Business Law Problem:
After thorough consideration by senior leadership and its Board of Directors, Big Box, Inc. decided to begin carrying firearms and ammunition. Big Box has carried these products for approximately nine months. Sales have been brisk and have exceeded projections. Big Box’s principal supplier is On Target Firearms. On Target is a national wholesaler of firearms and ammunition that has been in business for more than 25 years and supplies all of the largest retail outlets in the country. Things have been going well.
Fred Steady arrives at work to find a package on his desk. Contained in the package is a citation from a federal court in Alaska. Big Box has been sued in a wrongful death action filed by Bob and Linda Smith, who reside in Alaska, relating to the death of their six-year-old son Kyle when a rifle manufactured by On Target and sold by Big Box allegedly misfired while being handled by Kyle’s older brother Kevin, who is 12. Bob Smith legally purchased the rifle from a Big Box location in Seattle, Washington as a gift for Kevin. The incident occurred in the Smith home in Juneau, Alaska. The suit also names On Target as a defendant.
Mr. Steady immediately calls Chuck Connors, CEO of On Target, to talk about the case. Mr. Connors tells Mr. Steady On Target has had reports of problems with the model allegedly involved in the Smith case. Mr. Connors tells Mr. Steady there have been four reports of this model firing when the safety is on and without pressure on the trigger. Despite these reports and additional testing by On Target, they have been unable to duplicate the events alleged in the complaints. None of the other incidents involved personal injury. Mr. Connors also indicates an investigative journalist has been looking into the complaints and is preparing to air a story on a national news program. On Target has refused to be interviewed for the piece, but it is anticipated the reporter will reach out to Big Box as well. Mr. Connors requests Mr. Steady decline the interview.
After these events, Mr. Steady has a lot on his mind and turns to his Legal Department for advice on a number of diverse issues.
ASSIGNMENT NO. 2:
Prepare a memorandum to Mr. Steady providing at least a one-paragraph answer to each of the following sets questions:
(1) Should Big Box contest jurisdiction or venue of the federal court in Alaska? If so, what is the likely outcome? Even if Big Box could successfully contest jurisdiction, are there practical reasons why they would want the case in Alaska? What is the likely outcome of the lawsuit as to Big Box?
(2) The model of the rifle involved in the Smith incident is the best-selling model for both On Target and Big Box. Big Box has sold thousands and has orders for thousands more from On Target. There has been no independent proof the defect alleged in the lawsuit exists, and no regulatory agency has taken any action. Should Big Box stop selling the rifle? Should Big Box recall the rifles it has already sold? Explain why or why not. Can Big Box cancel its future orders for this rifle with On Target? Why or why not?
(3) Should Mr. Steady participate in the interview with the reporter? Why or why not?