Graziadio School of Business and Management

Week Day Classes Spring 2013

Managing Within the Ethical and Regulatory Environment (LEGL 653)

ProfessorMichael Rainey, J.D., LL.M.
Certified Mediator / Arbitrator/ Counselor at Law
Michael Rainey Dispute Resolution Services
16830 Ventura Boulevard
Encino, CA 91436

Schedule by Campus

CampusDateDay / TimeCourse Number
Encino01MAY-31JUN14Thursday 1800-2200 hrsLEGL 653.34
West Los Angeles
Antelope Valley


I work from the basic assumption you are motivated, skilled, and experienced people.  Accordingly, this course is designed to be a challenge to your critical thinking ability.  We will utilize the talents of each and every class member.  As a consequence, your participation in indispensable.  I expect every student to have read the chapters in the text applicable to the session, any assigned cases in the Reading Packet, view the assigned videos, and complete all assignments.

Some of the subject matter will be presented by me.  Often, after we discuss the basic factual situation, we will discuss the ramifications of factual changes.  For this reason it is imperative that you have read the assigned reading.  In these discussions, we may depart from the confines of the text.

Course Standards (See also “Grading” page 4 of 10)
In addition to class attendance, preparation and participation, the course requires the following:


Completion of a two (2) page, typed, double spaced “journal” entry for every other class.  This means every even numbered class a journal is due.  The first journal is due on the second class.  The next is due on the fourth (4th) class, sixth (6th) class, and so forth until the end of class.

THIS IS CRITICAL INFORMATION During the semester, on two (2) occasions you will submit your Journal through Sakai. When you submit it the file must be in this format [last name date journal number] as an example Rainey04JUL12#2 (My last name, the full date and journal number 2). It must also be submitted according to strict time parameters so you will need to be mindful of this too. We will talk about this on the first day and you will have plenty of notice as to when the journal will be due on Sakai.

• The first journal is the only assigned subject.  The subsequent journals should be a compilation of your thoughts and insights concerning the legal process.  You might discuss thoughts you had about the reading material, things said in class, or any thing else which moves you to make an observation or express an idea about the legal process or the law.  You will not be judged on whether or not you agreed with anything said or done.  I really appreciate profound observations and clarity of expression.

• I do not grade your journals.  The only impact they have on your grade is whether or not you turn one in.  The purpose of the journal is for you and I to have some private time together to share our thoughts.  I enjoy hearing what you have to say–the good, bad, and ugly.  It is our opportunity to share ideas, for you to give me feedback, me to respond, and for us to generally share our ideas.  I can only hope you will use the time to provide us both with some insights.

PLEASE NOTE –I do not take late papers! I am not in the business of analyzing excuses.  If your paper is late and/or you do not come to class, please do not submit a paper.  It will not be read or count toward completed papers. Email a paper only 1) if you were in class and 2) it is an emergency situation. If you email the paper it must be before midnight of the class (you attended).  I suggest you ask for confirmation.


• Completion of an in-class mid term and final exam.  There will be several questions and you will have to manage your time.

• The examinations will consist of written questions drawn from the text. The goal of the examination is for you to analyze facts and apply what you have learned.  The emphasis will be on your ability to analyze issues and approaches rather than providing specific facts.  All the tests are time-limited.  Part of the exercise is for you to plan what you are going to say and manage your time.

Class Participation

This is the most difficult aspect of the class to evaluate.  Perhaps the best way to explain it is to say what it is not.

It is not a motor mouth. This is the person who just says things to say them.

It is not quantify of noise. This is the person who just talks all the time without adding much to the conversation.

It is not the person who says, “I did not read that case.” Each person must be prepared to discuss the cases of the class period.  Failing to be prepared means you are not participating with the class

The person who asks thoughtful questions is participating.  The person who makes thoughtful and considered comments is participating.  We will discuss this more completely in the first class.

It is not my job to ferret out whether or not you are participating in class. You must demonstrate your participation by being involved with class discussions, reading the text and cases, and generally bringing value to the overall class experience.

