, SOLUTION MANUAL FOR
Business Law Today - Standard Edition Text & Summarized Cases 14th
Edition Miller
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Solution and Answer Guide
Legal Reasoning
Miller, Business Law Today - Standard Edition: Text & Summarized Cases 14e,
9798214045849; Chapter 01: Law and Legal Reasoning
TABLE OF CONTENTS
Critical Thinking Questions in Features ................................................................................... 1
Ethical Issue—Value Judgment.................................................................................................1
Managerial Strategy—Business Questions ............................................................................... 2
Landmark in the Law—Application to Today’s World ................................................................ 3
Chapter Review ........................................................................................................................... 3
Practice and Review..................................................................................................................3
Practice and Review: Debate This.............................................................................................4
Issue Spotters............................................................................................................................4
Business Scenarios and Case Problems...................................................................................5
Critical Thinking and Writing Assignments ................................................................................ 9
Critical Thinking Question in Exhibit 1A-3................................................................................10
A Sample Court Case—Critical Thinking.................................................................................10
CRITICAL THINKING QUESTIONS IN FEATURES
ETHICAL ISSUE—VALUE JUDGMENT
1. Should an administrative authority have the power to make decisions involving hundreds of billions of
taxpayer dollars—such as canceling student loans—without input from Congress? Why or why not?
Solution: When the secretary of education decided to establish a student loan forgiveness
program that would have cancelled about $430 million in student debt for as many as 430 million
American debtors, several states sued to prevent this unilateral policy resolution from moving
forward. The case eventually made it to the United States Supreme Court, where the
administration of President Joseph Biden insisted that Congress had given it this power in the
HEROES Act, which allows the secretary of education to respond to a national emergency by
waiving or modifying any “statutory or regulatory” provision governing student-loan programs.
The Supreme Court rejected this reasoning. In his opinion, Supreme Court Chief Justice John R.
Roberts, Jr., used the language of the HEROES Act to interpret congressional intent. Congress’s
use of the word “modify” meant that a government agency could make “modest adjustments and
additions to existing provisions,” Roberts wrote. “Not transform them.” He went on to suggest that
the debt-forgiveness program “modified” student loan laws in the same way that the “French
Revolution ‘modified’ the status of the French nobility—it has abolished them and supplanted
them with a new regime entirely.”
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,Solution and Answer Guide: Miller, Business Law Today - Standard Edition: Text & Summarized Cases 14e, 9798214045849; Chapter 01: Law and
Legal Reasoning
Here, the Court asserted that an administrative body had not modified an existing Congressional
plan. Rather, the Biden administration had used its authority to enact a major new law that
Congress had not chosen to enact itself. Even given the leeway that administrative agencies
have within the separation of powers, the executive branch had gone too far in this case.
Other members of the Court, disagreeing with the majority opinion, stated that the financial
burden being suffered by millions of student loan debtors was a sufficient “emergency” to justify
the loan forgiveness program, no matter its cost. To this, Chief Justice Roberts responded, “The
question here is not whether something should be done; it is who has the authority to do it.” Thus,
when determining the ethical components of a government decision with regard to business law,
one must not only consider the inherent rightness or wrongness of the decision. One must also
consider the consequences of giving the government agency or individual the power to make the
decision.
MANAGERIAL STRATEGY—BUSINESS QUESTIONS
1. “When faced with a clearly erroneous precedent, my rule is simple,” writes Supreme Court Justice
Clarence Thomas. “We should not follow it.” How do these words offer a cautionary tale for managers
relying on stare decisis to make business decisions?
Solution: Simply put, the doctrine of stare decisis applies in all instances, except when it does
not. As noted in the text, a court is able to depart from precedent if it feels that legal, social, or
technological changes have rendered the previous decision untenable. In this case, just because
the United States Supreme Court believes, at present, that automobile salespeople are exempt
from the overtime rules of the FLSA, there is a possibility that the Court could reverse itself in the
future. In this context, managers need to be aware that (1) any decision they make based on a
court decision is subject to change, and (2) if they believe that a previous business law-related
court decision is flawed, they can challenge it in court.
2. Should Roberta consider paying her salespeople overtime even though it is not required by federal
law? Why or why not?
Solution: Just because Roberta is legally able to avoid paying the salespeople at her new used
car dealership overtime, should she? As with so many managerial decisions, the answer to this
question involves the tricky determination of costs and benefits. On the one hand, Roberta’s costs
will be lower if she does not have to pay overtime to the salespeople. On the other hand, the
salespeople may be more motivated if they feel they are being properly compensated for the
extra hours they spend on the lot. The extra motivation will likely lead to additional sales, which
very well may offset the overtime costs.
LANDMARK IN THE LAW—APPLICATION TO TODAY’S WORLD
1. The equitable maxims listed here underlie many of the legal rules and principles that are commonly
applied by the courts today—and that you will read about in this book.
For instance, in the contracts materials, you will read about the doctrine of promissory estoppel.
Under this doctrine, a person who has reasonably and substantially relied on the promise of another
may be able to obtain some measure of recovery, even though no enforceable contract exists. The
court will estop (bar) the one making the promise from asserting the lack of a valid contract as a
defense. The rationale underlying the doctrine of promissory estoppel is similar to that expressed in
which of the maxims just listed?
