Form of Business

On May 7, 2019, two technology managers from a couple of leading social media companies met for dinner at a restaurant in Palo Alto, CA. These technology managers had known each other for a long time as they had played golf together in college. One of the technology managers, Jim Lawson a resident of Las Vegas, NV, was in fact a former PGA tour player who continued to play in professional golf events. He was scheduled to play in a golf tournament the following week for which he would receive $100,000 as an appearance fee because of his stature within the social media industry.

During dinner, they each shared that they were displeased with the social media industry in general and, more specifically, displeased that their respective companies did not protect users’ data. The friends had each accumulated significant wealth due to stock options and possessed financial security. They discussed starting their own company, which they would name TALKER. TALKER would be based on a proprietary algorithm that would protect users’ data. In their view, TALKER had the potential to grow quickly and take market share from other social media companies. They thought that data servers would be needed in the U.S., Singapore (to serve the Asian market), and the Netherlands (to serve European users). They also recognized that, as the new business grew, external financing would likely be needed to sustain the growth. The two technology managers were uncertain, however, whether their current employers would challenge their perceived use of proprietary technology or trade secrets.

The technology managers were also concerned about the ongoing U.S. Congressional hearings and inquiries into the liability protections afforded social media companies under the Communications Decency Act, 47 U.S.C. section 230 (more commonly known simply as “section 230”). Both agreed that the liability protections under section 230 would have to remain in place for the start-up business to be successful. If a social media company is deemed to be a “publisher” it can lose its liability protection. They each vowed to think about TALKER’s business procedures or operating processes to put in place to maintain the section 230 liability protections.

During dinner, and before ordering a second bottle of wine, one of the technology managers, Jim Lawson, went outside to take a phone call. Back inside the restaurant, he made his way to the restroom. In the hallway leading to the restroom, Jim slipped and fell on the wet slate tile floor. The slate tile floor had recently been mopped by one of the employees who did not place a “Caution: Wet Floor” sign in the area. This slate tile floor had recently been installed and the sheen on the new tiles had not worn off.

As a result of the fall, Jim injured his arm and cannot participate in the corporate golf outing the following week where he would’ve been paid $100,000. Jim would later incur $10,000 in medical expenses related to the fall in the restaurant.

Jim made his way back to the table with the assistance of restaurant staff to complete the discussion with his colleague. They decided that one of the next steps was to think through the legal, tax, and business considerations of a potential start-up business.

  1. Form of Business

Discuss the forms of business that should be considered for the TALKER start-up business. In your response, discuss the legal, tax, and other business issues for each of the forms of business the founders should consider.
What form of business for this start-up business do you recommend on these facts?

The Slip and Fall
Where may Jim Lawson, the plaintiff, file the lawsuit related to his fall in the restaurant? Which court system?
What is the cause of action, or legal claim, the plaintiff may assert along with the elements of the claim?
Apply the facts of the case to the elements of the cause of action. Discuss.
What defense(s) may the defendant assert? Discuss.

Current Business Essay Rubric (1)
Current Business Essay Rubric (1)
Criteria Ratings Pts
This criterion is linked to a Learning OutcomeUnderstanding
40 to >32.0 pts
Provides substantive evidence of a deep understanding of the relevant concepts.
32 to >24.0 pts
Provides significant evidence of understanding the relevant concepts.
24 to >12.0 pts
Provides some evidence of understanding of the relevant concepts.
12 to >0 pts
Provides no evidence of understanding of the relevant concepts.
40 pts
This criterion is linked to a Learning OutcomeAnalysis
40 to >32.0 pts
The paper provides excellent analysis and covers each point well.
32 to >24.0 pts
The paper provides evidence of coherent analysis.
24 to >12.0 pts
The paper provides evidence of superficial analysis, with minor gaps or mistakes.
12 to >0 pts
The paper provides little to no correct analysis.
40 pts
This criterion is linked to a Learning OutcomeWriting Mechanics
20 to >16.0 pts
The writing is clear and flawless.
16 to >12.0 pts
The writing is clear and contains few flaws.
12 to >6.0 pts
The writing is somewhat clear and somewhat flawed.
6 to >0 pts
The writing is unclear and is flawed by several grammatical or spelling errors.
20 pts
Total Points: 100

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