Legal analysis of employment dispute at Vulcan Systems using IRAC methodology

Unlucky and Edison-

Lennie Edison, employed by Vulcan Systems, is on call 24/7 as a trouble shooter. Because of this, he drives a company vehicle, to and from work, and occasionally stops for errands after work on his way home. Edison is involved in a collision with Unlucky, who suffered bodily injury and damage to his car. Unlucky is suing both Edison and Vulcan in joint and several liabilities.

Rule- Unlucky's attorney cites respondeat superior which states that an employer is responsible for the actions of employees within the course of their employment. When applied to physical torts an employer/employee relationship must be proven with the act committed during the scope of employment. Three general conditions apply: 1) Was the act committed while the employee was at work or on work property? 2) Was the offense committed during a normal working situation? 3) Was the agent motivated to benefit by committing the act? (Truglio, 2010).

Analysis- Unlucky will argue that since Edison was driving a company truck, both he and the company are responsible since the company allowed Edison the use of the truck and was, indeed, listed as on call 24/7. Vulcan will argue that respondeat superior does not apply in this case since, although Edison had the company vehicle, he was a) not only company property, b) not on the clock (e.g. To or from a job or picking up tools), and c) on a personal errand. Vulcan will thus argue that Edison's personal liability policy applies, and that the company be rendered harmless.

Conclusion- Typically, respondeat superior does not apply to the employer if the act was not connected in any way with the services for which the employee was retained. While one could argue that Edison is always on call, he was not traveling to or from a job or pick up; the act was not committed on company property; the act was not committed during the course of a job from Edison; neither Vulcan nor Edison benefited from the act. It is likely that the Court will find the Unlucky may sue Edison's personal insurance for damages and likely that Unlucky will prevail.

Question 2 -- Gotcha and the Corporation

Issue- Corporation A was formed two years ago, issuing 1,000 shares of stock to 120 shareholders. 600 shares are controlled by 3 shareholders, the remaining split between117 individuals. The three majority holders applied to the State of California for incorporation, stating the business purpose was the sale of computers and associated software. The articles were approved, but the required stockholder meetings have not been held. Recently, the economic situation has turned and the company has been forced to sell many of its assets and move into training programs, none of which has been profitable. Gotcha, a minority shareholder, wishes to file suit against the three primary owners; preventing them from engaging in unprofitable actions.

Rule- There is no SEC law requiring dividends to be distributed to shareholders (e.g. entitled) but if the rules of the corporation stipulate that annual meetings, minutes, etc. be available the directors are in violation of their own by-laws by not having the requirements. In fact, in 2007, the SEC voted to require public companies to meet and make their annual meeting materials available online, and private companies must meet their minimum requirements (Guide to Shareholder Meetings, 2011). Further, even minority shareholders have the right to inspect a corporation's records and make their opinion known about issues that affect the health of the corporation (Minority Shareholder, 2007). Finally, according to the California Supreme Court, minority shareholders may sue majority shareholders who have abused their power (Burleson, 2011).

Analysis- To the objective observer, it may appear that the 3 shareholders either purposefully defrauded the rest of the company shareholders or were simply negligent and erred in business practices. While by-laws were made, they were not followed -- leaving the three majority owners at risk with the SEC and state. The minority owners, while not voicing any objections, have not had any formal opportunity to vote or question the company's dealings. By the same token, nothing was preventing any of the minority shareholders from contacting the corporation prior to the recent downturn.