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Legal Reasoning
Solution: The rationale underlying the doctrine of promissory estoppel is similar to that
expressed in the fourth and fifth equitable maxims listed in the feature. The fourth maxim
supports the notion that the law should not be applied unfairly just because the law does not
provide a solution to a particular problem. The fifth maxim holds that those administering the law
should not get bogged down in technicalities when doing so leads to unfairness or injustice. In a
perfect legal world, then, a lack of a valid contract should not punish a party who has justice and
fairness on their side.
CHAPTER REVIEW
PRACTICE AND REVIEW
Suppose that the California legislature passes a law that severely restricts carbon dioxide emissions of
automobiles in that state. A group of automobile manufacturers files a suit against the state of California
to prevent enforcement of the law. The automakers claim that a federal law already sets fuel economy
standards nationwide and that these standards are essentially the same as carbon dioxide emission
standards. According to the automobile manufacturers, it is unfair to allow California to impose more
stringent regulations than those set by the federal law. Using the information presented in the chapter,
answer the following questions.
1. Who are the parties (the plaintiffs and the defendant) in this lawsuit?
Solution: In this situation, the automobile manufacturers are the plaintiffs, and the state
of California is the defendant.
2. Are the plaintiffs seeking a legal remedy or an equitable remedy? Why?
Solution: The plaintiffs are seeking an injunction, which is an equitable remedy, to
prevent the state of California from enforcing its statute restricting carbon dioxide
emissions.
3. What is the primary source of the law that is at issue here?
Solution: This case involves a law passed by the California legislature and a federal
statute; thus, the primary source of the law is statutory law.
4. Read through the appendix that follows this chapter, and then answer the following question:
Where would you look to find the relevant California and federal laws?
Solution: Federal statutes are found in the United States Code, and California statutes
are published in the California Code. You would look in both of these sources to find the
relevant state and federal statutes.
PRACTICE AND REVIEW: DEBATE THIS
1. Under the doctrine of stare decisis, courts are obligated to follow the precedents established in their
jurisdiction unless there is a compelling reason not to do so. Should U.S. courts continue to adhere to
this common law principle, given that our government now regulates so many areas by statute?
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,Solution and Answer Guide: Miller, Business Law Today - Standard Edition: Text & Summarized Cases 14e, 9798214045849; Chapter 01: Law and
Legal Reasoning
Solution: Both England and the U.S. legal systems were constructed on the common law
system. The doctrine of stare decisis has always been a major part of this system—courts should
follow precedents when they are clearly established, except when compelling reasons dictate
otherwise. Even though more common law is being turned into statutory law, the doctrine of stare
decisis is still valid. After all, statutes often must be interpreted by courts. What better basis for
judges to render their decisions than by basing them on precedents related to the subject at
hand?
In contrast, some students may argue that the doctrine of stare decisis is passé. There is
certainly less common law governing, say, environmental law than there was 100 years ago.
Given that federal and state governments increasingly are regulating more aspects of commercial
transactions between merchants and consumers, perhaps the courts should simply stick to
statutory language when disputes arise.
ISSUE SPOTTERS
1. The First Amendment to the U.S. Constitution provides protection for the free exercise of religion. A
state legislature enacts a law that outlaws all religions that do not derive from the Judeo-Christian
tradition. Is this law valid within that state? Why or why not? (See Sources of American Law.)
Solution: No. The U.S. Constitution is the supreme law of the land and applies to all jurisdictions.
A law in violation of the Constitution (in this question, the First Amendment to the Constitution)
will be declared unconstitutional.
2. Apex Corporation learns that a federal administrative agency is considering a rule that will have a
negative impact on the firm’s ability to do business. Does the firm have any opportunity to express its
opinion about the pending rule? Explain. (See Sources of American Law.)
Solution: Yes. Administrative rulemaking starts with the publication of a notice of the rulemaking
in the Federal Register. Among other details, this notice states where and when the proceedings,
such as a public hearing, will be held. Proponents and opponents can offer their comments and
concerns regarding the pending rule. After reviewing all the comments from the proceedings, the
agency’s decision makers consider what was presented and draft the final rule.
BUSINESS SCENARIOS AND CASE PROBLEMS
1–1. Binding versus Persuasive Authority. A county court in Illinois is deciding a case involving an
issue that has never been addressed before in that state’s courts. The Iowa Supreme Court, however,
recently decided a case involving a very similar fact pattern. Is the Illinois court obligated to follow the
Iowa Supreme Court’s decision on the issue? If the United States Supreme Court had decided a similar
case, would that decision be binding on the Illinois court? Explain. (See The Common Law.)
Solution: A decision of a court is binding on all inferior courts. Because no state’s court is inferior
to any other state’s court, no state’s court is obligated to follow the decision of another state’s
court on an issue. The decision may be persuasive, however, depending on the nature of the
case and the particular judge hearing it. A decision of the United States Supreme Court on an
issue is binding, like the decision of any higher court, on all inferior courts. The United States
Supreme Court is the nation’s highest court, however, and thus, its decisions are binding on all
courts, including state courts.
1–2. Sources of Law. This chapter discussed a number of sources of American law. Which source of law
takes priority in the following situations, and why? (See Sources of American Law.)
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Legal Reasoning
1. A federal statute conflicts with the U.S. Constitution.
Solution: The U.S. Constitution—The U.S. Constitution is the supreme law of the land. A
law in violation of the Constitution, no matter what its source, will be declared
unconstitutional and will not be enforced.
