Laws Affecting Mercedes and Starbucks Essay Example

Laws Affecting Mercedes and Starbucks Essay Starbucks Coffee Company: Brief Summary Starbucks Coffee Company is a coffee house chain that has locations all over the world. It was opened in Seattle, Washington in 1971, by two teachers and a writer. Starbucks now has over 11,000 locations in the United States and more than 6,800 locations in 49 other countries. In addition to selling coffee, Starbucks sells pastries, sandwiches, coffee drinking accessories, and various media. Starbucks is headquartered in Seattle, owns five different subsidiaries, and has partnership agreements with both Apple and MSNBC (Starbucks Coffee). Starbucks Health Code Compliance The FDA Food Code is a federal law that regulates jurisdictions responsible for inspecting Starbucks (FDA). Because each state has slightly different rules, compliance with the health code differs for each Starbucks location. Each store is required to follow the rules for its respective county department of health and state board of health. Starbucks is regularly inspected by the county health code inspector and must pass that health test, which is later published publicly. Each new store has to apply for a permit from the state health board yearly (Jefferson County). In order to comply with the health code, Starbucks must monitor many different aspects of its operations. Starbucks stores have many different machines that require electricity in a small space. This may cause a store to lose many points because the state requirements are very stringent. Managers must make sure each employee has clean clothes under their apron and has sanitized their hands before preparing food. Starbucks locations must pass an inspection four times a year in the state of Alabama. We will write a custom essay sample on Laws Affecting Mercedes and Starbucks specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Laws Affecting Mercedes and Starbucks specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Laws Affecting Mercedes and Starbucks specifically for you FOR ONLY $16.38 $13.9/page Hire Writer An inspection is graded on a 100 point scale, and anything above an 85 is considered a passing grade. If they make a score lower than 85, they must be retested within 60 days. If they do not pass the following test, they will have their permit suspended and have to go to trial for possible revocation. Health code inspectors have the authority to shut down an establishment whenever they see fit. Therefore, compliance is critical (Jefferson County). Contract Laws The Uniform Commercial Code and the Statute of Frauds are federal laws which regulate specific contracts. However, each state has its own contract laws, which vary slightly. Starbucks contracts with coffee farmers, suppliers of ingredients, manufacturers of other Starbucks goods, and many more business entities. In addition, Starbucks contracts with different music artists. In October of 2009, singer/song-writer Carly Simon filed a lawsuit against Starbucks claiming that the company substantially eliminated sales of her new album when it shut down its music production label. She accused the company of tortuous interference with contract, and demanded $5 to $10 million dollars for her losses. Simon said she could have used a different record company to promote her album, but she chose the Starbucks label because it would distribute her work at its store locations. Starbucks claims that it fulfilled the contract’s obligations and promoted the album for the agreed-upon amount of time. Simon claims that the overall assumption when she signed her contract was that the Starbucks label would not cease operations. She claimed a substantial loss of sales because of her album’s absence from the shelves of Starbucks. The coffee company argues, however, that she can only sue its subsidiary company that owned the label, not the coffee roasting side of the business. The case has not yet been resolved. (Farley). Tip Sharing Laws The Fair Labor Standards Act (FLSA) prohibits tip sharing with employers (Jones). In 2004, a former Starbucks employee filed a lawsuit against the company stating that it was unfair for Starbucks to let supervisors partake in tips. This class action lawsuit was filed in California and represented over 100,000 employees, including persons who were no longer employed. The California Labor code prohibits employers or agents from receiving any tips for employees if they do not participate in activities resulting in a tip. A San Diego county superior court judge ruled in the plaintiffs favor and awarded them $106 million in restitution. Starbucks appealed the suit on the premise that supervisors perform the same jobs as baristas. They argued supervisors cannot hire, fire, or discipline, which gives them no responsibilities as managers. In 2009, the California Supreme Court reversed the decision, agreeing that supervisors perform the same job as baristas. As a result, the plaintiffs appealed the decision (Jones). Accidental Tea Burns Like most business entities, Starbucks must be aware of negligence laws. Negligence laws vary