Sample Response to Business Law Questions QUESTION: On a trip to Arizona Roy suffered injuries in an auto accident in California caused by a defect in the automobile he was driving, a Dual-Ghia, special edition. He had purchased the car in New York. Roy sued in the California Superior Court the manufacturer, Dual-Ghia Motors, Inc, located in Detroit, Michigan and the New York dealer, who sold him the car, for the injuries and damage that he experience as a result of the accident. He effected service on both of the defendants under the provisions of the California "long-arm" statute. Assuming neither defendant appears in the action, will a judgment rendered by the California Court be enforceable against either of them? RESPONSE: The issue here is: Does California have in-personam jurisdiction over the out-of-state, non resident defendants? In order for the judgment rendered by California to be binding on the Michigan manufacturer and the New York dealer, it must not offend the limitations on the State’s jurisdiction imposed by the Due Process clause of the Fourteenth Amendment of the US Constitution. Although States must give full faith and credit to their sister States, a judgment rendered in violation of due process is void in the rendering State and is not entitled to full faith and credit elsewhere. Due process requires that the defendant be given adequate notice of the suit (which was done according to the data), and be subject to the personal jurisdiction of the court (which needs to be determined). Since the defendants did not appear, they have not placed themselves voluntarily under the jurisdiction of the California Court. Nonetheless, the California Court may hold that personal jurisdiction over the non resident defendants is acquired by its provisions of its ‘long-arm’ statute. California’s long-arm statute stipulates that a California court “may exercise jurisdiction on any basis not inconsistent with the Constitution of [California] or of the United States.” The Supreme Court of the United States has affirmed that a state court may exercise personal jurisdiction over a non-resident defendant as long as it meets the Due process requirement and the courts have establish that were there are sufficient ‘minimum contacts’ between the defendant and the forum state that constitutional requirement for due process will be deem to have been met. The relationship between the defendant and the forum must be such that it would be ‘reasonable’ to require the defendant to defend there. Typically, this is satisfied where the non resident has, by their voluntional conduct created a commercial “foot-print” in the forum state. From the information given, it does not seem that the defendants carried out any commercial activity in the State of California. The nonresident defendants have not availed themselves of any of the privileges and benefits of doing business in California or have, in anyway, benefited by California law. They h.

1. Sample Response to Business Law Questions
QUESTION:
On a trip to Arizona Roy suffered injuries in an auto accident in
California caused by a defect in the automobile he was driving,
a Dual-Ghia, special edition. He had purchased the car in New
York. Roy sued in the California Superior Court the
manufacturer, Dual-Ghia Motors, Inc, located in Detroit,
Michigan and the New York dealer, who sold him the car, for
the injuries and damage that he experience as a result of the
accident. He effected service on both of the defendants under
the provisions of the California "long-arm" statute. Assuming
neither defendant appears in the action, will a judgment
rendered by the California Court be enforceable against either
of them?
RESPONSE:
The issue here is: Does California have in-personam jurisdiction
over the out-of-state, non resident defendants?
In order for the judgment rendered by California to be binding
on the Michigan manufacturer and the New York dealer, it must
not offend the limitations on the State’s jurisdiction imposed by
the Due Process clause of the Fourteenth Amendment of the US
Constitution. Although States must give full faith and credit to
their sister States, a judgment rendered in violation of due
process is void in the rendering State and is not entitled to full
faith and credit elsewhere. Due process requires that the
defendant be given adequate notice of the suit (which was done
according to the data), and be subject to the personal
jurisdiction of the court (which needs to be determined).
Since the defendants did not appear, they have not placed
themselves voluntarily under the jurisdiction of the California

2. Court. Nonetheless, the California Court may hold that
personal jurisdiction over the non resident defendants is
acquired by its provisions of its ‘long-arm’ statute. California’s
long-arm statute stipulates that a California court “may exercise
jurisdiction on any basis not inconsistent with the Constitution
of [California] or of the United States.” The Supreme Court of
the United States has affirmed that a state court may exercise
personal jurisdiction over a non-resident defendant as long as it
meets the Due process requirement and the courts have establish
that were there are sufficient ‘minimum contacts’ between the
defendant and the forum state that constitutional requirement
for due process will be deem to have been met. The
relationship between the defendant and the forum must be such
that it would be ‘reasonable’ to require the defendant to defend
there. Typically, this is satisfied where the non resident has, by
their voluntional conduct created a commercial “foot-print” in
the forum state.
From the information given, it does not seem that the
defendants carried out any commercial activity in the State of
California. The nonresident defendants have not availed
themselves of any of the privileges and benefits of doing
business in California or have, in anyway, benefited by
California law. They have not solicited business, either through
salespersons or through advertising reasonably calculated to
reach the State. The facts given do not show either that they
regularly manufacture or sell cars to California customers or
residents, or that they indirectly, through others, serve or seek
to serve the California market. It seems therefore that Roy
seeks to base jurisdiction on one, isolated occurrence. The
fortuitous circumstances that a single Dual Ghia automobile,
sold in New York, and made in Detroit happened to suffer an
accident while passing through California does not to my
opinion create sufficient ‘minimum contacts’, to satisfy the
constitutional requirement of Due Process. Because the
defendants have no contacts, ties, or relations with the State of

