- Juan Guiterrez
11. Juan Guiterrez, a state legislator from the southwest suburbs of Chicago, has drafted a proposed law that would make the compensation package paid to the three highest executives of any corporation chartered or doing business in Illinois subject to judicial review for excessiveness at the option of any shareholder. He comes to you for advice, specifically wanting to know: 1) will the statute, if adopted by the legislature, be legal? If not, how could the statute be revised to make it stronger, legally? and 2) will the statute realize its intended objective of making corporations more accountable to their shareholders? If not, how could the statute be revised in order to make it more directly connected to, and supportive of, the underlying policy objective(s)? Please consider statute-authorized or created causes of action that could be brought in the state or federal courts.
12. Jon Smith and his brother, Rock Smith, come to you for advice regarding their developing business venture. The brothers wish to operate an Uber-like dogwalking service in Chicago named “Dog Mess United” (Rock is a huge European soccer fan). Basically, customers would sign up on their smart phones, and using GPS technology, the business would dispatch one of their independentlycontracted walkers directly to the customer’s home, to walk one or more dogs. The service would be available every day of the week, 24 hours a day.
Rock will provide the funding for the venture; specifically, for development of the app, prepayment of two years’ rent on the office, and a small reserve in the bank account ($1,000) in case the business needs to purchase or replace office supplies, such as printer paper or light bulbs. Jon will be the manager of the operations, and will devote all his working time to it. Rock will be hands-off, keeping his full-time job as a fireman.
The walkers will be paid on a per/walk basis. They will provide their own leashes, as necessary, and approve any scheduling made by Jon on their behalf.
Question # 1 – In which form of business do you recommend the brothers operate their enterprise? Give specific reasons supporting your recommendation.
Question # 2 – Let’s jump ahead a few years. After some initial success, the business is barely breaking even because of entry into the market of several competitors, all of whom have undercut the brothers’ prices. To make matters worse, one of the brothers’ independent drivers, Lenny Piecemeal, is careless and allows one of the dogs he is walking to run into the street and get run over by a Tesla. The owner of the dog sues Lenny, the business, and the brothers individually. Assuming you chose an entity with limited liability for one or both brothers, does the customer have a cause of action against the business for the careless driver’s acts? Does she have any direct causes of action against the brothers individually?