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POL-10067-XA161 Elements of US Legal System

TO: Katie O’Connor

From: Walter Jofre Jr.

Date: April 11th, 2021

RE: Funny Face Case

In this case there would most likely be two branches of the U.S. legal system involved in this case. First would be the U.S. Department of Health and Human Services (DHHS) oversees the FDA which protects the health of all Americans. The DHHS is an executive branch agency and since the FDS is a related agency to DHHS they both carryout the law (USAGOV, N.D.). Second would be the judicial branch. The judicial branch would evaluate legislation that would apply to the case of Margolin vs. Funny Face and Novelty Now Inc. to verify if any state or federal law has been violated. The legislative branch would not be involved unless they need to draft a proposed law or make changes to an existing one (USAGOV, N.D.).

The rules of jurisdiction based on the facts of this case are that the product of liability laws remain Florida state laws unless the case involves interstate commerce. Although laws can vary from one state to another it can become a federal court case when a crime violates the federal law. Jurisdiction in this case would remain in Florida if Margolin is in Florida where Novelty Now Inc. manufactures and distributes their product. If Margolin is in a different state, then the case should be settled by the federal court to ensure both parties get a fair trial. If Margolin’s case is for a small amount of money, then he would file his suit in state courts. If his suit is for more than $75,000, he could sue in federal court (The Judicial Learning Center, 2019).

In the United States, federal laws apply to everyone. Regarding this case a federal law that may apply are laws enforced by the DHHS and FDA regarding any ingredients used in the product. State and local laws apply to everyone who lives or works in the state, county, city, town or territory. In this case a law that can apply to Margolin would be personal injury and compensation for any missed work. Therefore, the plaintiff Margolin will initiate litigation with the defendants Funny Face Novelty Now, with the interest of enforcing his legal right in a state’s court.

Litigation can turn the dispute into a resolution through the public court system. Pre-lawsuit litigation is initiated by Margolin (the plaintiff) and demands that Funny Face and Novelty Now (the defendants) take action to resolve his issue. If Funny Face and Novelty Now do not comply with his demands and Margolin decides to defend his legal rights, then litigation begins. Then Margolin (the plaintiff) will hire an attorney to represent him. The attorney for the defendants (Funny Face and Novelty Now) will participate in many pre-lawsuit litigation actions. At this time work by the attorneys may include a variety of things, creating formal demands, demanding compensation from Funny Face and Novelty Now, or filing notices within the court systems (UpCounsel, Inc, 2019). Many litigations never reach trial because it involves a lengthy process of legal demands until a settlement is reached. If at that time an agreement cannot be reached, then the case will go to trial.

The likely reason for legislation to support Funny Face in understanding the product safety laws is to help them recognize potential hazards to consumer use of the product. Funny Face and Novelty Now manufactures a product sold to the public and must follow the rules and regulations that are created by the Consumer Product Safety Commission (CPSC). "The CPSC regulates all consumer products except those that are overseen by another agency. It establishes product safety requirements, issues a recall, evaluates product hazards, and bans products it deems dangerous" (Bonner, 2019). The CPSC may determine the shaving cream poses a danger to the public, the CPSC would then contact Funny Face and Novelty Now to explain the violation and the required actions to correct it (Bonner, 2019). There may be a combination of actions necessary to fix the problem.

Another essential point, in this case, is the type of alternative dispute resolution (ADR) that each litigant chooses to settle. There are two that would be in the best interest of each party involved. The first ADR Margolin could select is the arbitration process because he may want a faster process in a more confidential setting. The cost of arbitration is a lot less, and both parties agree to the arbitrator and once a decision is made it cannot be appealed. Second, the cost may outweigh the settlement agreement if there is not a lot of money involved in the settlement. Third, the general rules of a court do not apply. For example, rules of evidence, lack of cross-examination, limited discovery, lack of consistency, and lack of evidence can all be significant disadvantages (UpCounsel, 2019). Fourth, the case would not be public, so the lack of transparency could pose a problem for Margolin. If Margolin believes he has a strong case, he may want to choose litigation over arbitration. Also, there is no need for either party to hire an attorney. One of the disadvantages would be the no appeal process. If Margolin feels as though the outcome was not fair ha cannot appeal.