In order to diminish the subjectivity of this facet of your grade, toward the end you will receive a Qualatronics electronic survey.  You rate your colleagues on a scale of 1-25.  I will receive and compile the results.  Your peer evaluation will play a part in my evaluation.


I generally deduct 1 point for each absence.  This is not so much a punishment for those who are not here but a recognition of those who also had other commitments but came to class.  Succinctly stated, if you come to class each day, you have the double advantage of an extra point and the experience of the class.

In an effort to recognize you are working student, you are welcome to participate in any class by Skype or similar technology. If you so participate, you will not lose a point for Attendance and as long as your Journal is submitted before midnight of the evening of class, I will accept it too.

If you choose this option, it will be your sole responsibility to make all technical arrangements. You will have do make arrangements with a colleague in class to make sure s/he has a computer with a camera and the hardware and software necessary to connect with no interruption to the class.


An “A” or “B” is an earned grade.  In order to earn an “A” or “B”,  you must do the work commensurate with such an award.  Showing up and presenting your journals each week is, at best, “C” work.

Class Participation 20% (See above for standards)
Journal 30% (See above for standards)
Mid Term and Final Examination 40% (See above for standards)
Attendance 10% (See above for standards

Grading is based upon 100 points.  For example, if there were are seven (7) journals in a semester and you turned in 7, you would receive 30 points.  If you turned in 6, you would receive 85.7% of 30 or 25.7 points.  If you miss one (1) day of class you get 9 of 10 points.  If you respond, “I did not read the case” and it is a case in the required reading, it is cause for comment.  If it happens more than once, it will effect your participation grade.

This course is structured so as to draw upon everyone’s participation.  It will reflect adversely on your grade if you have not read a case or are otherwise unprepared to participate in class discussion. If you are absent from class two or more times it is grounds for a full letter reduction of your final grade.  I deduct one (1) point every time you are absent.

I hope you achieve a high grade. You should understand the average grade for all students in the MBA program is  3.55 (B+). By graduation, typically, less than 1% of graduates have earned  all A’s in the evening MBA program.  In an average-size graduating class of 250, usually there will be only one graduate who has earned all A grades.  At some graduations we have no students who have earned all A’s. If you expect to earn an A in every class, you will have to be better than 99% of all students in the program.

Course Description

I want to take the mystery out of the legal process.  As prospective CEO’s, CFO’s, owners, and managers you will make daily decisions with potentially profound legal ramifications.  After this course, I hope you will look at the law as tool, not a threat.

Course Objectives

Upon completion of this course, you will have:

  1. Read cases, discussed the legal and social ramifications of the decisions, and analyzed the symbiosis of cultural, environmental, legal, political, and sociological influences in business.
  2. Understood the structure of law and how it is used in society and business.
  3. Become familiar with the subtleties of legal terminology in the business environment.
  4. Discussed how to utilize legal representation effectively.
  5. Discussed and analyzed the legal advantages and disadvantages of the various forms of business organization.
  6. Looked at the ways of minimizing legal liability in business.
  7. Learned the basics of a contract.

Texts and Course Materials

  1. Business Law-The Ethical, Global, and E-Commerce Environment (15th Edition) Mallor, Barnes, Bowers, & Langvardt (McGraw Hill Publication).  It is highly likely we will not cover all chapters of the text in class.  You are responsible for the scheduled material and all material discussed in class.  I expect you to be able to analyze and discuss class work, assigned chapters in the text, and other selected readings.
  2. Professor’s Packet (Rev/2012) of cases and readings. We will use this extensively

Laptop Policy

Because our class is primarily discussion-driven and notes are discouraged, it is not a laptop-friendly environment.  On a very limited occasion you may need the laptop for research purposes and you will be welcomed to use it during the prescribed activity ONLY.  Kindly print hard copies of any  documents you think you will need for class discussions.