3. California, I think it would be unreasonable to ask them to
defend there. I believe, therefore, that any judgment rendered
by the California court would be void because the court would
not have personal jurisdiction over either of the defendants and
therefore, unenforceable.
QUESTIION:
Congress, in 1997, enacted the Food and Drug Administration
Modernization Act in which certain exemptions were granted,
however, a provision of the Act prohibited pharmacies, selling
the compounds for which exemptions were granted, from
advertising to the general public. Following an extensive media
blitz, in which you extolled the benefits of the new compounds,
you were cited for a violation of the Act. You now face civil
fines in the range of $50,000 and loss of your pharmaceutical
license. How would you defend this charge?
RESPONSE:
The general issue is the following: Under which conditions is it
constitutional for Government/Congress to restrict ones
commercial free speech? Congress prohibited pharmacies to
advertise the compounds, yet our pharmacy did, through an
extensive media blitz. There is no doubt that the pharmacy
violated the law enacted by Congress. The real question is: the
law itself ‘legal’, meaning is it constitutional?
The First amendment of the US constitution protects the right to
freedom of expression from federal government interference. It
can be noted that the US Supreme Court has interpreted the due
process clause of the Fourteenth amendment as protecting the
rights in the First amendment from interference by state
governments as well; however, since this is a federal issue, we
only need the protection granted by the First amendment.
Whereas the First amendment specifically protects individual
free speech, it does not explicitly protect commercial speech.
The US Supreme Court has therefore interpreted the law and

4. created a four-prong test to measure the validity of restraints
upon commercial expression.
Under the first prong of the test, certain commercial speech is
not entitled to protection. If the advertising does not accurately
inform the public about lawful activity, it can be suppressed.
This means that false, deceptive or misleading advertisements
need not be permitted. However, even truthful, non-misleading
commercial speech may be regulated, depending on the result of
the application of the remaining prongs of the test.
Under the second prong, the interest of the government in
regulating and limiting the protected speech must be assessed.
The State must assert a substantial interest to be achieved by
restrictions on commercial speech.
Under the third prong, the restriction cannot be sustained if it
provides only ineffective or remote support for the asserted
purpose. The regulation must ‘directly advance’ the
governmental interest.
Under the last prong, if the governmental interest could be
served as well by a more limited restriction on commercial
speech, the excessive restriction cannot survive. The Court
requires a ‘reasonable fit’ between means and ends, with the
means ‘narrowly tailored to achieve the desired objective.’
In our particular case, if I were in charge of the pharmacy’s
defense, I would try to attack the constitutionality of the law by
attacking each prong. I would first argue that the advertisement
was not false, deceptive or misleading. If I fail at this step,
then I basically lost the case. There is nothing in the data that
tells us whether or not the advertising was false, deceptive or
misleading. Even if I pass this step successfully, I also need to
demonstrate that the law does not pass either one of the next 3
prongs. Therefore, I would also argue that the government had

5. no substantial interest in preventing pharmacies from
advertising the compound. There is nothing in the data that
informs us on the Congress’s motives. If I fail to convince the
court, I would argue that restricting advertising does not
‘directly advance’ the governmental interest, whatever it may
be. If this also fails, I would then argue that the governmental
interest could be served by a more restricted limitation on
commercial speech. After all, tobacco and alcohol are known to
be detrimental to the consumers’ health, but they have not been
banned from advertising altogether. Instead the products come
with warning labels on their packaging. There may be a way for
the government to reach its public service objective without
restricting advertising altogether. This systematic attack on
each prong would constitute my defense strategy
Nota Bene: An answer that is merely a statement of your
conclusions will receive little or no credit. Too brief an answer
is undesirable. All aspects of the problems resolution should be
fully reviewed. An answer should show recognition of the issues
presented by the question, an understanding of the material
facts, the principles of law applicable, and the reasoning relied
upon by you to support your conclusion. Make your answers
complete, but try not to volunteer information that is not
material to the issues raised in the question. The value assigned
to your response does not depend as much upon the conclusion
as it does upon the evidence it displays of your ability to
analyze and develop a rational resolution to the issues raised by
the question.