from state to state. Recently, Starbucks defended itself against a negligence lawsuit over severe burns. The company won the lawsuit in early November of this 2010. A 76 year old woman from New York alleged that Starbucks was responsible for burns that resulted from tea spilling on her leg when she tried to remove the lid. She claims the drink spilled because she had trouble removing the lid since it was placed in a double cup. She also claimed that Starbucks should have warned her that the cup could spill. This is nearly identical to a 1994 case where a woman burned herself with a cup of coffee at McDonalds. The woman in the Starbucks case, however, was unsuccessful with her claim. The 2nd U. S. Court of Appeals did not take long to dismiss the case because the hazards of hot drinks are nothing new and the entire beverage industry uses the double cupping method to allow ease of holding a hot drink (Starbucks). Fair Trade Starbucks is a massive supporter of fair trade when it comes to their products and merchandise. Currently in the U. S, we have many free trade laws which conflict with a fair trade policy. Free trade is a market principle where prices are not artificially tampered with by governments, and both parties in a transaction receive fair profits. Government intervention would include taxes, tariff, price floors and quotas. The U. S. has legislated free trade acts with both North America and Central America (Cornell). Starbucks claims that we hurt farmers in these foreign countries by supporting free trade legislation because we cut down on local farmers’ sales and profits by making the farmer’s product as cheap as possible. Therefore, Starbucks only has fair trade transaction to promote this market practice and to not add to what they think is the problem. They also are outspoken in supporting new fair trade legislation. The problem Starbucks has though is the U. S. cannot act completely in supporting Fair trade because some countries where fair trade exist the U. S. has an embargo upon and Starbucks usually does not have jurisdiction to override foreign countries international trade policies. Still Starbucks claims all of there coffee is bought in a fair trade market (Starbucks). STARBUCKS CONCLUSION Mercedes-Benz: Brief Summary Mercedes-Benz is an international manufacturer of luxury automobiles. The company can trace its origin to the first gasoline powered car by Karl Benz in 1886. Since then, the company has had many mergers and is now owned as a division of Daimler AG. Today Mercedes-Benz has manufacturing plants in 20 countries including one in Vance, Alabama. Mercedes-Benz is headquartered in Stuttgart, Germany and manufactures automobiles, buses, and trucks (Mercedes). Vehicle Safety Requirements The National Highway Traffic Safety Administration has power under Title 49 of the United States Code, Chapter 301, to issue Federal Motor Vehicle Safety Standards and Regulations that Mercedes-Benz is required to adhere to. The safety standards are regulations of the minimum safety requirements for motor vehicles. The regulations are enforced so that the motor vehicle operator is protected against crashes caused by Mercedes-Benz negligence and faulty construction or design of the motor. These are just the regulations Mercedes-Benz has to adhere to in the U. S. (Federal Motor Safety). The Magnuson-Moss Warranty Act, a federal lemon law, offers a remedy for car buyers that purchase vehicles which continually fail to comply with quality and performance standards. Lemon laws differ slightly for each state and do not include used or leased cars. Consumer rights provided by the laws may surpass warranties in the purchase contracts because federal law requires that the consumer be made aware of all terms of the warranty, and they must also be aware of their options in the event that something goes wrong. On top of that, the Magnuson-Moss Warranty Act assures consumers a speedy resolution to any disputes involving the warranty of the automobile (â€Å"Businessperson†). A notable case involving Mercedes began when a 40-year-old man bought an E320 for $56,000 from a Mercedes-Benz dealership in 2005. He claimed the car would not start, and he had to replace the battery numerous times. Finally, a mechanic told him there was nothing more that could be done to save the functionality of his car. He demanded a refund from the dealership, but it offered him a replacement instead. Mercedes-Benz eventually agreed to refund but did not do so within 30 days. The lawsuit was filed seeking double damages and attorneys fees (Lattman). Mercedes-Benz claims that it acted appropriately, stating that the plaintiff acted in bad faith and did not provide his information fast enough for a timely refund. A Wisconsin state judge concluded Mercedes violated Wisconsin’s â€Å"Lemon Law. † As a result, the judge ordered Mercedes-Benz to pay $482,000 (Lattman). Wisconsin’s set of Lemon Laws are more strict than other states (â€Å"Wisconsin Lemon Law†). The ruling here could have forced Mercedes-Benz to pay twice the purchase price and legal fees for breaking the law. However, in 2008, an appeals