1. RUNNING HEAD: Cases and Business
Cases That Changed the Conduct of Business
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Cases That Changed the Conduct of Business
Part 1
1. McCulloch v. Maryland (1819)
In 1819, the state of Maryland passed a law which imposed taxes on all banks which are
not chartered in the state. Being a national bank, the Second Bank of the United States was the
only out-of-state bank in Maryland, hence it is the only subject of the new law passed by the
state. James McCulloch, head of the branch, refused to pay the tax and was subsequently sued by
the state. Maryland contended that it had the power to tax all business establishments that
operated within its boundaries and that Congress does not have constitutional right to establish a
national bank. McCulloch was convicted of the case and was forced to pay a fine, but he filed an
appeal to the Supreme Court.
The Supreme Court determined that the Constitution does not explicitly state that the
Congress had the power to create banks, but it had the capacity to “lay and collect taxes; to
borrow money; to regulate commerce”. In these functions, a bank presents a suitable instrument
that can assist the government in collecting and disbursing revenue.
Through this ruling, the Supreme Court upheld national supremacy. It meant that no
entity, government or otherwise, can impede decisions made by the national government which
are deemed “necessary and proper”. The impact of this law to business is that national banks
were finally given mandate to operate which meant it had the capacity to affect business
operations. Because national banks were originally chartered to ensure a sound national
currency, whatever policies it imposes to guarantee its purpose has to be followed by businesses,
even when they feel that it is already becoming “predatory” or unfair.
2. Gibbons v. Ogden (1824)
Thomas Gibbons and Aaron Ogden were owners of competing companies, which
operated steamboats traversing the New Jersey-New York route. Ogden, who held a state license
to operate as a monopoly asked the state to prevent Gibbons, who held a federal coasting license,
from traversing the route. Gibbons lost twice in the New York courts but court rulings were
reversed by the Supreme Court.
The case pointed out that states did not have control over interstate commerce, they did,
however, have the power for economic regulation. It also had provisions which allowed the
Congress to regulate activity of interstate commerce if it had a substantial effect to the economy.
For businesses which operate in different states or transactions spanning different territories, they
must be aware that regulations to their operations can come not only from the state, but also from
Congress. Rulings released by the Congress about interstate commerce will affect the operation
of such businesses.
3. Mapp v. Ohio (1961)
In this 1961 case, the Supreme Court provided the protection against “unreasonable
searches and seizures” by the state and its agencies. Doliree Mapp, suspected of hiding a
fugitive, refused entry to officers of the Cleveland Police Department when they failed to give
her a search warrant. The police then forcibly opened the door and searched the entire house for
the fugitive. No fugitive was found in the house but the officers then saw pornographic material
in Mapp’s basement. Mapp was arrested for violating Ohio law that prohibited the possession of
obscene material. She was then convicted on the basis of the evidence presented by the police.
Mapp appealed to the Supreme Court contending that she should never been brought to trial
because evidence against her were a result of an illegal and warrantless search. The US Supreme
Court reversed the ruling of the lower courts.

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While this was a case between an individual and the state, the exclusionary rule provided
by this case applies to businesses as well. In instances when a business is sued, the government
or its agencies must follow due process so that the evidence they present to court are valid. Even
when complaints against a business can be concurred with different testimonies, government
agencies cannot gather evidence from the business office without securing a search warrant.
4. Gideon v. Wainwright (1963)
In 1961, Earl Gideon was convicted of breaking and entering and petty larceny. He did
not have a lawyer because he could not afford one. He did ask the state to provide him with an
attorney claiming that the Sixth amendment entitles everyone to a legal counsel, but the Florida
Circuit Court denied his request. While serving his sentence, Gideon studied law, which
reaffirmed his belief that his right to legal representation was violated. He sent a letter to the U.S.
Supreme Court asking them to hear his case. The Court ruled in his favor.
For businesses, it is important to realize whether they are the accuser or the accused, they
will need to deal with lawyers who will do everything they can to benefit their client. Hence, it
can be both an advantage and a disadvantage. Bankrupt business owners can be sure that their
right to legal counsel will always be upheld so someone will always represent their case even
when they cannot afford to pay for a good lawyer. Meanwhile, business owners who wish to sue
someone will have to ensure that they have a good case because their granted without
undergoing due process. Such a case will cost money and will affect a business’ bottomline.
5. United States v. Nixon (1974)
The case against former President Richard Nixon is probably one of the most publicized
of all landmark cases in the U.S. because it ultimately created a limit to the power of the U.S.
presidency. Installing a tape-recording device at the Oval Office, prosecutors investigating the
Water Gate scandal filed a petition to obtain subpoena ordering President Nixon to release taped
conversations and meetings between the President and those indicted by the jury. The president
filed a petition arguing for separation of powers; by granting the prosecutor’s petition, the
judicial branch would be interfering with the function of the executive branch. Moreover, the
President’s camp claimed that he was entitled to executive privilege. The Supreme Court ruled
that such privilege is not absolute and that it was the judiciary’s function to ensure that criminal
justice was administrated fairly. Through this case, the judicial branch signifies that the
president’s need for confidentiality is does not outweigh the judiciary especially when the
evidence obtained contains “military, diplomatic or sensitive national security secrets”.
If the president had limits to its power, then it essentially means that businesses do not
have absolute power as well. Businesses, even those earning more than the U.S. government,
have to adhere to the law, and they will need to release any information it holds when demanded
by the law to do so.
6. Brown v. Board of Education (1954)
In this 1954 case, a class action suit headed by Oliver L. Brown sued the Board of
Education for violating the Equal Protection Clause of the Fourteenth Amendment. The Brown,
along with 12 other parents petitioned against the segregation of school systems claiming that
such racial segregation is concurrent to racial discrimination. The U.S. Supreme Court found no
other reason for allowing such practice to persist except for the belief in the African American
children were of inferior race.
This ruling had massive effects in American society because for the first time, it
recognized the substantial harm of racial segregation. This effectively ended the practice and has
led to the understanding that the “negroes” and the “whites” have the same capabilities and

