GM520 Final Exam
This page includes one fact pattern and questions over TCOs A, B, C, D, and I.
Note that questions over TCO D and I are short answer only (and have small boxes for your answer) worth 15 points each. Answer those question succinctly.
Questions over TCO A, B, and C are essay questions and have large boxes for your answer. Be sure to fully explain, analyze, and evaluate the full essay questions. These are worth 30 points each.
1. TCO D Short Answer Question and Facts for Page 1 Questions:
A well known pharmaceutical company, Robins & Robins, is working through a public scandal. Three popular medications that they sell over the counter have been determined to be tainted with small particles of plastic explosive. The plastic explosives came from a Robins & Robins supplier named Casings, Inc., that supplies the capsule casings for the medication pills. Casings, Inc., also sells shell casings for ammunition. Over $8 million in inventory is impacted. The inventory is located throughout the Western United States, and it is possible that it has also made its way into parts of Canada.
Last fall, the FDA had promulgated an administrative proposed rule that would have required all pharmaceutical companies that sold over-the-counter medications to incorporate a special tracking bar code (i.e., UPC bars) on their packaging to ensure that recalls could be done with very little trouble. The bar codes cost about 35 cents per package.
Robins & Robins lobbied hard against this rule and managed to get it stopped in the public comments period. They utilized multiple arguments, including the cost (which would be passed on to consumers). They also raised “privacy” concerns, which they discussed simply to get public interest groups upset. (One of the drugs impacted is used for assisting with alcoholism treatment – specifically for withdrawal symptoms – and many alcoholics were afraid their use of the drug could be tracked back to them.) Robins & Robins argued that people would be concerned about purchasing the medication with a tracking mechanism included with the packaging and managed to get enough public interest groups against the rule. The FDA decided not to impose the rule.
Robins & Robins’ contract with Casings, Inc., states, in section 14 B.2.a., “The remedy for defects in supplies shall be limited to the cost of the parts supplied.” Casings, Inc., had negotiated that clause into the contract after a lawsuit from a person who was shot by a gun resulted in a partial judgment against Casings for contributory negligence.
List any bases Robins & Robins could sue Casings, Inc., under contract theory ONLY for the damages caused by the explosives in their drugs, over and above the cost of the capsule shells. (short answer question) (Points: 15)