2. A federal statute conflicts with a state constitutional provision.
Solution: The federal statute—Under the U.S. Constitution, when there is a conflict
between a federal law and a state law, the state law is rendered invalid.
3. A state statute conflicts with the common law of that state.
Solution: The state statute—State statutes are enacted by state legislatures. Areas not
covered by state statutory law are governed by state case law.
4. A state constitutional amendment conflicts with the U.S. Constitution.
Solution: The U.S. Constitution—State constitutions are supreme within their respective
borders unless they conflict with the U.S. Constitution, which is the supreme law of the
land.
1–3. Remedies. Arthur Rabe is suing Xavier Sanchez for breaching a contract in which Sanchez
promised to sell Rabe a Van Gogh painting for $150,000. (See The Common Law.)
1. In this lawsuit, who is the plaintiff, and who is the defendant?
Solution: In a suit by Arthur Rabe against Xavier Sanchez, Rabe is the plaintiff and
Sanchez is the defendant.
2. If Rabe wants Sanchez to perform the contract as promised, what remedy should Rabe
seek?
Solution: Specific performance is the remedy that includes an order to a party to perform
a contract as promised.
3. Suppose that Rabe wants to cancel the contract because Sanchez fraudulently
misrepresented the painting as an original Van Gogh when in fact it is a copy. In this
situation, what remedy should Rabe seek?
Solution: Rescission is a remedy that includes an order to cancel a contract.
4. Will the remedy Rabe seeks in either situation be a remedy at law or a remedy in equity?
Solution: In both cases, these remedies are remedies in equity.
1–4. Philosophy of Law. After World War II ended in 1945, an international tribunal of judges convened
at Nuremberg, Germany. The judges convicted several Nazi war criminals of “crimes against humanity.”
Assuming that the Nazis who were convicted had not disobeyed any law of their country and had merely
been following their government’s (Hitler’s) orders, what law had they violated? Explain. (See The
Common Law.)
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Legal Reasoning
Solution: Crimes against humanity constituted, at the time of the Nuremberg trials, a new
international crime, consisting of “murder, extermination, enslavement, deportation, and other
inhumane acts committed against any civilian population, before or during the war, or
persecutions on political, racial, or religious grounds.” In response to the defendants’ assertion
that they had only been following orders, the Nuremberg judges explained in part that these were
familiar crimes within domestic jurisdictions and thus the accused must have known, when they
committed their acts, that they would be considered criminal.
In terms of a philosophy of law, it might be said that these criminals violated “natural law.” The
oldest and one of the most significant schools of jurisprudence is the natural law school. Those
who adhere to the natural law school of thought believe that government and the legal system
should reflect universal moral and ethical principles that are inherent in human nature. Because
natural law is universal, it takes on a higher order than positive, or conventional, law. The natural
law tradition presupposes that the legitimacy of conventional, or positive, law derives from natural
law. Whenever it conflicts with natural law, conventional law loses its legitimacy. For example, a
precept of natural law may be that murder is wrong, which is a value reflected by specific laws
prohibiting murder. If a specific, written law requires murder, it conflicts with the natural law
precept, in which case individuals should disobey the written law and obey the natural law.
1–5. Business Case Problem with Sample Answer—Reading Citations. Assume that you want to
read the entire court opinion in the case of Friends of Buckingham v. State Air Pollution Control Board,
947 F.3d 68 (4th Cir. 2020).
Refer to the appendix to this chapter, and then explain specifically where you would find the court’s
opinion. (See Finding Case Law.)
Solution: The court’s opinion in the case Friends of Buckingham v. State Air Pollution Control
Board can be found in volume 947 of the Federal Reporter, third series, on page 68. The Federal
Reporter contains the decisions of all the United States Courts of Appeals, including, as is the
case here, the Fourth Circuit Court of Appeals. Also, this case was decided (though not
necessarily filed) in 2020.
1–6. Spotlight on Gateway Hotels—Stare Decisis. Orlando Garcia filed a lawsuit against Gateway
Hotels, contending that, in violation of the Americans with Disabilities Act (ADA), the company’s website
failed to indicate whether any of its rooms would accommodate his disability. After a court ruled that
Gateway’s website did comply with the ADA, the company sought an award of attorney’s fees, as allowed
by federal law. Garcia countered that his case was not “frivolous” and therefore he should not be forced to
cover the hotel chain’s legal costs. Gateway pointed out that, according to a previous United States
Supreme Court ruling, attorney’s fees could be awarded in such cases even if the original lawsuit was not
frivolous. Applying the doctrine of stare decisis, will the court side with Gateway? Explain. [Garcia v.
Gateway Hotel, LP, 82 F.4th 750 (9th Cir. 2023] (See The Common Law.)
Solution: In Brown v. Lucky Stores (2001), the U.S. Court of Appeals for the Ninth Circuit (the
authority deciding this case) ruled that ADA defendants could not recoup the legal costs of a
failed discrimination lawsuit unless the action was “frivolous, unreasonable, or groundless.”
Twelve years later, with its Marx v. General Revenue Corp. decision, the United States Supreme
Court held that a district court has the discretion to award legal fees to a defendant regardless of
whether the plaintiff’s legal action was in bad faith.
