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Liabilities

1. Antitrust
- Microsoft - When Microsoft began bundling their Microsoft Internet Explorer with
Microsoft Windows products they ran afoul of the law. The consumers were not forced to
buy it, also there were other options on the market.
- AT&T - Antitrust laws examples differ here slightly as AT&T; was allowed to work as a
natural monopoly by the government for many years. However in 1974, Attorney
General William Saxbe filed an antitrust lawsuit against them. It would take seven years
for the Department of Justice to render a verdict and the end result was a division of the
company into seven separate regional corporations.
- Standard Oil - The United States government went after Standard Oil due to alleged
antitrust violations under the Sherman Act. The United States Supreme Court applied
the Sherman Act and upheld it, establishing precedent for future cases to be prosecuted
under this act.
2. Intellectual property
- Campbell v. Acuff-Rose Music, Inc. - “Weird Al” Yankovic has a policy of writing a
parody of a song only if he gets permission from the artist. In the late 1980s, the rap
group 2 Live Crew attempted to play by the same rules.
- Adidas America Inc. v. Payless Shoesource Inc. - Adidas and Payless got into a
scuffle over stripes. Adidas had used its three-stripe mark as a logo of sorts since 1952,
and had recently registered it as a trademark. But Payless was selling confusingly
similar athletic shoes with two and four parallel stripes. The two companies hashed out a
settlement, but by 2001, Payless was again selling the look-alikes. Fearing that the
sneakers would dupe buyers and tarnish its name, Adidas America Inc. demanded a jury
trial. The trial lasted seven years, during which 268 pairs of Payless shoes were
reviewed. In the end, Adidas was awarded $305 million—$100 million for each stripe, as
the Wall Street Journal’s Law Blog calculated.
- Amazon's 1-Click Patent - There have been several patent disputes surrounding 1-
click technology, including a patent infringement lawsuit filed against Barnes & Noble in
1999—only a month after Amazon's patent was issued. Barnes & Noble offered a
checkout option called "Express Lane," which also enabled shoppers to make a
purchase with one click. The lawsuit was settled in 2002; however, the terms were not
disclosed.
3. Employee conduct
- IBM - In December 2007, Queensland awarded a contract to IBM to develop an
application to administer payroll for Queensland's health department. IBM proposed to
complete the project by mid 2008 for $6 million. Shortly after beginning the project, IBM
realised that it faced numerous and unforeseen technical challenges and announced to
Queensland that the project would cost $27 million. The project dragged on for several
years and the payroll platform never functioned properly. In the interim, thousands of
staff failed to receive paychecks, while others were overpaid. By the end of the project,
costs had escalated to $1.2 billion, 16,000 per cent above projected cost. Queensland
banned IBM from working on other government projects and sued IBM to recover its
losses. Queensland had learned that a famous-name vendor might yield infamous
results.
- Royal Bank at Scotland - In June 2012, a failed software update left millions of
bank customers unable to access their bank accounts to withdraw funds or view their
balances. The bank, itself, was unable to conduct transactions for either commercial or
non-commercial customers. 30,000 social welfare recipients did not receive their
payments, even though the funds were moved from government accounts. Also affected
were customers of British bank NatWest and Ireland's Ulster Bank. While RBC did not
disclose details to the public concerning the IT vendor responsible for performing the
software update that initiated the shutdown, it is clear that a backup plan for such
contingencies was not sufficient, or did not exist.
- US Navy and EDS - In 2000, the Navy and Marine Corps contracted EDS to provide
voice, video, network, desktops, and system training for their personnel. By 2004, EDS
had written off more than $500 million in lost assets because it was unable to fulfill its
obligations. Worse, still, EDS' contract with the Navy obligated EDS to absorb the costs
for hardware changes, and there were plenty. Further, EDS was contractually bound to
perform unplanned customisation of legacy software prior to installing new PCs. Loose
contract language had left EDS vulnerable to some costly and unforeseen obligations.
EDS closed the third quarter of 2004 with a loss of $153 million.
4. Shareholder actions
- Roy Disney and Stanley Gold vs. Michael Eisner and Disney Management - In
2003, Roy Disney and Stanley Gold resigned as Disney) board members in protest that
Michael Eisner (Disney's CEO) had filled the company's board with directors that were
too aligned with Eisner. As nephews of the company's founder, they wanted a board
composed of directors who were accountable to investors, not the CEO.
