| December 2, 2015

Student:  Jarrett E. Walton

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DoeJXXX0000-1                                                                          1

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MGT7027	Dr. Davis

Legal Implications in Management	Assignment #5

Hello, Dr. Davis. Attached you will find Assignment #5

Please include the yellow faculty box as a part of the Assignment Cover sheet.

It was a pleasure speaking with you on the telephone.  As I stated during the call, it is clear that you read and researched the assigned case; however, this paper does not comply with APA formatting guidelines in the body of the paper and on the reference list.    Here are my comments to help you write an even stronger paper:
•	Whenever you provide information that is not in common knowledge insert a citation.  The citation allows the reader the opportunity to refer to the reference list and retrieve the document.
•	Citations also add validity to the paper.  Even though the focus of this assignment was on an assigned case, you must include citations.
•	Please do not include a list of citations in the body of the paper.  You provided a list of cases but did not indicate to which portion of the paper it applies.  Did you actually read these cases?  If so, please insert the citation for the cases in the section of the paper to which it relates.
•	For every citation on the reference list, there must be a corresponding citation in the body of the paper.
•	It is important to point out the reason the corporation wanted to remove the case from state court to federal court.  There is a presumption of immunity under the FSIA for foreign states.
•	Please see the following article, Tiering and the Foreign Sovereign Immunities Acts after Dole,  written by the New York Bar Association on the topic of this case:    The article provides important insights into this case which should be helpful.
•	The  farm workers at Dole initiated this law suit because of alleged injury from chemicals.  What responsibility does the company have?  What responsibility do the workers have?
•	Please include a conclusion paragraph which summarizes the content of the paper.

Please see additional comments in the margin of the paper.   Please resubmit this paper by 8/30.  Let me know if you have any questions.
Jo Davis		8/28/14

Evaluate Antitrust and Legal Rights in a Business Context
Jarrett E. Walton
Legal Implications in Management
Northcentral University
August 24, 2014
Dr. Davis