Applying the doctrine of stare decisis, the U.S. Court of Appeals for the Ninth Circuit concluded
that “our decision in Brown cannot be reconciled with the Court's decision in Marx, and therefore
it has been effectively overruled.” Therefore, in this case, at the district court’s discretion, Garcia
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,Solution and Answer Guide: Miller, Business Law Today - Standard Edition: Text & Summarized Cases 14e, 9798214045849; Chapter 01: Law and
Legal Reasoning
could be found liable for those costs that Gateway incurred in defending itself against Garcia’s
failed ADA lawsuit.
1–7. A Question of Ethics—The Doctrine of Precedent. Sandra White operated a travel agency. To
obtain lower airline fares for her nonmilitary clients, she booked military-rate travel by forwarding fake
military identification cards to the airlines. The government charged White with identity theft, which
requires the “use” of another’s identification. The trial court had two cases that represented precedents.
In the first case, David Miller obtained a loan to buy land by representing that certain investors had
approved the loan when, in fact, they had not. Miller’s conviction for identity theft was overturned because
he had merely said that the investors had done something when they had not. According to the court, this
was not the “use” of another’s identification.
In the second case, Kathy Medlock, an ambulance service operator, had transported patients for whom
ambulance transport was not medically necessary. To obtain payment, Medlock had forged a physician’s
signature. The court concluded that this was “use” of another person’s identity. [United States v. White,
846 F.3d 170 (6th Cir. 2017)] (See Sources of American Law.)
1. Which precedent—the Miller case or the Medlock case—is similar to White’s situation, and why?
Solution: In this problem, White operated a travel agency. To obtain low fares for her
clients, she submitted fake military identification cards to the airlines. She was charged
with the crime of identity theft, which requires the “use” of another’s identification. In a
previous case, David Miller, to obtain a loan, represented that certain investors approved
of the loan when they did not. Miller’s conviction for identity theft was overturned on the
ground that he had not “used” the investors’ identities—he had only said that they had
done something when they had not. In a second case, Kathy Medlock, the operator of an
ambulance service, obtained payment for transporting patients for whom there was no
medical necessity to do so by forging a physician’s signature. White’s actions most
closely resemble Medlock’s forgery. White not only told the airlines that her clients were
members of the military—she created false identification cards and sent them to the
airlines.
In all of these cases, the defendants lied about their actions. Whether or not their conduct
fell within the meaning of a word within a statute, or matched the actions of a perpetrator
in another case, none of these parties can claim to have acted ethically. Honesty is a part
of ethical behavior in any set of circumstances, and none of these defendants were
truthful about their actions.
In the actual case on which this problem is based, the court concluded that White’s
actions were most similar to Medlock’s. White was convicted of identity theft. On appeal,
the U.S. Court of Appeals for the Sixth Circuit affirmed the conviction.
2. In the two cases cited by the court, were there any ethical differences in the actions of the
parties? Explain your answer.
Solution: No, in the two cases cited by the White court—and in the White case—there
were no ethical differences in the actions of the parties.
Almost any definition of ethics, and any set of ethical standards, includes honesty as a
component. In the White case, Sandra White lied to the airlines that her clients were
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Legal Reasoning
members of the military, and created false identification cards to obtain cheaper fares. In
the first case cited by the White court, David Miller, to obtain a loan, represented that
certain investors approved of the loan when they did not. In the second case cited by the
White court, Kathy Medlock, the operator of an ambulance service, obtained payment for
transporting patients for whom there was no medical necessity to do so by forging a
physician’s signature.
In all of these cases, the defendants lied. Whether or not their conduct fell within the
meaning of a word within a statute, or matched the unlawful actions of each other, none
of these parties can claim to have acted ethically. Honesty is a part of ethical behavior in
any set of circumstances, and none of these defendants were truthful.
CRITICAL THINKING AND WRITING ASSIGNMENTS
1–8. Business Law Writing. John’s company is involved in a lawsuit with a customer, Beth. John argues
that for fifty years higher courts in that state have decided cases involving circumstances similar to his
case in a way that indicates he can expect a ruling in his company’s favor. Write at least one paragraph
discussing whether this is a valid argument. Write another paragraph discussing whether the judge in this
case must rule as those other judges did and why. (See The Common Law.)
Solution: John’s argument is valid. Under the doctrine of stare decisis, judges are generally
bound to follow the precedents set in their jurisdictions by the judges who have decided similar
cases. A judge does not always have to rule as other judges have, however. A judge can depart
from precedent. One argument that a party might offer to counter an assertion of precedent is that
the times have changed—the social, economic, political, or other circumstances have changed—
and thus it is time to change the law.
1–9. Time-Limited Group Assignment—Court Opinions. Go to the section entitled Reading and
Understanding Case Law in the appendix at the end of this chapter, and read the subsection entitled
“Decisions and Opinions.”
1. One group will explain the difference between a concurring opinion and a majority opinion.
Solution: A majority opinion is a written opinion outlining the views of the majority of the
judges or justices deciding a particular case. A concurring opinion is a written opinion by
a judge or justice who agrees with the conclusion reached by the majority of the court but
not necessarily with the legal reasoning that led the conclusion.
2. Another group will outline the difference between a concurring opinion and a dissenting opinion.
Solution: A concurring opinion will voice alternative or additional reasons as to why the
conclusion is warranted or clarify certain legal points concerning the issue. A dissenting
opinion is a written opinion in which judges or justices who do not agree with the
conclusion reached by the majority of the court expound their views on the case.
3. The third group will explain why judges and justices write concurring and dissenting
opinions, given that these opinions will not affect the outcome of the case at hand, which
has already been decided by majority vote.
