"jeans 4 all" is a manufacturer of casual and sportswear items in Altoona, PA. The company received notice from the U.S. Department of Justice's Antitrust Division that a federal lawsuit had been filed against the company for violations of antitrust law. The suit alleged that four (4) employees of "jeans 4 all" had conspired with certain retail outlets to fix the price at which the companies most popular jeans would be sold. The corporation, the corporate board of directors, and the individual employees involved were all named as defendants in the lawsuit.
The board of directors of the company instructed its corporate legal counsel to prepare a motion to dismiss the corporate entity and the directors from the lawsuit. The board told their legal counsel that since they had no knowledge of the employees' price-fixing activities and had never approved of it, then the employees should be held personally liable for acting on their own.
ARE THE DIRECTORS CORRECT IN THEIR LEGAL POSITION? WHY OR WHY NOT?