with the help of a third party, a
mediator, to find points of agreement, or makes those with conflict agree on a fair
outcome. Mediation is typically used in disputes involving workers and employers
where it is important to maintain the relationship. Or, is most used in environmental
cases; neither one these scenarios apply to the current case. Mediation would not be
beneficial (Kubasek, p. 72).
Fraud is an intentional deception that causes harm to someone else (Kubasek, p.
153). Chris instructed Novelty Now to substitute an ingredient, PYR, in the formula of
the aftershave, knowing that PYR does not have FDA approval. Funny Face may be held
responsible as Chris made the decision to change ingredients without knowing what ill
causes this could create due to the ingredient not having FDA approval. Novelty Now
could also be held responsible as the manufacturer of the product and should know

what ingredients are FDA approved. There could be the chance that something more
harmful than a blue face may yet to surface. Another possible defendant could be the
CEO of Novelty Now. As a CEO, it is that persons responsibility to know the workings of
the organization and what employees doing whether it be directly or through
communications of managers. For a manufacturer that produces a consumable, there
should be safe guards in place. Who agreed to the change internally? Who purchased a
FDA non-approved ingredient? Who tested the product in the Quality department (or
R&D)? It would seem that a blind-eye was turned on all of this. If Funny Face was able
to increase their margins, that means Novelty Now was also able to increase their
margins.
The WPH process of ethical decision making are guidelines to consider whom an
action affects, the purpose of the action, and how its morality is viewed (Kubasek, p.
23). Whom the action affects is Donald Margolin, and his business, as a consumer. As
a public speaker, he will be unable to present to groups with a blue face. He could
potentially lose sales revenue and reputation. Efficiency in regards to minimizing costs
to create increased margins was breached at the expense of the general public. To
conscientiously direct another to use an ingredient that could potentially be harmful is
unethical. For the manufacturer to also make the conscience decision to go along, is
also unethical. Consumers will pay for a quality product, but when greed comes into
play, when have actions been taken too far? What if the public had knowledge to the
fact that the shaving cream turned someones fact blue? The public would know this
because it was printed in newspapers nationwide. Would the decision to continue to
use a non-approved FDA ingredient still be used in the formula? Funny Face would then
have to contemplate if loss of sales, market competiveness, and reputation was worth
an unethical decision that they made.

Kubasek. Dynamic Business Law. (2nd ed., p. 66). New York, NY: McGraw-Hill Education.