- Kirk Kerkorian vs. Chrysler Management - Throughout the 1980s and 1990s, Chrysler
had been steadily losing to international car makers such as Toyota (NYSE:TM),
Nissan (Nasdaq:NSANY) and Honda (NYSE:HMC). Gone were the glory days when the
giant car manufacturer was run by its former boss and business legend, Lee Iacocca.
Starting in 1990, Kerkorian started buying shares of the struggling Chrysler. With the
help of Iacocca, Kerkorian's efforts culminated in 1995 with an attempted takeover bid
over Chrysler. This was a classic case of a high-profile investor attempting to buy an
underperforming company, replace its management, alter its competitive posture,
improve execution and hold the equity for an eventual sale (and a large profit). Chrysler's
existing management viewed Kerkorian's efforts as a hostile bid, successfully thwarted
the takeover efforts and the executive team preserved their jobs. In exchange for his co-
operation, Kerkorian won a payoff in the form of stock buybacks and a seat on the
board. Iacocca was slapped with a gag order preventing him from discussing Chrysler in
public for a period of five years.
- Yahoo vs. Starboard Value - Starboard Value last week sent a letter to Yahoo's Board
of Directors announcing its intention to ask shareholders to replace the entire Board.
That is why Starboard is called an "activist" fund. In cases like Yahoo the activist
investor is the last remaining player to try and save the company from weak leadership.
5. Product liability
- Philip Morris - A woman sued the company, claiming cigarettes produced by Philip
Morris caused her lung cancer and long-term addiction. The company was originally
ordered to pay $28 billion in addition to $850,000 in compensations. While this did drop
down to $28 million, it is a sizable liability case for the company.
- General Motors - Vehicles using gas powered engines require coolant to prevent
overheating in the summer and freezing up in the winter. A lawsuit against General
Motors stated the coolant in vehicle engines contained a dangerous chemical. GM had
to pay out around $20 billion for its 25 million customers. Each person ended up
receiving from $400 to $800.
- McDonald’s Restaurants - The famous McDonald’s coffee case gets a bad rap: can a
company really be at fault for customers not knowing the coffee is hot? The answer is
no, when you phrase it that way. However, the facts of the case show negligence on the
part of the company and definitely meet the standards of proving liability in product injury
cases. Learn the truth, and impress people at parties.
6. Employee conduct
- Vernon v. British Columbia (Liquor Distribution Branch), 2012 BCSC 133 -
Improper workplace investigation - Vernon had been employed by the Liquor
Distribution Branch of the Province of British Columbia for approximately 30 years, and
had an excellent employment record. She was terminated, allegedly for cause, after a
subordinate made numerous allegations against her, which were later determined to be
unfounded. Vernon sued for wrongful dismissal. The BC Court agreed, awarding the
maximum notice period available to public employees, together with $35,000 in
aggravated damages and $50,000 in punitive damages. The Court was particularly
critical of the employer’s investigation into the allegations against Vernon, and provided
useful commentary on appropriate steps in a workplace investigation.
- Devaney v. ZRV Holdings, 2012 HRTO 1590 - Family status discrimination;
mandatory elder care - Devaney is an architect, who was employed by ZRV Holdings
until 2009. Devaney also provided elder care to his mother, through a flexible work
arrangement that ZRV had permitted. However, as his mother’s condition worsened,
ZRV believed that his productivity was being affected. On numerous occasions, ZRV told
him that he would need to spend more time in the office, or he would be fired.
Unfortunately, Devaney was not able to do so, and he was fired, allegedly with cause.
Devaney brought a human rights complaint, alleging that ZRV had discriminated against
him on the basis of family status. Finding that ZRV had failed in accommodating
Devaney, the Ontario Human Rights Tribunal awarded $15,000 in damages. This case
makes clear that “family status” as defined under the Human Rights Code includes elder
care obligations.
- Sandhu v. Solutions2go Inc., 2012 ONSC 2073 - Entitlement to bonus payments
during statutory notice period - Sandhu was employed by Solutions2go Inc. and her
bonus was a significant portion of her total compensation. Sandhu was terminated,
without cause, and provided with pay in lieu of notice. Despite the fact that the company
declared bonuses during the notice period, she did not receive one because bonuses
had not been declared at the time of termination. Sandhu sued her former employer,
successfully. The Ontario Court was particularly troubled by the lack of a written bonus
policy, requiring it to refer to the employer’s obligation to pay all entitlements throughout
the statutory notice period, including bonuses. As the bonus was declared during the
notice period, it was payable to Sandhu.