Reference no: EM13789043

Dracca uses a standard-form contract to sell directly to  consumers in the United States. About one-third of direct sales occur in  Spanish-speaking communities within the United States. The contract is in  English and is 16 pages in length. A binding arbitration clause on page 5 requires  all disputes arising from the contract to be settled by arbitration.

Recently, two consumers from the Spanish-speaking  community sued Dracca in state court. The state court dismissed the claims  pursuant to the arbitration clause. The consumers then brought a claim  challenging the validity of the arbitration clause, claiming they were not  properly informed that they were waiving a right to trial when entering the  contract.

Over the past three years, Dracca has had 23 additional  claims brought to the arbitration process because of this form contract. Twenty  of the 23 claims were arbitrated by the same dispute resolution agency, as  selected by Dracca.

Recently, a new dispute arose regarding product safety of  the Dracca Pack-n-Play Beach Model. Because retailers made the claims, they  were not subject to the binding arbitration clause contained in consumer  contracts. The court claim involved faulty clasps that did not lock the  pack-n-play in place As  a result of the faulty clasps, four infants in three countries suffered  life-threatening injuries.  One of those  infants was from the U.S. and had to be placed on life support for two weeks  before recovering from a respiratory injury sustained after being trapped in  the pack-n-play for nearly a half hour.

During the discovery process, Dracca sent 600 boxes of  documents to the attorneys for the retailer  in an attempt to hide relevant information. Within the boxes were several  documents properly labeled in response to the attorneys' request for  production. After combing through the documents and conducting other discovery,  parties surmised that an employee of Dracca, Sue Hennings, tampered with the  faulty clasps. Hennings worked in accounting, but she was overlooked for a  promotion to oversee the new pack-n-play line. Hennings deliberately tampered  with the safety of the clasps in retaliation, an action that could carry  criminal charges.

In light of these facts, please respond to the following  questions using course material and credible outside research to support your  findings. Please submit findings in a three page paper using APA  format.

• What is the legal effect of the arbitration  clause on consumers? Must consumers abide by the decision of the arbitrator?  Use caselaw to support your position.
• Will the two Spanish-speaking consumers  prevail in invalidating the arbitration clause? Why or why not? Discuss the  legal considerations the court will entertain in reaching its decision.
• Identify the ethical concerns regarding the  implementation of the arbitration clause and the arbitration process. Recommend  actions Dracca could take to remedy these ethical concerns. (The Ethical  Business Leader's Decision Tree in chapter 2 of the text may be a useful tool  for your analysis).
• Identify the ethical concerns regarding  Dracca's approach to the litigation process. Recommend actions Dracca could  take to remedy these ethical concerns. (The Ethical Business Leader's Decision  Tree in chapter 2 of the text may be a useful tool for your analysis).
• Is Dracca responsible for the actions of  Hennings? Why or why not? Use legal principles discussed in the readings to  support your conclusion.
• What actions (internal and external) do you  recommend to Dracca to resolve the dispute regarding the Pack-n-Play clasps? Be  specific and detailed, and be sure to base recommendations on relevant legal  and ethical principles.