For this assignment our client is the Board of Directors for a regional
baby food company, Yummy in the Tummy. Melissa, the CEO of the regional
baby food delivery company, made some decisions recently without
consulting the Board or shareholders, that the Board is now concerned
about. The company has prided itself on only using the highest quality
ingredients for the baby food. The company has now started marketing and
producing the baby food on a large scale, delivery baby food
nationwide. Melissa decided to source the materials from cheaper farms
across the country, with some of the materials being switched to lab
created or GMO vegetables. Melissa still is advertising the baby food as
being of the highest quality, without disclosing the switch in vendors
and quality of ingredients, even though the labels still state that the
ingredients are of the “highest quality,” are “free-range,” and without
GMOs. Melissa was confident that nobody would be able to tell the
difference in quality. She did not inform the company’s Board of
Directors or shareholders, instead choosing to only disclose that she
has changed production issues. The Board of Directors has recently
learned of the switch and is concerned.
Your supervising attorney has asked that you draft a memorandum
addressing the proposed change. Are there legal issues that the company
should be concerned about? What are the issues and why should the
company be concerned? What are the ethical issues? What would you
recommend the company do moving forward to decrease liability?
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