Dole Food Co. v. Patrickson
538 U.S. 468 (2003)
	Patrickson, the plaintiff, and a group of farm workers who were similarly situated and came from Costa Rica, Ecuador, Guatemala, and Panama, filed a suit against Dole Food Company, (referred to hereinafter as Dole, or defendant) seeking relief for injuries that they alleged were caused by pesticides that the company Dole used when growing produce in their home countries. Dole asserted that two other corporations should be involved:  Dead Sea Bromine Co., Ltd., and Bromine Compounds, Ltd. (hereinafter referred to as the Dead Sea Companies or defendants). The plaintiffs filed suit in Hawaii in state court. The defendants requested the case be moved to federal court based on 28 U.S.C. § 1441(d). 28 U.S.C. § 1441(d) governs removal actions  against foreign States and provides that:
any civil action brought in a state court against a foreign State as defined [under § 1603(a) of the Foreign State Immunities Act (FSIA)] may be removed by the foreign state to the district court of the United States for the district and division embracing the place where such action is pending 28 U.S.C. § 1441(d ).
	Section 1603(a) of the FSIA defines foreign state to include an “agency or instrumentality of a foreign state.” Additionally, “agency or instrumentality of a foreign State ” is defined as any entity which is a separate legal entity (person or corporation).  It includes divisions of foreign states, including political subdivisions of those nations. It can also include a group of minority owners of shares or other ownership interest of a company owned by a foreign nation or political subdivision of that nation, provided the entity is not a citizen of the US or the company is not registered (or created) in a third party nation. While Dole met this qualification (because it is headquartered and registered in the US), the Dead Sea Companies were instrumentalities of the State of Israel. Thus, they argued, they were entitled to foreign immunity and that their portion of the case was more appropriately filed in Israel.
	The issue is whether the Foreign States Immunity Act (FSIA) requires that a foreign state own a majority of the shares of a corporation if the corporation is to be deemed an instrumentality of the State. A second issue is whether instrumentality status is determined at the time of filing a complaint or later in the process.
Decision of the Court:
	The court of appeals held that the Dead Sea Companies were a subsidiary of an instrumentality (Dole), and were not themselves entitled to instrumentality status. The United States Supreme Court granted certiorari. How do you know this?  Citations, please.
Reasoning of the Court:
	Justice Kennedy, in the decision for the majority, stated that the Dead Sea Companies are not entitled to instrumentality status under the FSIA. This is because the nation of Israel, who Dead Sea Companies is claiming as a foreign owner, does not own a majority of the Dead Sea Company shares. In order to be an instrumentality of the state, the FSIA requires that a foreign state own a majority shares of the corporation.  Citations?
	In addition, it  states that instrumentality is determined when the complaint is filed.  The FSIA requires that a foreign State own a majority of the shares of a corporation if the corporation is to be deemed an instrumentality of the State, and instrumentality status is determined at the time of filing a complaint. Under American corporate law, just because one owns shares in a parent company does not automatically entitle the shareholder to ownership interest in subsidiary companies the parent owns. A corporation and the shareholder(s) cannot be treated as one entity just because the shareholder owns shares. This law applies regardless of whether or not the shareholder is a foreign state.  Citations?
	Israel also owned shares in Dole. As a parent company, Dole had ownership interest in Dead Sea Companies as well as its subsidiaries. However, the state of Israel did not own majority shares at any point. The Dead Sea Companies were absolutely subsidiaries of Dole, and thus were not instrumentalities of a foreign state the way the FSIA defines as necessary. A second issue is that instrumentality has to be determined when the suit is filed, not at a later point. Thus, at issue is the relevant time period surrounding the filing. At the time that Patrickson filed the suit, the Dead Sea Companies were a subsidiary and not an instrumentality of Israel. Thus, since Israel does not own majority shares, the companies are not an instrumentality. As a result the Court affirmed the appeals decision.
Citations to support judgment:
	First Nat. City Bank v. Banco Para el Comercio Exterior de Cuba, 462 U. S. 611, 625 (1983) a corporation and shareholders are separate entities);
	Keene Corp. v. United States, 508 U. S. 200, 207 (1993)  – jurisdiction depends on the state of the organization at the time of filing
	Woods v. Interstate Realty Co., 337 U. S. 535, 537 (1949).; instrumentality depends on situation at time of suit filing
 Rule of Law:
	FSIA requires that in a company is to be deemed an instrumentality of a state, that the State must hold a majority of the shares. Further, instrumentality is determined at time of filing of the complaint. How do you know this?
	Justice Breyer  joined by Justice O’Connor dissented in part, stating that the phrase “other ownership interest” when owned by a foreign state would indeed cover the ownership of the Corporate Parent as long as they owned shares of the subsidiary. He states that decisions on incorporation and how it is done are not substantial; they are merely matters of form. They are still protected by the SFIA. He states that “the risk of adverse foreign policy consequences is no less great” ( as cited  in Miller & Jentz, 2007, p. 1132) whether the company is wholly owned by the foreign entity, partially, or minority owned. Indeed, as Dead Sea Companies argued, Israel did seem to hold a lot of control over the company’s actions. Regardless, however, Kennedy stated that control cannot be substituted for instrumentality.
	1.) The corporations’ instrumentality status is defined as of the time of the filing of the complaint. Thus, the instrumentality is defined either at the time of the alleged tort nor at the time the company is founded. Rather, it is determined as of the time of the filing of the compliant (De Jonge, 2011, p. 113 ).
	2.) Shared responsibilities of corporations and employees are essentially an economic theory that developed as a way to ensure that the source of deeper pockets is the one that is ultimately responsible for paying them. Prosser, (in Parlee, 1984, p. 30 ) point out that:
 The losses caused by the torts of employees, which as a practical matter are sure to occur in the conduct of the employer’s enterprise, are placed upon that enterprise itself, as a required cost of doing business. They are placed upon the employer because...he is better able to absorb them, and to distribute them, through prices, rates or liability insurance, to the public, and so shift them to society, to the community at large. Citation?
	This seems to suggest that it is a well understood concept that the employee can misbehave, the corporation (which has more money) will be forced to pay out, but the costs will be redistributed back to the community . This applies only to compensatory damages, and Parlee (1984 ) pointed out that the concept of vicarious liability is actually the opposite of what the entire legal system has generally accepted as fault principles. As Holmes (in Parlee, 1984, p. 31) pointed out, “commonsense is opposed to making one man pay for another man’s wrong, unless he actually has brought the wrong to pass according to the ordinary canons of legal responsibility .”
	The scope of employment rule, however, allows that a principal who is vicariously liable for compensatory damages may be liable for punitive damages, assuming the individual acted within the scope of agency at the time the incident occurred. This would apply in Dole v. Patrickson (year)  regarding the subsidiaries. However, in this particular case it is important to note that the Court did not hear the issues relating to liability; they only heard issues relating to the proper location for hearing the case.  However, in order to avoid this type of problem in the future, it would be beneficial to the companies to establish venues and jurisdiction of any potential court actions  in the future, i.e., to specify in ownership, partnership, or contract papers what the venture will be in the event of a problem. In this way, any issues associate with proper setting for legal action will be settled in advance .
	3.) The Supreme Court held that the Court of Appeals was correct when they held that the Dead Sea Companies were a subsidiary of an instrumentality (Dole), and were not themselves entitled to instrumentality status. Thus the matter was referred to Hawaii for hearing.
	4.) The case itself did little to determine who was responsible for what, in terms of the chemicals. However, the case was extremely important in terms of establishing what was, and what was not, an instrumentality. The Court established that a company could be an instrumentality only if it were a direct subsidiary of majority stockholder interest owned by a foreign state or subdivision. It was not enough to be a subsidiary of a subsidiary; the company had to be owned in majority by the foreign state or subdivision. Breyer’s dissent held open the possibility that this issue would be discussed in later Courts.
Where is the conclusion paragraph which provides a brief summary of the content of the paper?
28 U.S.C. § 1441(d). Retrieved from
28 U.S. Code § 1603 (a-d).  Retrieved from
De Jonge, A. (2011) Transnational corporations and international law: Accountability in the global business environment. Cheltenham, UK: Edward Elgar.
First Nat. City Bank v. Banco Para el Comercio Exterior de Cuba, 462 U. S. 611, 625 (1983)
Keene Corp. v. United States, 508 U. S. 200, 207 (1993).
Miller, R. & Jentz, G. (2007) Business law today. Mason OH: Southwest Cenage.
Parlee, R. S. (1984).  Vicarious liability for punitive damages: Suggested changes in the law through policy analysis. Marq. L. Rev., 68, 27.
West, G. D., & Smeltzer, N. A. (2011). Protecting the integrity of the entity-specific contract: The no recourse against others clause-missing or ineffective boilerplate. Bus. Law., 67, 39.
Woods v. Interstate Realty Co., 337 U. S. 535, 537 (1949).


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