The Myth of the Law
“It cannot truthfully be said that the law operates uniformly with respect to the promises of the rich and the poor, the employer and the employee.  Sometimes the rich can escape enforcement by reason of their ability to employ the ablest counsel or to prolong litigation.  More often, however, the poor can escape enforcement when the rich cannot.  Judges as well as juries moderate the operation of the law in favor of the poor as against the rich: in our country, it is the comparatively poor who determine what the law is.  As between an employer and employees, the contract may, as a practical matter, be substantially unenforceable against the latter.  Battles have been fought for the system called “collective bargaining”; but from the employer’s standpoint a collective bargain has often been found to be an illusion.

By the foregoing, it is not meant that injustice prevails or that there is no law.  For all human kind, justice is relative, not absolute.  In spite of the long tradition that “justice” is absolute and eternal, the tradition has always been incorrect.  Fiat justitia ruat coelum1 is a phrase impressive mainly because of its being Latin and not understandable.  When the skies begin to fall, Justice removes the blindfold from her eyes and tilts the scales.”2


“The University expects from all of its students and employees the highest standard of moral and ethical behavior in harmony with its Christian philosophy and purposes.  Engaging in or promoting conduct or lifestyles inconsistent with traditional Christian values is not acceptable.

The following regulations apply to any person, graduate or undergraduate, who is enrolled as a Pepperdine University student.  These rules are not to be interpreted as all-inclusive as to situations in which discipline will be invoked.  They are illustrative, and the University reserves the right to take disciplinary action in appropriate circumstances not set out in this catalog.  It is understood that each student who enrolls at Pepperdine University will assume the responsibilities involved by adhering to the regulations of the University.  Students are expected to respect order, morality, personal honor, and the rights and property of others at all times.  Examples of improper conduct for which students are subject to discipline are as follows:

  • Dishonesty in any form, including plagiarism, illegal copying of software, and knowingly furnishing false information to the University.
  • Forgery, alteration, or misuse of University documents, records, or identification.
  • Failure to comply with written or verbal directives of duly authorized University officials who are acting in the performance of assigned duties.
  • Interference with the academic or administrative process of the University or any of the approved activities.
  • Otherwise unprotected behavior that disrupts the classroom environment.
  • Theft or damage to property.
  • Violation of civil or criminal codes of local, state, or federal governments.
  • Unauthorized use of or entry into University facilities.
  • Violation of any stated policies or regulations governing student relationships to the University.

Disciplinary action may involve, but is not limited to, one or a combination of the alternatives listed below:

Dismissal Separation of the student from the University on a permanent basis.
Suspension Separation of the student from the University for a specified length of time.
Probation Status of the student indicating that the relationship with the University is tenuous and  that the student’s records will be reviewed periodically to determine suitability to remain enrolled.  Specific limitations to and restrictions of the student’s privileges may accompany probation.”  GSBM Catalog, pgs. 160-161.

Policy on Disabilities

“Students with disabilities, whether mental or physical, are encouraged to contact the Equal Opportunity Office before the academic year begins or soon after classes are in session.  This office will assist each student by providing general information about campus facilities and available resources.  The office will assist in providing reasonable accommodation to students with disabilities pursuant to applicable laws.  Inquiries should be directed to equal opportunity officer, Dr. Calvin H. Bowers, (310) 456-4208. (Students who wish to file a formal grievance should refer to the “Nondiscrimination Policy,” which is listed in the “Legal Notices” section of this catalog.)” GSBM Catalog


