Litigation Cost-Benefit Analysis
Resources: Ch. 3 and Ch. 4 of Legal Environment of Business: Online Commerce, Business Ethics, and Global Issues; law libraries and databases from the internet.
Scenario: Solar Co. Inc., a solar panel manufacturing and installation company, has recently encountered a series of scandals and bad publicity relating to defective solar panels, poor workmanship, and employee allegations of harassment by executives within the company. One claim resulted in a two-year trial which Solar Co. lost; all other claims were settled out of court.
Solar Co. enters into a contract with XYZ Media to prepare a 6-month national advertising and public relations campaign to help restore its tarnished reputation at a cost of $600,000. XYZ Media launches the campaign, and it is successful for the first two months until XYZ’s computer servers are hacked and all client information is lost because XYZ failed to have adequate backup systems in place. In addition, social media account information and passwords were compromised, resulting in derogatory and inappropriate posts being made on all of XYZ’s social media accounts for several hours. Because XYZ was managing Solar Co.’s social media presence at the time, Solar Co.’s social media accounts were also taken over by the hackers for a brief time and filled with damaging posts.
XYZ issues a public apology; however, Solar Co. wishes to terminate the contract with XYZ and receive a refund of the $200,000 it paid for the first two months of the campaign due to the damages caused by the computer hack. XYZ refuses to cancel the contract or issue a refund, insisting that it can successfully continue the campaign and re-create all of the material that was lost. Solar Co. refuses to pay any further amounts due under the contract and has already begun seeking a new media relations firm to re-launch the campaign.
Write a 1000 word paper, not including the title page and references, discussing the following:
Part 1: Discuss the following, each under a separate heading:
- Should Solar Co. file a lawsuit against XYZ and proceed to trial
- Should Solar Co. file a lawsuit and then try to negotiate and out-of-court settlement before proceeding to trial
- Should Solar Co. use a method of alternative dispute resolution (ADR) and if so, what type, and why
Your analysis should specifically discuss each of the nine factors provided in the “Contemporary Environment Cost-Benefit Analysis of a Lawsuit” feature found in Ch. 4, “Judicial, Alternative, and E-Dispute Resolution.” Provide a clear explanation and reasoning for your recommendation based on the facts of the scenario.
Include Part 2 in the same paper but start at top of a new page.
Part 2: Solar Co. wants to include binding arbitration agreements with all clients, subcontractors and employees in the future. Discuss,
- The general nature of how arbitration works compared to litigation or mediation
- The enforceability of arbitration agreements in contracts, including employment contracts.
must have a minimum of five sources in your references; two of the five references must be SCHOLARLY sources (must be from journals, not from websites and not from your textbook)