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Business Law Today - Standard Edition Text & Summarized Cases 14th
Edition Miller
Important Notes
The file includes the complete test bank, organized chapter by chapter.
A sample of selected pages has been provided for preview.
All available appendices and Excel files (if included in the original resources) are
provided.
We continuously update our files to ensure you receive the latest and most accurate
editions.
New editions are added regularly – stay connected for updates!
Purchase Guarantee
If you believe you have purchased the wrong file, don’t worry. Contact us anytime and we
will gladly replace it with the correct version.
Contact Email:
,Solution and Answer Guide: Miller, Business Law Today - Standard Edition: Text & Summarized Cases 14e, 9798214045849; Chapter 01: Law and
Solution and Answer Guide
Legal Reasoning
Miller, Business Law Today - Standard Edition: Text & Summarized Cases 14e,
9798214045849; Chapter 01: Law and Legal Reasoning
TABLE OF CONTENTS
Critical Thinking Questions in Features ................................................................................... 1
Ethical Issue—Value Judgment.................................................................................................1
Managerial Strategy—Business Questions ............................................................................... 2
Landmark in the Law—Application to Today’s World ................................................................ 3
Chapter Review ........................................................................................................................... 3
Practice and Review..................................................................................................................3
Practice and Review: Debate This.............................................................................................4
Issue Spotters............................................................................................................................4
Business Scenarios and Case Problems...................................................................................5
Critical Thinking and Writing Assignments ................................................................................ 9
Critical Thinking Question in Exhibit 1A-3................................................................................10
A Sample Court Case—Critical Thinking.................................................................................10
CRITICAL THINKING QUESTIONS IN FEATURES
ETHICAL ISSUE—VALUE JUDGMENT
1. Should an administrative authority have the power to make decisions involving hundreds of billions of
taxpayer dollars—such as canceling student loans—without input from Congress? Why or why not?
Solution: When the secretary of education decided to establish a student loan forgiveness
program that would have cancelled about $430 million in student debt for as many as 430 million
American debtors, several states sued to prevent this unilateral policy resolution from moving
forward. The case eventually made it to the United States Supreme Court, where the
administration of President Joseph Biden insisted that Congress had given it this power in the
HEROES Act, which allows the secretary of education to respond to a national emergency by
waiving or modifying any “statutory or regulatory” provision governing student-loan programs.
The Supreme Court rejected this reasoning. In his opinion, Supreme Court Chief Justice John R.
Roberts, Jr., used the language of the HEROES Act to interpret congressional intent. Congress’s
use of the word “modify” meant that a government agency could make “modest adjustments and
additions to existing provisions,” Roberts wrote. “Not transform them.” He went on to suggest that
the debt-forgiveness program “modified” student loan laws in the same way that the “French
Revolution ‘modified’ the status of the French nobility—it has abolished them and supplanted
them with a new regime entirely.”
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accessible website, in whole or in part.
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Legal Reasoning
Here, the Court asserted that an administrative body had not modified an existing Congressional
plan. Rather, the Biden administration had used its authority to enact a major new law that
Congress had not chosen to enact itself. Even given the leeway that administrative agencies
have within the separation of powers, the executive branch had gone too far in this case.
Other members of the Court, disagreeing with the majority opinion, stated that the financial
burden being suffered by millions of student loan debtors was a sufficient “emergency” to justify
the loan forgiveness program, no matter its cost. To this, Chief Justice Roberts responded, “The
question here is not whether something should be done; it is who has the authority to do it.” Thus,
when determining the ethical components of a government decision with regard to business law,
one must not only consider the inherent rightness or wrongness of the decision. One must also
consider the consequences of giving the government agency or individual the power to make the
decision.
MANAGERIAL STRATEGY—BUSINESS QUESTIONS
1. “When faced with a clearly erroneous precedent, my rule is simple,” writes Supreme Court Justice
Clarence Thomas. “We should not follow it.” How do these words offer a cautionary tale for managers
relying on stare decisis to make business decisions?
Solution: Simply put, the doctrine of stare decisis applies in all instances, except when it does
not. As noted in the text, a court is able to depart from precedent if it feels that legal, social, or
technological changes have rendered the previous decision untenable. In this case, just because
the United States Supreme Court believes, at present, that automobile salespeople are exempt
from the overtime rules of the FLSA, there is a possibility that the Court could reverse itself in the
future. In this context, managers need to be aware that (1) any decision they make based on a
court decision is subject to change, and (2) if they believe that a previous business law-related
court decision is flawed, they can challenge it in court.
2. Should Roberta consider paying her salespeople overtime even though it is not required by federal
law? Why or why not?
Solution: Just because Roberta is legally able to avoid paying the salespeople at her new used
car dealership overtime, should she? As with so many managerial decisions, the answer to this
question involves the tricky determination of costs and benefits. On the one hand, Roberta’s costs
will be lower if she does not have to pay overtime to the salespeople. On the other hand, the
salespeople may be more motivated if they feel they are being properly compensated for the
extra hours they spend on the lot. The extra motivation will likely lead to additional sales, which
very well may offset the overtime costs.
LANDMARK IN THE LAW—APPLICATION TO TODAY’S WORLD
1. The equitable maxims listed here underlie many of the legal rules and principles that are commonly
applied by the courts today—and that you will read about in this book.
For instance, in the contracts materials, you will read about the doctrine of promissory estoppel.
