Jessica E.

Banahene
August 2, 2015

The appropriate court for this lawsuit depends upon several factors.
Three important considerations include the following personal jurisdiction,
subject matter jurisdiction, and minimum contacts. Personal jurisdiction is
defined as a courts power to render a decision affecting the rights of the
specific persons before the court. (Kubasek, 2012, pp. 42) The court received
personal jurisdiction over Margolin when he filed his lawsuit. The court
acquired personal jurisdiction over Chris, Matt, and Ian when they received a
copy of the lawsuit and a summons. Subject matter jurisdiction is defined as
a courts power to hear certain kinds of cases. (Kubasek, 2012, pp. 44-45) It
also determines which court will hear certain types of cases. (Kubasek, 2012,
pp. 44-45) This particular case would fall under state court because it has to
do with a lawsuit about negligence. Therefore does not warrant exclusive
federal jurisdiction. Minimum Contacts is dependent on the states long arm
statues. However, committing a tort or doing business in the state is
considered enough to allow a state to serve a defendant. (Kubasek, 2012, pp.
42-43) In this case Novelty Now Inc. is a company based in Florida and is
selling Funny Face over the internet. Because Funny Face is not just a posting
but is a product clearly being sold for consumption, minimum contact has
been made.
Alternative dispute resolution (ADR) may be an option to resolve this
dispute. ADR is defined as a way to resolve legal disputes other than

litigation. (Kubasek, 2012, pp. 68-69) Some forms of ADR are arbitration
agreements, negotiation, mediation, summary jury trials, mini-trials,
neutral case evaluations, and private trials. ADRs can save organizations
lots of money by settling outside of court. (Kubasek, 2012, pp. 68-69)
Language on the Funny Face website appears to limit any claim filed to
arbitration as a means of resolving the dispute. Funny Face stated on the
website that anyone buying their product cannot take Chris, Matt, and Ian
to court. This is beneficial to them because it can save them lots of time
and money when considering potentially long court cases. It also allows for
discrete resolutions when dealing with angry consumers. However, the
website does state that any actions must be brought forth in the state of
Florida where the Novelty Now Company is based. Mediation is when to
parties select a neutral party to facilitate communication and help resolve
their dispute. (Kubasek, 2012, pp.70) Once mediation begins the parties
involved will meet with the mediator to discuss why their side should win.
(Kubasek, 2012, pp.70) The mediator is supposed to help both parties hear
each others side and find what caused the dispute in the first place. Once
they figure out what caused the dispute the mediator will reiterate what
was said and come up with a solution. Once both parties find a solution the
mediation stops and a contract is created and signed. If there is any
violation of the contract the party can be sued for breach of contract.
(Kubasek, 2012, pp. 70) With it being a fairly new company, mediation will

allow them to resolve any disputes with Margolin discretely without

causing too much harm to the business.
Chris, Matt, and Ian could be subject to corporate criminal liability. The
primary crime that exists in this case is that of fraud. Fraud is when an
individual intentionally uses misrepresentation to gain an advantage over
another.(Kubasek, 2012, pp.153) Fraud generally requires the following three
elements: a material false representation made with intent to deceive, a
victim's reasonable reliance on the false representation, and damages.
(Kubasek, 2012, pp. 153) Based on the case Chris suggested to substitute
PYR in place of what was originally used. PYR is not FDA approved and
caused Margolins face to change to blue. Even though the website for Funny
Face states that anyone buying their product cannot take Chris, Matt, and Ian
to court. They are still liable because they used a product that was not FDA
approved and as the owners of the company are just as much liable as
Novelty Now. The fact that Novelty Nows contract with the three men states
that all disputes must be brought in the state of Florida doesnt really matter
because they clearly sale a product over the internet which can be
consumed any and everywhere. Most states long arm statues will proceed
with a law suit brought strictly because they do business in any state via the
internet.
Corporate executives may also be personally liable for a business crime,
regardless of whether it was committed for their personal benefit or that of

the corporation.(kubasek, 2012, pp.161) Under the responsible corporate

officer doctrine, a court may assess criminal liability even on a corporate
executive or officer who did not engage in, direct, or know about a specific
criminal violation. (kubasek, 2012, pp.161) So in the case of Chris, Matt, and
Ian including Novelty now they are all liable. In the Case of United States v.
Parks the CEO was charged along with his corporation for violating the
Federal Food, Drug, and Cosmetic Act by allowing food in the warehouse to
be exposed to rodent contamination.(Kubasek, 2012, pp.161) Though Parks
didnt directly deal with the warehouses specifically he is still the owner of
said company. Even worse he was given a notice as to what was happening
and chose to ignore it. Though it was not intentional according to the
responsible corporate doctrine criminal liability can be assessed. However,
this case in more than one way boils down to business ethics. Chris, Matt,
and Ian could have decided to keep the original recipe intact. Instead they
used PYR which was not approved by the FDA and it caused harmed to a
consumer. Strict liability would also come into play because though they
didnt mean any harm they were still using a product that was not approved
by the FDA.
The ethical issues that remain is that fact Novelty Now used a product
which was not approved and it cause damage to the consumer. The decision
they made to cut corners could potentially cause major backlash in that they
could lose funding for their product or consumers could choose to not
purchase it. I dont think their decision in any way was malicious. I think they

made a bad judgement call when trying to decide on a prduct to use while
mass producing Funny Face.

References:
Kubasek, N. (2012). Dynaminc business law. (2nd. ed.). New York: McGrawHill/Irwin.