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should be treated as such. In the workplace, black and white Americans have to work together.
They are also granted with the same opportunities and privileges. The preference for “whites” in
the top positions must also deteriorate to ensure fair treatment of both races.
Part 2
1. A company is selling on the internet designer bags such as Louis Vuitton. It turns out these
“authentic” items sold at “cheaper” prices are fake.
2. A company is selling a new product which is FDA approved. Upon checking with the agency
website, it turns out that the FDA approval was for an old formula, the new one is not yet
registered.
3. In order for internet companies to become credible, they put the BBB logo on their site. Other
companies might add “Visa” or “Mastercard” logos, but in fact, they are just processing
payments using Paypal and aren’t really registered merchants with the two credit companies.
4. Companies offering phone support employ people abroad. Often when customers ask where
these phone representatives are located they will say, “I am in the U.S.” but we know this is not
true because we hear people in the background talking in a different language.
5. Companies selling “wonder herbs” such as hoodia gordonii or acai berry are not FDA
approved. Their claimed “benefits” are not scientifically tested.
6. An online website is selling “new” items. They even have pictures posted on the site. When
the client orders and the product is shipped to them, they are disappointed with the product. They
attempt to get it replaced but then the company cites a clause on their terms and conditions
“items may differ from the actual product” or “we reserve the right to modify items without
notice”.
7. There are many articles claiming that a product is the “best” in the industry, but there are no
proof to this, except for the gold seal on their company website which says “best seller”.
8. A plastic surgery (Company B) firm does a press release claiming that they have a witness
against their competitor. This witness is talking about how her silicone implants has caused
damages to her body and that the problem was ignored by company A and how company B has
helped her overcome the trauma and the risk presented by company A’s negligence.
9. A company has a photo of a product on its advertisement. Below the photo is a notice in small
print: “item may vary from the photo shown herein”.
10. The company puts a minimum amount/number of purchase for every item they are selling.
The client responds by filling the requirement, and going on to checkout. At the end of all the
information that the client has to fill out, they receive a notice: “item out of stock. Delivery
schedule, next month”.
11. A company is selling furniture online. On its website are photos of the furniture and a notice
that says free delivery. Ecstatic, the client orders, and then they receive a boxed package. Inside
the package are the parts of the furniture which is still to be assembled. The client asks the
delivery guy to assemble the package, the delivery guy refuses saying that it is not part of his job.
12. A company is selling furniture online. On its website are photos of the furniture and a notice
that says free delivery. Ecstatic, the client orders, and then they receive a boxed package. Inside
the package are the parts of the furniture which is still to be assembled. The client asks the
delivery guy to assemble the package, this time, the delivery guy agrees unless the client pays a
25% markup. The client has no choice because they have no tools available to assemble the
package.

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13. A grocery store says that they are providing mark down on “all items”. Customers shop
happily, afterall, it is almost Christmas. It turned out, these items were due to expire at the end of
the month.
14. Credit score companies claim that they can fix a person’s credit rating but the only service
that they provide is advice. They may offer to “do something” about the client’s credit rating, but
they also inform the client that there is no “guarantee” that the credit rating will be fixed.
15. A client comes in because her computer turns off after a few hours of use. The repair guy
does everything – replace the battery, install a new CMOS battery, install a new fan, without
really diagnosing what is causing the problem.
16. “No return, no exchange” policies in some stores is an example. By refusing to get returns or
exchanges, the company is essentially saying “you have used this, therefore you have taken
advantage of its benefits already” when in actuality, the client is disappointed with the product.
17. A company says that they offer a “30-day guarantee” for an online service. The client orders
the service but is required to pay the first month. At the end of the month, the client decides to
cancel the service, the company agrees to rebate the deducted amount but it takes a year and
several documentation in order to get this done.
18. Several companies say that they have a “dedicated representative”, when in fact these
representatives are only agents and they still have to get approval from their boss if they wish to
offer discounts or other benefits to the client.
19. Companies have terms and conditions (TAC) which are very long, many people don’t bother
to read it. Others which have shorted TAC require the client to refer to another document which
is not readily available. Others still, have TAC with a small print.
20. People calling companies may be informed that their calls are being recorded. Once the client
is able to get through the operator and asks for the recording of the call, the agent may refer the
client to a manager, and then the manager will say “the recordings are for legal purposes only, if
you wish to listen to the recording, you need to get a court ruling”.