Under this doctrine, a person who has reasonably and substantially relied on the promise of another
may be able to obtain some measure of recovery, even though no enforceable contract exists. The
court will estop (bar) the one making the promise from asserting the lack of a valid contract as a
defense. The rationale underlying the doctrine of promissory estoppel is similar to that expressed in
which of the maxims just listed?
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Solution: The rationale underlying the doctrine of promissory estoppel is similar to that
expressed in the fourth and fifth equitable maxims listed in the feature. The fourth maxim
supports the notion that the law should not be applied unfairly just because the law does not
provide a solution to a particular problem. The fifth maxim holds that those administering the law
should not get bogged down in technicalities when doing so leads to unfairness or injustice. In a
perfect legal world, then, a lack of a valid contract should not punish a party who has justice and
fairness on their side.
CHAPTER REVIEW
PRACTICE AND REVIEW
Suppose that the California legislature passes a law that severely restricts carbon dioxide emissions of
automobiles in that state. A group of automobile manufacturers files a suit against the state of California
to prevent enforcement of the law. The automakers claim that a federal law already sets fuel economy
standards nationwide and that these standards are essentially the same as carbon dioxide emission
standards. According to the automobile manufacturers, it is unfair to allow California to impose more
stringent regulations than those set by the federal law. Using the information presented in the chapter,
answer the following questions.
1. Who are the parties (the plaintiffs and the defendant) in this lawsuit?
Solution: In this situation, the automobile manufacturers are the plaintiffs, and the state
of California is the defendant.
2. Are the plaintiffs seeking a legal remedy or an equitable remedy? Why?
Solution: The plaintiffs are seeking an injunction, which is an equitable remedy, to
prevent the state of California from enforcing its statute restricting carbon dioxide
emissions.
3. What is the primary source of the law that is at issue here?
Solution: This case involves a law passed by the California legislature and a federal
statute; thus, the primary source of the law is statutory law.
4. Read through the appendix that follows this chapter, and then answer the following question:
Where would you look to find the relevant California and federal laws?
Solution: Federal statutes are found in the United States Code, and California statutes
are published in the California Code. You would look in both of these sources to find the
relevant state and federal statutes.
PRACTICE AND REVIEW: DEBATE THIS
1. Under the doctrine of stare decisis, courts are obligated to follow the precedents established in their
jurisdiction unless there is a compelling reason not to do so. Should U.S. courts continue to adhere to
this common law principle, given that our government now regulates so many areas by statute?
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Solution: Both England and the U.S. legal systems were constructed on the common law
system. The doctrine of stare decisis has always been a major part of this system—courts should
follow precedents when they are clearly established, except when compelling reasons dictate
otherwise. Even though more common law is being turned into statutory law, the doctrine of stare
decisis is still valid. After all, statutes often must be interpreted by courts. What better basis for
judges to render their decisions than by basing them on precedents related to the subject at
hand?
In contrast, some students may argue that the doctrine of stare decisis is passé. There is
certainly less common law governing, say, environmental law than there was 100 years ago.
Given that federal and state governments increasingly are regulating more aspects of commercial
transactions between merchants and consumers, perhaps the courts should simply stick to
statutory language when disputes arise.
ISSUE SPOTTERS
1. The First Amendment to the U.S. Constitution provides protection for the free exercise of religion. A
state legislature enacts a law that outlaws all religions that do not derive from the Judeo-Christian
tradition. Is this law valid within that state? Why or why not? (See Sources of American Law.)
Solution: No. The U.S. Constitution is the supreme law of the land and applies to all jurisdictions.
A law in violation of the Constitution (in this question, the First Amendment to the Constitution)
will be declared unconstitutional.
2. Apex Corporation learns that a federal administrative agency is considering a rule that will have a
negative impact on the firm’s ability to do business. Does the firm have any opportunity to express its
opinion about the pending rule? Explain. (See Sources of American Law.)
Solution: Yes. Administrative rulemaking starts with the publication of a notice of the rulemaking
in the Federal Register. Among other details, this notice states where and when the proceedings,
such as a public hearing, will be held. Proponents and opponents can offer their comments and
concerns regarding the pending rule. After reviewing all the comments from the proceedings, the
agency’s decision makers consider what was presented and draft the final rule.
BUSINESS SCENARIOS AND CASE PROBLEMS
1–1. Binding versus Persuasive Authority. A county court in Illinois is deciding a case involving an
issue that has never been addressed before in that state’s courts. The Iowa Supreme Court, however,
recently decided a case involving a very similar fact pattern. Is the Illinois court obligated to follow the
Iowa Supreme Court’s decision on the issue? If the United States Supreme Court had decided a similar
case, would that decision be binding on the Illinois court? Explain. (See The Common Law.)
Solution: A decision of a court is binding on all inferior courts. Because no state’s court is inferior
to any other state’s court, no state’s court is obligated to follow the decision of another state’s
court on an issue. The decision may be persuasive, however, depending on the nature of the
case and the particular judge hearing it. A decision of the United States Supreme Court on an
issue is binding, like the decision of any higher court, on all inferior courts. The United States
Supreme Court is the nation’s highest court, however, and thus, its decisions are binding on all
courts, including state courts.
1–2. Sources of Law. This chapter discussed a number of sources of American law. Which source of law
takes priority in the following situations, and why? (See Sources of American Law.)
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1. A federal statute conflicts with the U.S. Constitution.
