BA 202 Case Study 37.8.docx

BA 202 Case Study 37.8.docx - Snow 1 Caroline Snow BA 202...

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Snow 1 Caroline Snow 04/16/16 BA 202 Dr. Speronis Critical Legal Thinking Cases: 37.8: Ethics FACTS: Lawrence Gaffney was the president and general manager of Ideal Tape Company (Ideal). Ideal was a subsidiary of Chelsea Industries and was engaged in the manufacturing of pressure-sensitive tape. Gaffney recruited three other Ideal executives to join him in starting a tape manufacturing business. The four men remained with the Ideal company for the next two years while they planned their new company. During that time, they used their positions at Ideal to travel the country to get business ideas, recruit potential customers and purchase equipment for their business. At no time, was Chelsea notified of the men’s intention to open a competing business. The new business was incorporated as Action Manufacturing Company (Action). When executives at Chelsea discovered the existence of the new company, Gaffney and the others resigned from Chelsea. Chelsea then sued the men for damages. ISSUE: The issue in this case is whether or not Chelsea wins and can claim damages against the four men from Ideal. RULE OF LAW:
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Snow 2 The rule of law in this case deals with fiduciary duty. More specifically, the duty of loyalty. The duty of loyalty of directors and officers, requires the directors and officers to subordinate their personal interests to those of the corporation and its shareholders. There
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