Acct 405 and 415

Assignment Instructions

Please complete the following homework assignment: 

3–8A. Arbitration

3–8. Arbitration PRM Energy Systems, Inc. (PRM), owned technology patents that it licensed to Primenergy to use and to sublicense in the United States. The agreement stated that all disputes would be settled by arbitration. Kobe Steel of Japan was interested in using the tech- nology at its U.S. subsidiary. PRM directed Kobe to talk to Primenergy about that. Kobe talked to PRM directly

about using the technology in Japan, but no agreement was reached. Primenergy then agreed to let Kobe use the technology in Japan without telling PRM. The dispute between PRM and Primenergy about Kobe went to arbi- tration, as required by the license agreement. In addition, PRM sued Primenergy for fraud and theft of trade secrets. PRM also sued Kobe for using the technology in Japan without its permission. The district court ruled that PRM had to take all complaints about Primenergy to arbitra- tion. PRM also had to take its complaint about Kobe to arbitration because the complaint involved a sublicense Kobe was granted by Primenergy. PRM appealed, con- tending that the fraud and theft of trade secrets went beyond the license agreement with Primenergy and that Kobe had no right to demand arbitration because it never had a right to use the technology under a license from PRM. Is PRM correct, or must all matters go to arbi- tration? Why or why not? [PRM Energy Systems, Inc. v. Primenergy, 592 F.3d 830 (8th Cir. 2010)]

3–9A. A Question of Ethics: Agreement to arbitrate

3–9. A QUESTION OF ETHICS: Agreement to Arbitrate.

Nellie Lumpkin, who suffered from various ill- nesses, including dementia, was admitted to the Picayune Convalescent Center, a nursing home. Because of her mental condition, her daughter,

Beverly McDaniel, filled out the admissions paperwork and signed the admissions agreement. It included a clause requir- ing parties to submit to arbitration any disputes that arose. After Lumpkin left the center two years later, she sued, through her husband, for negligent treatment and malpractice during her stay. The center moved to force the matter to arbi- tration. The trial court held that the arbitration agreement was not enforceable. The center appealed. [ Covenant Health & Rehabilitation of Picayune, LP v. Lumpkin, 23 So.3d 1092 (Miss.App. 2009)]

(a) Should a dispute involving medical malpractice be forced into arbitration? This is a claim of neg- ligent care, not a breach of a commercial contract. Is it ethical for medical facilities to impose such a requirement? Is there really any bargaining over such terms?

(b) Should a person with limited mental capacity be held to the arbitration clause agreed to by the next- of-kin who signed on behalf of that person?

4–8A. Violation of internal ethical codes

4–8. Violation of Internal Ethical Codes Havensure, LLC, an insurance broker, approached York International to determine whether it could provide insurance for York at a better rate. At the time, York was obtaining its group insurance from Prudential Insurance Co. through Universal Life Resources (ULR), another insurance broker. York allowed Havensure to study its policies. Havensure discovered that the premium Prudential charged included a hidden broker’s fee that it used to pay ULR. When Havensure claimed that it could get the insurance at a lower price, York agreed that Havensure could send requests for proposals to various insurance companies. To keep York’s business, Prudential offered to match the lowest rate quoted. Prudential also informed York that it must continue to buy the policy through ULR, not through Havensure. York agreed. Havensure then sued Prudential for wrongful interference with a business rela- tionship (a tort that will be discussed in Chapter 12). The trial court held for Prudential. Havensure appealed. The appeals court held that although Prudential had vio- lated its own code of ethics by having a hidden fee for a broker, and might have violated New York insurance law, Havensure still had no case. Why would a court find that a firm that violated its own rules, and might have violated the law, had no obligation for the loss it might have imposed on another firm trying to compete for business? Does this ruling make sense? Why or why not? [Havensure, LLC v. Prudential Insurance Co. of America, 595 F.3d 312 (6th Cir. 2010)]