Question: How should IDS proceed with Angelica Lucas’s demand?
General:
You are not a lawyer, and are not expected to have definitive answers to legal questions. You are supposed to be a manager with educated instincts about legal problems, including an understanding of broad legal doctrines, the ability to spot where legal issues will have an impact on a business arrangement and the individuals involved, and the ability to evaluate in a preliminary way how legal considerations shape risks and opportunities. You are asked below to address legal issues in a business context from the point of view of a manager. You should in your Response Memo show that you understand general legal principles and can apply them to specific facts.
Prompt:
IDS has fallen on hard times, due to its technology that lags behind that of industry leaders in the biometric security field.
In view of its dwindling financial resources, IDS has decided to reassess its operations strategy. Currently, IDS employs twelve (12) full-time workers and seven (7) part-time workers; it also engaged one (1) consultant three months ago. IDS has determined that a more cost-effective team would consist of eight (8) full-time workers, and five (5) overseas workers. IDS believes that the local team with the international workers will be able to maintain IDS operations without a significant decline in the quality or delivery of its products and services to clients.
Among the four full-time workers whose employment will be terminated are Vachi Lago, a 46-year old Hispanic operations manager, and logistical strategist Dana Menton, who recently announced that she was pregnant. Although Mr. Lago’s work has been satisfactory, IDS executives feel that his salary is too high given IDS’s current strained resources. IDS has also decided not to hire anyone with a “Middle-Eastern” look, as certain IDS executives have expressed concern about the appearance of the company’s workforce to its law enforcement clients.
IDS also recently received a letter from an attorney who represents Angelica Lucas, an electrical engineer with whom IDS’s CEO had met informally on a few occasions prior to IDS’s formal incorporation. Although Lucas discussed general concepts regarding electrical circuit feasibility with IDS’s CEO over coffee and a two lunch meetings, only general business strategy and product architecture topics were discussed. Lucas was, however, aware that IDS’s CEO was, at the time of the meetings, thinking of starting a business based on biometric security technology. Through her attorney, Lucas is now claiming that she is a founder of IDS, and is asking for $2 million – the equivalent to a twenty percent (20%) stake in IDS.
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