Dracca Inc Dracca Is A Publicly Traded U S

About Dracca:

Dracca, Inc. (“Dracca”)
is a publicly-traded U.S. corporation that manufactures and distributes baby
equipment in seven countries. It is
based in St. Louis, MO, but has manufacturing facilities in Philadelphia, Sacramento,
and Indonesia. Key products include:

·
Strollers

·
High Chairs

·
Cribs

·
Pack-n-Play Playpens

·
Toys

·
Baby/toddler feeding
equipment (bottles, cups, utensils)

Dracca employs nine
hundred employees and has projected earnings of $50 million U.S. dollars for
the coming year.

Scenario

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.

Instructions: 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 (introduction, conclusion, references, citations).

Course book:Bagley, C. (2012). Managers and the Legal Environment: Strategies for the 21st Century
(7th ed). Cengage Learning.

• 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.