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Business and Management

QUESTION 1: Suppose you are the manager of a Costa Mesa facial cream company, and you have marketed your products as Covid virus killers because your aunt Bessie told you it does.   Things are going great – sales went from $10,000 per month to $200,000 per month with the new marketing plan.   The FDA gets complaints from 2 of your customers about the burns on their face from the cream, and 1 other says they used your cream and they still got the virus.        a)     Can the FDA regulate you?   Why or why not?   (Just give me your best answer – don’t research it long.)       b.   The FDA Administrator sends an emergency notice to you and other face cream people about a rule they will put into effect in 5 days that says you must register with them, or pay a $5,000 per day fine.      After 10 days, an inspector shows up to inspect your place based on the rule.    What is your best defense to the inspector and the rule?                                                                                                                               c.     Presume the rule is somehow valid.   The inspector issues you a citation and stop order with a $50,0000 fine for the 10 days you were operating.   How do you contest it?                                                                                                                                                                       d.)   Presume the fine is initially held valid by step c,  where can you go to contest the fine?                                                                               e.) If you challenge the rule and the FDA says it was necessary to stop the burns and risk of death, what will a court likely say

ANSWER 1: a. FDA can regulate because it is related to drugs, ingredients in creams. FDA needs to assure customers of absolute safety, so when the company encounters any complaints, FDA has the right to regulate.

b. In my opinion, the best course of action is to register with the FDA if you are absolutely convinced that your cream is safe. Or still, sell as normal, just don’t have anything to claim your facial cream is illegal. When working in a store there will be many sources of good and bad opinions. There are still many satisfied customers with the product and they can guarantee the product I sell is good

c. I will dispute by saying that the law is effective after 5 days so it is not possible to give the penalty amount for 10 days

d. I can contest the FDA or higher courts like County Court or Supreme Court

e. The court will have the ability to stop my company from doing business or suspend and pay a fine, need to review the ingredients in the face cream and get it checked by the FDA before reopening.


COMMENT TO EDIT ANSWER 1: Looks like you have most of what you need, but I want you to pay attention here:  for Question 15 – the rule is probably not valid because they did not follow the rule making procedure as required – , but if rule is valid, you would challenge the citation in the agency first, and then go to the 9th Circuit Court of Appeals, and then Supreme Court. Finally, the courts would likely follow the FDA rulings because they are reasonable and within the scope of the law, the rule of Chevron Deference.


QUESTION 2:  Read the summary of Southern Union v. the US, and then tell me why the company only had to pay a $50,000 fine, and where in the Constitution you find the reason for that.   Your answer should be more than one sentence.   Try and understand SPECIFICALLY why the Supreme Court reduced the fine a judge had levied against the Company. (Links to an external site.).


ANSWER 2: The fining exceptions and specifications can be drawn to the provisions of the Sixth Amendment of the US constitution. This provision provides that the jury has the power to determine the appropriate sentencing for serious offenses. However, pursuant to the ruling made by the court in the case of Southern Union v. the US, the jury’s power does not extend to the determination of the fine to be paid by the offender. The amount to be paid as a fine is to be determined by the presiding judge or judges while exercising their judicial discretion.


COMMENT TO FIX 2: in Southern Union, the Supreme Court determined that a jury must make any finding of guilt on any material aspect, so the court held that it must not only find SU guilty of storing the materials, the jury must specifically find that SU stored it for a specific number of days.


QUESTION 3:  Using the FIRAC method, analyze facts and legal issues and come up with a possible or likely outcome in Business Case Outcome Question 5-3. At the Weatherford Hotel in Flagstaff, Arizona, in Room 59, a balcony extends across thirty inches of the room’s only window, leaving a twelve-inch gap with a three-story drop to the concrete below. A sign prohibits smoking in the room but invites guests to “step out onto the balcony” to smoke. Toni Lucario was a guest in Room 59 when she climbed out of the window and fell to her death. Patrick McMurtry, her estate’s personal representative, filed a suit against the Weatherford. Did the hotel breach a duty of care to Lucario? What might the Weatherford assert in its defense? Explain. [McMurtry v. Weatherford Hotel, Inc., 231 Ariz. 244, 293 P.3d 520 (2013)


ANSWER 3: In McMurtry v. Weatherford hotel, a complainant’s activities might lower recovery under comparative fault ethics or impede recovery is considered an overriding cause of the damage. If a contractor’s carelessness were an overriding reason for Lucario’s death, the proprietor’s laxity would not be a causal basis, and the proprietor would never be accountable. Plaintiff’s action of exiting through the window was a prime and intervening reason for her demise since the window was an open and clear hazard needing no cautions.


COMMENT 3: For question 16, when we apply the FIRAC to the hotel, it is a close call since the guest was drinking, but the hotel owes a duty to its guests, and inviting them to smoke on a dangerous balcony probably violates that. One court found no duty, the appellate court found there is one. I think there is. Close call.