Project 1: Introduction to the Legal Environment of Business

Blue Mood Clothing, Inc

Notice: Contains Confidential Information

Blue Mood Clothing, Inc., a company

devoted to producing positive, mood-

altering apparel and various other clothing

items, is a wholly owned subsidiary of

Course Resource

Colossal Corporation. Blue Mood Clothing's

most famous and best-selling product is the

Breezer—a skin-tight shirt with an air

ventilation system that allows the breeze to

pass through the shirt. Colossal Corporation

has uncovered an incident of theft at Blue

Mood Clothing: approximately one month

ago, over five thousand Breezers were

stolen from Blue Mood Clothing's Atlantic

City, New Jersey, warehouse.

Shortly after the theft was discovered,

Colossal Corporation's internal investigator,

Bill, found an online advertisement for the

sale of exactly five thousand Breezers,

described as shirts with an "air ventilation

system that allows a cooling breeze to pass

through the shirt." Bill called the contact on

the website and set up a meeting with the

seller, Nick Johnson. When Bill, under the

guise of being an interested purchaser of

the Breezers, inquired about Nick's

distributor, Nick did not hesitate to reveal

that he purchased the Breezers from Juanita

Winfrey, his long-time business associate.

Bill inspected the five thousand Breezers,

and confirmed they were indeed the same

Breezer products that were stolen from the

warehouse. He then requested a price

quote from Nick and asked Nick to hold the

products for him for seven days. Nick

agreed.

That same afternoon, before additional

investigation, Bill sent an email intended

solely to be sent to the vice president of

Blue Mood Clothing, Inc., but he

accidentally hit "reply all" to a previous

message, and sent the email to every

employee at Blue Mood Clothing, Inc., over

two hundred people. The email stated,

among other things, that "Nick Johnson was

a thief and had an extensive criminal record

in New Jersey. He stole the five thousand

Breezers. I will continue my investigation

tomorrow." This statement was not true.

Nick’s old friend from high school, who

worked at Blue Mood Clothing, Inc.,

forwarded this message to Nick, who

became worried about his business and

reputation.

Bill arranged a meeting with Juanita the very

next day, during which he posed as an

interested clothing buyer. He asked Juanita

if she had any Breezer distributors she could

recommend. Juanita said that she works

directly with a Blue Mood Clothing sales

agent named Alex Ridgefield, and that she

recently purchased five thousand Breezers

from him at a fair price. Juanita also said

that Alex is quite interested in expanding his

business with her, and would provide Bill

with a great deal.

After his meeting with Juanita, Bill checked

the personnel records at Blue Mood

Clothing and identified Alex Ridgefield as a

low-level warehouse employee who has

been with the company for over 20 years.

Alex's personnel record is spotless, with no

prior personnel issues and no complaints.

Alex is an at-will employee who is in charge

of night security at the Atlantic City

warehouse and has no history in sales. As a

night security guard, Alex is responsible for

protecting the warehouse from theft and is

not permitted to sell products. After further

investigation, Bill found company emails

between Juanita and Alex in which Alex

posed as a sales agent. Reading the emails,

it became obvious that neither Juanita nor

Nick knew that the five thousand Breezers

were stolen, and that both bought the

Breezers for fair-market value. Bill then

collected video from all of Alex’s shifts and

was able to locate a film of Alex packing the

Breezers into his personal minivan and

driving them out of the warehouse parking

lot.

Your task is to research the legal issues

surrounding the stolen property. It is up to

you to decipher which laws have been

broken and deduce any potential remedies.

Vice President Dodger wants you to prepare

a narrated PowerPoint to present this

information to the senior leadership team.

Because of the sensitive nature of this case,

the vice president has asked you to operate

with total confidentiality and without

involving the legal department.

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