Class Date Chapter (Note: some are out of order–this is by intent)
1. 01. The Nature of Law
02. The Resolution of Private Disputes
04. Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking
03. Business and the ConstitutionRead the Constitution – we will use it oftenScan 18 United States Code Annotated (USCA) §922 (in Reading Packet, hereafter RP)Read pages 1-7 in United States vs. Lopez and scan the rest of the case (RP)Scan United States vs. Michael R.3(RP)Scan Morrison vs. United States (RP)Scan Gonzales vs. Raich (RP)Assigned Journal Paper4:In Shakespeare’s Second Part of King Henry VI, Act IV, Scene II, Dick said “The first thing we do, let’s kill all the lawyers”.  Discuss the context of the quote within the play.  What was Dick’s agenda?  Then tell me whether you agree or disagree with play’s depiction of lawyers as stated by this character.  Plausibly explain your position.  Finally, share your opinion of lawyers.  Tell me the basis of your opinion, i.e. is your opinion predicated upon personal experience, television, movies, rumor, or something else.  This may have a cathartic effect and do not worry what I think.  Your honesty and candor are much more important than my opinion. (Paper due at Session 2)
2. Continue discussion from the First Class
3. Discuss Korematsu, West Virginia, and Newdow (RP)
4. 05. Crimes
06. Intentional TortsRead In re Polimis, Ryan vs. New York Central and Palsgraf vs. Long Island Railroad.5 (RP)
5. 07. Negligence and Strict Liability
20. Product LiabilityRead Winterbottom vs. Wright, Evans vs. General Motors, Larsen vs. General Motors, Escola vs. Coca Cola, Greenman vs. Yuba Power Products  and Ford/Pinto documentation (RP)
6. — Insurance (MBR)
23. Personal Property and Bailments
24. Real PropertyRead Green vs. Superior Court (RP)
7. Continue discussion of Real Property
8. 26. Estates and Trusts (MBR)
29. Security Interests in Personal Property
9. 09. Introduction to Contracts
10. The Agreement: Offer
11. The Agreement: Acceptance
12. Consideration
10. 15. Illegality
14. Capacity to Contract
11. 16. Writing
17. Rights of Third Parties
18. Performance and Remedies
12. Continue the discussion regarding contracts
13. 35. Agency Relationship
36. Third-Party Relations of the Principal and the Agent
41. History and Nature of Corporations
47. Administrative Agencies
14. 48. The Federal Trade Commission Act and Consumer Protection Laws
15. Final Examination6

My goal is for you to learn how to understand and ultimately use the law as a tool to achieve your goals.  Granted you will have to do some work.  That work will give value to the goal.  However, I don’t need you to crash and burn trying to overwork the problem.  The journal papers are difficult enough.  Do not make them more difficult by spending a lot of unnecessary time looking for direction.  Please give me a call (or talk to me after class).  It is my pleasure to give you some leads and some places you can find information.

Second, do not be intimidated or frustrated by confusion in the early stages.  You are going to see so much information and evidence which will call into question pre-conceptions you have been inundated with since birth.  We are going to use the didactic approach and method of communication (remember the first article).  Often students come to the class thinking they understand the law.  With movies, television, and media input every day, the law seemed so obvious.  I hope you will enjoy looking into the minds of the people who interpret and make the law.

Finally, although we will talk about it more in class, the final examination will be a variation of what we do in class.  You will not have to remember cites and dates of cases and events.  You will have to remember principles, elements, and issues.  The examination will be questions which will test your ability to see issues and apply the law we learn.  During the semester we will talk about sample questions.  There will not be any surprises to those who come to class, read the text, and partake in the discussions.


  1. Let right be done, though the heavens should fall
  2. Corbin on Contracts, page 3 Arthur L. Corbin (West Publishing, 1952)
  3. Lopez and Michael R. both discuss 18 USCA § 922.  I need you to tell me why the two courts come to different conclusions.
  4. Papers should be typed, two pages, double spaced.  The point of the exercise is for you to write a concise, profound brief you would be proud of giving to your prospective employer.  You want your paper to become the benchmark for new people in the business entity to follow.  Remember the quote attributed to Mark Twain (and others) “I would have written a shorter letter-but I did not have the time.”
  5. We will do at least two (2) oral arguments of ten (10) minutes each on some of the cases in the text or reading packet.  There will be two (2) plaintiff’s attorneys and two defense attorneys.  You should assume the case in the text is a lower court appellate case.  If you are on the side of the case which won in the opinion, you might adopt the reasoning of the court.  If you are on the other side, find reasons why the case should be decided your way.
  6. The final test is two hours.  You must manage your time effectively to do well on this test.  It will consist of several questions.