Reference no: EM133418453
Case: Rachel Phyllis Montgomery and her twin brother Raymond Phillip Montgomery are the majority shareholders of RPM Communications, a Georgia close corporation. The company has three major operating divisions; print and digital publishing, broadcast, and support services for online museums. Each division is headed by a member of the Montgomery family.
When RPM was established, all of the shareholders reached an agreement about the operations of the company. They agreed that the company would operate without a board of directors and that Rachel and Raymond would manage the business affairs of RPM. In addition, the shareholders agreed that they would not "own, manage, operate, represent, promote, sell consult for, control, participate in, or manage any business selling or providing the same or similar services provided by RPM" and each shareholder signed a separate agreement not to disclose any confidential information it acquired by virtue of being a shareholder. The shareholders also agreed to require the same for all of its employees.
Rachel and Raymond are preoccupied with several distinct legal issues, any one of which could jeopardize the company's planned initial public offering. One issue involves a contract Rachel approved seven years ago between RPM and DigiTech.
DigiTech is a joint venture organization between Phipps Graphics Design, owned by Lenox Phipps, and Jon Pappas, a marketing professional. Phipps and Pappas had an agreement that described how their new company would function, with Phipps handling the day-to-day affairs of the company and how they would deal with business loss and split earnings. Pappas lives and works in Georgia and Phipps Graphics is based in Louisiana.
The contract between RPM and DigiTech required DigiTech to (1) develop a logo, (2) create a company tagline to accompany the logo, and (3) develop a website that would house the menu of RPM podcasts. The contract also required Phipps to "be in Georgia while performing all work required by this agreement." The contract was signed by Rachel as a designated director of RPM and Lenox Phipps, who signed as "general partner of DigiTech." When DigiTech received its payment from RPM, Phipps Graphics got seventy percent of the earnings and Jon Pappas received thirty percent, which was equal to Pappas' investment in the joint venture.
RPM company lawyers secured the legal protection for the logo and the tagline "Vox Veritas Profer Aeternum" which is Latin for the voice of truth speaks forever. The lawyers explained to Rachel how to maintain the protection. Somehow the instructions were lost when RPM changed lawyers and Rachel does not recall them. At all times, however, RPM has consistently used both the logo and the tagline.
Since then, the general partner who signed the agreement has begun to develop and sell an array of comedic and satirical products that other businesses can use as promotional merchandise. One of the items contains a logo and tagline similar to the one created for RPM. Once Rachel discovered that RPM's logo and tagline were being used by others, she initiated two lawsuits against the owners of DigiTech: one in federal court and the other in state court, seeking the appropriate remedies.
In court filings, Papas argues that he should be dismissed from the lawsuit because he is not responsible for the actions of Phipps, and Phipps argues that he should be dismissed from the lawsuit because he does not live in Georgia.
Another matter involves a charge of discrimination against RPM filed by a former employee. From its beginning, RPM has been concerned about the fair treatment of its workforce. As evidence of its commitment, RPM maintains a vibrant compliance program, with a strong internal reporting procedure it developed in reliance upon advisory opinions issued by the Equal Employment Opportunity Commission. This program was the pet project of Raymond Montgomery. Despite this, Ben Carmichael, a former RPM employee has recently made a claim against RPM based on his belief that he was subjected to unwelcome advances by Natalie Endicott, the host of Talk Is Cheap, one of RPM's most popular relationship and cultural commentary podcasts.
Carmichael was initially hired as a sound engineer for the company's podcasts, but after returning from an out-of-town business trip, he was denied a promotion to be senior producer of Talk is Cheap. After the trip, Natalie began using her show to make astonishing remarks. On one episode she says, "brought my sound guy to the podcast awards in San Francisco and turns out Big Ben is just a clock in London." On another she says, "he's stuck in sound because he can't produce." Four months after the trip, Natalie plays snippets of the Rolling Stones song "I Can't Get No, Satisfaction" and each time she does, she followed it with some comment like "well that's the soundtrack for my sound guy." Natalie is careful to never mention Ben by name.
In the office, coworkers have heard Natalie hum the song out loud whenever she sees Carmichael and, on occasion, she has been seen touching other male employees in ways that another employee called "gross and inappropriate." Her behavior has been brought to the attention of Richard Preston Montgomery, head of the RPM broadcasting division. Ben has begun to seek psychological counseling, but he has not utilized the company's internal procedures. RPM is defending itself where Carmichael has made the charge.
One other issue involves proprietary archival software developed in connection with its online museum division. Ed Caspar, an employee and minority shareholder of RPM, was assigned by division head, Raven Priscilla Montgomery to oversee the software development. Caspar had first-hand knowledge of the specifications of the software code, its platform, and its architecture. Caspar also had the principal responsibility to obtain the legal protection for the software on behalf of RPM.
Caspar approached Lenox Phipps about the possibility of obtaining an interest in DigiTech and suggested that DigiTech could corner the market for digital collections with "the new software I have developed." After a few weeks of discussion, Phipps and Caspar formed DigiTech Ventures. Caspar enlisted the help of the principal RPM employee who worked on the software. Caspar told the employee that this new project was being done "as a sort of Beta testing to protect RPM." Concerned, about this, the employee informed Raven Montgomery about Caspar's actions, and Raven began an internal evaluation of the company's confidentiality policies.
Caspar, through DigiTech Ventures, began the process of obtaining legal protection for the software on behalf of DigiTech Ventures. Before the process could be completed, however, Phipps was questioned by federal law enforcement authorities in connection with an ongoing investigation. Raven Priscilla Montgomery was later contacted about Ed Caspar. As a result of this contact, and based on her evaluation of company policy, RPM initiated a lawsuit against Ed Caspar for his actions, seeking appropriate remedies. In court filings, Caspar asked the court to dismiss the lawsuit because RPM was not a legitimate business because it did not have a board of directors.
Identify the presented 8 legal issues. Identify and list the legal principles needed to solve the 8 legal issues presented , and Determine which facts in the scenario relate to or are implicated by the legal principles. Conclusion how the case should go.