Solution: The U.S. Constitution—The U.S. Constitution is the supreme law of the land. A
law in violation of the Constitution, no matter what its source, will be declared
unconstitutional and will not be enforced.
2. A federal statute conflicts with a state constitutional provision.
Solution: The federal statute—Under the U.S. Constitution, when there is a conflict
between a federal law and a state law, the state law is rendered invalid.
3. A state statute conflicts with the common law of that state.
Solution: The state statute—State statutes are enacted by state legislatures. Areas not
covered by state statutory law are governed by state case law.
4. A state constitutional amendment conflicts with the U.S. Constitution.
Solution: The U.S. Constitution—State constitutions are supreme within their respective
borders unless they conflict with the U.S. Constitution, which is the supreme law of the
land.
1–3. Remedies. Arthur Rabe is suing Xavier Sanchez for breaching a contract in which Sanchez
promised to sell Rabe a Van Gogh painting for $150,000. (See The Common Law.)
1. In this lawsuit, who is the plaintiff, and who is the defendant?
Solution: In a suit by Arthur Rabe against Xavier Sanchez, Rabe is the plaintiff and
Sanchez is the defendant.
2. If Rabe wants Sanchez to perform the contract as promised, what remedy should Rabe
seek?
Solution: Specific performance is the remedy that includes an order to a party to perform
a contract as promised.
3. Suppose that Rabe wants to cancel the contract because Sanchez fraudulently
misrepresented the painting as an original Van Gogh when in fact it is a copy. In this
situation, what remedy should Rabe seek?
Solution: Rescission is a remedy that includes an order to cancel a contract.
4. Will the remedy Rabe seeks in either situation be a remedy at law or a remedy in equity?
Solution: In both cases, these remedies are remedies in equity.
1–4. Philosophy of Law. After World War II ended in 1945, an international tribunal of judges convened
at Nuremberg, Germany. The judges convicted several Nazi war criminals of “crimes against humanity.”
Assuming that the Nazis who were convicted had not disobeyed any law of their country and had merely
been following their government’s (Hitler’s) orders, what law had they violated? Explain. (See The
Common Law.)
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Solution: Crimes against humanity constituted, at the time of the Nuremberg trials, a new
international crime, consisting of “murder, extermination, enslavement, deportation, and other
inhumane acts committed against any civilian population, before or during the war, or
persecutions on political, racial, or religious grounds.” In response to the defendants’ assertion
that they had only been following orders, the Nuremberg judges explained in part that these were
familiar crimes within domestic jurisdictions and thus the accused must have known, when they
committed their acts, that they would be considered criminal.
In terms of a philosophy of law, it might be said that these criminals violated “natural law.” The
oldest and one of the most significant schools of jurisprudence is the natural law school. Those
who adhere to the natural law school of thought believe that government and the legal system
should reflect universal moral and ethical principles that are inherent in human nature. Because
natural law is universal, it takes on a higher order than positive, or conventional, law. The natural
law tradition presupposes that the legitimacy of conventional, or positive, law derives from natural
law. Whenever it conflicts with natural law, conventional law loses its legitimacy. For example, a
precept of natural law may be that murder is wrong, which is a value reflected by specific laws
prohibiting murder. If a specific, written law requires murder, it conflicts with the natural law
precept, in which case individuals should disobey the written law and obey the natural law.
1–5. Business Case Problem with Sample Answer—Reading Citations. Assume that you want to
read the entire court opinion in the case of Friends of Buckingham v. State Air Pollution Control Board,
947 F.3d 68 (4th Cir. 2020).
Refer to the appendix to this chapter, and then explain specifically where you would find the court’s
opinion. (See Finding Case Law.)
Solution: The court’s opinion in the case Friends of Buckingham v. State Air Pollution Control
Board can be found in volume 947 of the Federal Reporter, third series, on page 68. The Federal
Reporter contains the decisions of all the United States Courts of Appeals, including, as is the
case here, the Fourth Circuit Court of Appeals. Also, this case was decided (though not
necessarily filed) in 2020.
1–6. Spotlight on Gateway Hotels—Stare Decisis. Orlando Garcia filed a lawsuit against Gateway
Hotels, contending that, in violation of the Americans with Disabilities Act (ADA), the company’s website
failed to indicate whether any of its rooms would accommodate his disability. After a court ruled that
Gateway’s website did comply with the ADA, the company sought an award of attorney’s fees, as allowed
by federal law. Garcia countered that his case was not “frivolous” and therefore he should not be forced to
cover the hotel chain’s legal costs. Gateway pointed out that, according to a previous United States
Supreme Court ruling, attorney’s fees could be awarded in such cases even if the original lawsuit was not
frivolous. Applying the doctrine of stare decisis, will the court side with Gateway? Explain. [Garcia v.
Gateway Hotel, LP, 82 F.4th 750 (9th Cir. 2023] (See The Common Law.)
Solution: In Brown v. Lucky Stores (2001), the U.S. Court of Appeals for the Ninth Circuit (the
authority deciding this case) ruled that ADA defendants could not recoup the legal costs of a
failed discrimination lawsuit unless the action was “frivolous, unreasonable, or groundless.”
Twelve years later, with its Marx v. General Revenue Corp. decision, the United States Supreme
Court held that a district court has the discretion to award legal fees to a defendant regardless of
whether the plaintiff’s legal action was in bad faith.