court overturned the prior ruling and moved for a retrial so a jury could decide whether the plaintiff acted in bad faith. The jury agreed with Mercedes-Benz the verdict was eventually overturned due to a lack of evidence. A judge later ruled in the plaintiff’s favor, even though the plaintiff still drives the car in question to this day. He now says it is working fine but it is wrong Mercedes-Benz sold him a lemon. Price Fixing Price fixing is an arrangement by participants on allied sides of a market to buy or sell only at a secure price, and then to uphold the market’s present situation so that the price stays at its current level, thus giving the parties the ability to control supply and demand. Parties involved in price fixing are known as a cartel. There are many different goals one can achieve through price fixing. Some possible outcomes include raising prices, lowering prices, or maintaining prices to secure a maximum profit for all companies involved. The crucial characteristic of price fixing is any agreement about price regardless of whether the agreement is expressed or implied (Title 15). In the United States, this action can be prosecuted as a federal offense under Section 1 of the Sherman Antitrust Act. Prosecutions can either be handled by the U. S. Department of Justice or by the FTC. Consumers or organizations can file their own lawsuits for triple damages and also recover attorney’s fees. Colluding on price amongst competitors is also seen as price fixing and is in violation of the Sherman Act. In 2007, the U. S. Supreme Court ruled that price fixing by a manufacturer and its retailers is not in violation (Kloset vs. Leegan). In 1999, Mercedes-Benz was accused of price fixing and already had a bad public image due to this previous case (Mercedes). Recently, Mercedes issued a statement saying that the U. S. Department of Justice is investigating allegations that the companys subsidiaries participated in a price-fixing scheme in New York. The 3-year-old lawsuit was filed in New Jersey, by buyers of the cars. The lawsuit claims 27 dealers in New York, New Jersey and Connecticut and Mercedes-Benz USA conspired since 1992 to artificially maintain prices. The company stated that the allegations were all derived from a single dealer that, due to poor performance, the company had tried to revoke its franchise agreement. (Henry) International Trade Laws As the world becomes a more globalized place, international trade laws are beginning to become more prevalent at all levels of business. However, many laws do not draw from U. S. Code. The World Trade Organization (WTO) regulates international trade (World Trade Organization). One issue of international trade law that Mercedes deals with in the United States is known as â€Å"parallel import. Parallel import occurs when a country imports a product that was originally distributed to that country with a certain price and specifications. In 1981, Mercedes-Benz had planned not to distribute the W126 in the United States because specifications were too costly to meet. The demand for the car caused U. S. consumers to import their own from other countries and pay a large price for the cars to f it the specifications. This increase in demand for these imported cars ended up driving the price of Mercedes-Benz’s other models sky high, which in turn drove demand down immensely. Mercedes estimated that over 22,000 W126 were being parallel imported each year (Mercedes). Labor Laws Mercedes-Benz has to deal with a vast array of labor laws for every country in which it has a plant. In the United States, Title 29 of the U. S. Code is the federal law which establishes labor laws. Labor laws encompass unions, wages, benefits, discrimination, and working conditions. Federal law typically governs basic rights and allows individual states to be more extensive based on their environment. (U. S. Department of Labor). GIVE EXAMPLES OF SPECIFIC LAWS IN THIS PARA In Alabama, minimum wage is set at the federal wage of $7. 25 an hour, and hiring and firing is allowed for any reason, as long as it is not based on discrimination. Alabama employees are allowed to join unions, but unions are not as prevalent in Alabama as they are in other States. This is a large reason why Mercedes-Benz decided to create a plant in Vance, Alabama. The company is praised for its compliance to labor laws and did not have to lay off any employee during the recent recession when many car manufacturers had to lay off hundreds of employees (Department of Labor). While Mercedes has a strong track record when it comes to abiding by labor laws, it has faced some problems with its Alabama plant. Employees at the Vance plant are suing on the basis that Mercedes has been violating the Federal Fair Labor Standards Act by not giving some employees their lunch breaks. Over 150 employees are pushing to be repaid with interest for missed overtime due to working during the lunch hour. The employees also allege that Mercedes-Benz has been calling its employees in during their lunch breaks and causing them to miss family time. Mercedes-Benz has not yet responded to the lawsuit.