The ADR type that Funny Face and Novelty Now could select would be the mediation process to quickly and confidentially come to an agreement. One of the benefits of this process is that mediation can have creative solutions to a settlement. Another advantage is that Funny Face and Novelty Now would be directly involved in negotiating their agreement. There will be no settlement imposed at the time of mediation. The proceedings are done in private, and Funny Face and Novelty Now would be in control of their position. Since the agreement is flexible, it can be changed to suit both parties. A consent order could be drawn up after the mediation outlining what was agreed to and then sent to the court to be approved by a judge to make it legally binding. Some disadvantages are that both parties may not cooperate and be able to compromise. The major disadvantage is that it is difficult for both parties to agree upon a fair settlement. The advantages of both are that they allow greater control over the way the dispute is resolved rather than it would be in litigation.

Furthermore, there can be some positive and negative business impacts on Funny Face if Margolin is successful in his suit. Some of those negative impacts could be as severe as time in prison, and financial instability can potentially shut the business down. Funny Face and Novelty Now may need to make changes to the product ingredients by finding a different alternative to PYR, this can result in a decrease of profit margin and affecting their bottom line. The impact of the lawsuit would also taint their brand image. Since it takes years to build up a brand image and only one suit to destroy the brand, Funny Face and Novelty Now may find themselves in a situation where they have no choice but to start all over. Businesses and consumers need trust and confidence in a product to do business with them or buy their products. The risks of adverse publicity create a loss of trust, negative affect on sales, damage to the brand association, and equity. Sometimes there is no coming back from a tainted brand image.

More importantly, if Funny Face wins and Margolin is unsuccessful, then the public could be exposed to PYR, and it may affect the public in many ways. Funny Face would not be obligated to change the ingredients in their product, it could have harmful side effects on people's skin. Their product may go unchanged, and they would continue to profit from a product that is harmful to the public. On the other hand, Funny Face may choose to do the right thing and utilize the CPSC's handbook for Manufacturing Safer Consumer Products. The guide could help them develop a product per the federal laws of the FDA and CPSC, making it safer for the public and within the guidelines of state and federal laws. Funny Face can then rebrand the product as a new and improved version which can help them combat any negative feedback from previous product.

Also, if the use of the emulsifier PYR that Chris approved for the product is found to be a criminal offense, he would have committed what is known as a white-collar crime. Chris knowingly, negligently and recklessly used PYR, which was not approved by the FDA in order to make more money for the company. Chris put Funny Face and Novelty Now in a position where he can be criminally liable for the harm caused by the product to Margolin. In that case Chris chose to use these ingredients and can be held accountable as well as Novelty Now if they knew it was an ingredient not approved by the FDA. In a criminal case, Chris may appeal his conviction and his sentence. If the case were determined to be a civil offense, then Funny Face, Chris, Matt, Ian, and Novelty Now would be responsible for Margolin's monetary damages and an injunction against them would most likely occur. In a civil case the preponderance of evidence is all that is needed to be found guilty. If found in violation, they may have to change the formula of the product, pay fines, and prove to the courts that they have corrected the product. In conclusion, the criminal court could find Funny Face and Novelty Now guilty of a crime against the public. The civil courts would settle the case of Margolin vs. Funny Face and Novelty Now.

REFERENCES

Armstrong, K. B., & Staman, J. A. (2018, February 9). Enforcement of the Food, Drug, and Cosmetic Act: Select Legal Issues. Retrieved from https://fas.org/sgp/crs/misc/R43609.pdf .

Bonner, M. (2019, September 5). Federal and State Consumer Protection Laws May Affect Your Business. Retrieved from https://www.thebalancesmb.com/how-consumer-protection-laws-affect-businesses-4161325 .

CPSC. (2019, April 24). Step 6: Best Practices. Retrieved from https://www.cpsc.gov/business--manufacturing/business-education/business-guidance/BestPractices .

Jurkowski, S. (2017, June). Subject matter jurisdiction. Retrieved from

https://www.law.cornell.edu/wex/subject_matter_jurisdiction .

The Judicial Learning Center. (2019). State Courts vs. Federal Courts. Retrieved from

https://judiciallearningcenter.org/state-courts-vs-federal-courts/ .

UpCounsel, Inc. (2019). What Is the Meaning of Litigation in Law? Retrieved from

https://www.upcounsel.com/meaning-of-litigation-in-law .

UpCounsel. (2019). What Are the Advantages and Disadvantages of Arbitration? Retrieved from https://www.upcounsel.com/what-are-the-advantages-and-disadvantages-of-arbitration .

USAGov. (n.d.). Branches of the U.S. Government. Retrieved from https://www.usa.gov/branches-of-government .