Applying the doctrine of stare decisis, the U.S. Court of Appeals for the Ninth Circuit concluded
that “our decision in Brown cannot be reconciled with the Court's decision in Marx, and therefore
it has been effectively overruled.” Therefore, in this case, at the district court’s discretion, Garcia
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could be found liable for those costs that Gateway incurred in defending itself against Garcia’s
failed ADA lawsuit.
1–7. A Question of Ethics—The Doctrine of Precedent. Sandra White operated a travel agency. To
obtain lower airline fares for her nonmilitary clients, she booked military-rate travel by forwarding fake
military identification cards to the airlines. The government charged White with identity theft, which
requires the “use” of another’s identification. The trial court had two cases that represented precedents.
In the first case, David Miller obtained a loan to buy land by representing that certain investors had
approved the loan when, in fact, they had not. Miller’s conviction for identity theft was overturned because
he had merely said that the investors had done something when they had not. According to the court, this
was not the “use” of another’s identification.
In the second case, Kathy Medlock, an ambulance service operator, had transported patients for whom
ambulance transport was not medically necessary. To obtain payment, Medlock had forged a physician’s
signature. The court concluded that this was “use” of another person’s identity. [United States v. White,
846 F.3d 170 (6th Cir. 2017)] (See Sources of American Law.)
1. Which precedent—the Miller case or the Medlock case—is similar to White’s situation, and why?
Solution: In this problem, White operated a travel agency. To obtain low fares for her
clients, she submitted fake military identification cards to the airlines. She was charged
with the crime of identity theft, which requires the “use” of another’s identification. In a
previous case, David Miller, to obtain a loan, represented that certain investors approved
of the loan when they did not. Miller’s conviction for identity theft was overturned on the
ground that he had not “used” the investors’ identities—he had only said that they had
done something when they had not. In a second case, Kathy Medlock, the operator of an
ambulance service, obtained payment for transporting patients for whom there was no
medical necessity to do so by forging a physician’s signature. White’s actions most
closely resemble Medlock’s forgery. White not only told the airlines that her clients were
members of the military—she created false identification cards and sent them to the
airlines.
In all of these cases, the defendants lied about their actions. Whether or not their conduct
fell within the meaning of a word within a statute, or matched the actions of a perpetrator
in another case, none of these parties can claim to have acted ethically. Honesty is a part
of ethical behavior in any set of circumstances, and none of these defendants were
truthful about their actions.
In the actual case on which this problem is based, the court concluded that White’s
actions were most similar to Medlock’s. White was convicted of identity theft. On appeal,
the U.S. Court of Appeals for the Sixth Circuit affirmed the conviction.
2. In the two cases cited by the court, were there any ethical differences in the actions of the
parties? Explain your answer.
Solution: No, in the two cases cited by the White court—and in the White case—there
were no ethical differences in the actions of the parties.
Almost any definition of ethics, and any set of ethical standards, includes honesty as a
component. In the White case, Sandra White lied to the airlines that her clients were
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members of the military, and created false identification cards to obtain cheaper fares. In
the first case cited by the White court, David Miller, to obtain a loan, represented that
certain investors approved of the loan when they did not. In the second case cited by the
White court, Kathy Medlock, the operator of an ambulance service, obtained payment for
transporting patients for whom there was no medical necessity to do so by forging a
physician’s signature.
In all of these cases, the defendants lied. Whether or not their conduct fell within the
meaning of a word within a statute, or matched the unlawful actions of each other, none
of these parties can claim to have acted ethically. Honesty is a part of ethical behavior in
any set of circumstances, and none of these defendants were truthful.
CRITICAL THINKING AND WRITING ASSIGNMENTS
1–8. Business Law Writing. John’s company is involved in a lawsuit with a customer, Beth. John argues
that for fifty years higher courts in that state have decided cases involving circumstances similar to his
case in a way that indicates he can expect a ruling in his company’s favor. Write at least one paragraph
discussing whether this is a valid argument. Write another paragraph discussing whether the judge in this
case must rule as those other judges did and why. (See The Common Law.)
Solution: John’s argument is valid. Under the doctrine of stare decisis, judges are generally
bound to follow the precedents set in their jurisdictions by the judges who have decided similar
cases. A judge does not always have to rule as other judges have, however. A judge can depart
from precedent. One argument that a party might offer to counter an assertion of precedent is that
the times have changed—the social, economic, political, or other circumstances have changed—
and thus it is time to change the law.
1–9. Time-Limited Group Assignment—Court Opinions. Go to the section entitled Reading and
Understanding Case Law in the appendix at the end of this chapter, and read the subsection entitled
“Decisions and Opinions.”
1. One group will explain the difference between a concurring opinion and a majority opinion.
Solution: A majority opinion is a written opinion outlining the views of the majority of the
judges or justices deciding a particular case. A concurring opinion is a written opinion by
a judge or justice who agrees with the conclusion reached by the majority of the court but
not necessarily with the legal reasoning that led the conclusion.
2. Another group will outline the difference between a concurring opinion and a dissenting opinion.
Solution: A concurring opinion will voice alternative or additional reasons as to why the
conclusion is warranted or clarify certain legal points concerning the issue. A dissenting
opinion is a written opinion in which judges or justices who do not agree with the
conclusion reached by the majority of the court expound their views on the case.
3. The third group will explain why judges and justices write concurring and dissenting
opinions, given that these opinions will not affect the outcome of the case at hand, which
has already been decided by majority vote.
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