Essay Instructions: Case Study requirements:
10 pages
Word format
APA style, 1 inch margins
Use at least 4 references to supplement the information in the case or support your recommendations.
The format for the case analysis report is:
Case Details:
Describe in detail the illegal/unethical behavior you will be analyzing in your case analysis.
Background:
Identify the key stakeholders in the case and the impact of operational/ethical issues on the stakeholders.
Legal analysis:
Depending on the situation in the case, summarize the key legal issues related to federal employment or federal consumer protection law and in what way the company is non-compliant with the law. What factors do you think have contributed to the company be non-compliant.
Ethical analysis:
Summarize the key ethical issues in the situation. Apply at least three of the ethical perspectives (theories of ethical thought see below) and for each perspective, give your opinion as to what aspects of the situation (actions by any stakeholder) demonstrate ethically sound behavior and which illustrate unethical behavior.
Contributing factors: corporate culture and corporate governance/guidelines.
Analyze how the company’s corporate culture that may have either helped to minimize the unethical behavior or actually contributed to/caused the unethical behavior. Analyze how the company’s corporate governance (overall guidelines, strategic decisions/actions) may have helped to minimize the unethical behavior or actually contributed to/caused the unethical behavior.
Ethical decision factors to consider:
Based on the ethical perspectives (theories of ethical thought, see below), what are the key factors that should be addressed or considered in resolving the legal/ethical issues identified in this case (as outlined above). List each ethical issue and then for each issue, the factors to be addressed or considered based on the ethical perspectives used above.
Recommended corrective action:
Recommend corrective actions for each of the legal/ethical issues outlined above. Provide supporting rationale for each recommendations or industry examples of the use of your recommendations as “best practices”.
Recommend approaches or policies that the company can take to help prevent these issues in the future. Provide supporting rationale for each recommendations or industry examples of the use of your recommendations as “best practices”.
Reference List: minimum of 4 references. References can be used for the following:
•to show “best practices” from organizations for preventive or corrective actions related to ethical issues
•examples of similar incidents in the same/other industries, to illustrate factors contributing to the unethical behavior
•examples of common concerns expressed by the stakeholders you identified in the cases
* reference material (law, research articles, government data) to explain why the actions in the case are not in compliance, or what the compliance requirements are
Theories of Ethical Thought
1. Consequential Theories - Acts are judged good or bad based on whether the acts have achieved their desired results. Acts of the business community or any other social unit i.e. government, school, (fraternity, and sorority). Act and rule utilitarianisms are two sub-schools.
2. Deontological Theories - Actions can be judged good or bad based on rules and principles that are applied universally.
3. Humanist Theories - Action are evaluated as good or bad depending on whether they contribute to improving inherent human capacities such as intelligence, wisdom and self-restraint.
Case:
Exxon Valdez
On Good Friday, March 24, 1989, the oil tanker Exxon Valdez was run aground on Bligh Reef in Prince William Sound, Alaska. On March 24, 1989, Joseph Hazelwood was in command of the Exxon Valdez. Defen¬dant Exxon Shipping [Company] owned the Exxon Valdez. Exxon employed Captain Hazelwood, and kept him employed knowing that he had an alcohol problem. The captain had supposedly been rehabilitated, but Exxon knew better before March 24, 1989. Hazelwood had sought treatment for alcohol abuse in 1985 but had "fallen off the wagon" by the spring of 1986. Yet, Exxon continued to allow Hazelwood to command a supertanker carrying a hazardous cargo. Because Exxon did nothing despite its knowledge that Hazelwood was once again drinking, Cap¬tain Hazelwood was the person in charge of a vessel as long as three football fields and carrying 53 million gallons of crude oil. The best available estimate of the crude oil lost from the Exxon Valdez into Prince William Sound is about 11 million gallons. Commercial fisheries throughout this area were totally disrupted, with entire fisheries being closed for the 1989 season. Subsistence fishing by resi¬dents of Prince William Sound and Lower Cook Inlet villages was also disrupted. Shore-based businesses depen¬dent upon the fishing industry were also disrupted as were the resources of cities such as Cordova. Exxon undertook a massive cleanup effort. Approximately $2.1 billion was ultimately spent in efforts to remove the spilled crude oil from the waters and beaches of Prince William Sound, Lower Cook Inlet, and Kodiak Island. Also, Exxon under¬took a voluntary claims program, ultimately paying out $303 million, principally to fishermen whose livelihood was disrupted. [Lawsuits] (Involving thousands of plain¬tiffs) were ultimately consolidated into this case. The jury awarded a breathtaking $5 billion in punitive damages against Exxon. Exxon appealed the amount of punitive damages [to the U.S. Court of Appeals for the Ninth Circuit]. [T]he Ninth Circuit Court of Appeals in this case reiterated the guideposts for use in determining whether punitive damages are grossly excessive [include] the reprehensibility of the defendant's conduct. The court of appeals remanded the case [and] unequivocally told this court that "[t]he $5 billion punitive damages award is too high" and" [i] t must be reduced."
Justice Holland
[T]he reprehensibility of the defendant's conduct is the most important indicium [indication] of the reasonable¬ness of a punitive damages award. In determining whether a defendant's conduct is reprehensible, the court consid¬ers whether "The harm caused was physical as opposed to economic; the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; the target of the conduct had financial vulnerability; the con¬duct involved repeated actions or was an isolated incident; and the harm was the result of intentional malice, trickery, or deceit, or mere accident."
The reprehensibility of a party's conduct, like truth and beauty, is subjective. One's view of the quality of an actor's conduct is the result of complex value judgments. The evaluation of a victim will vary considerably from that of a person not affected by an incident. Courts employ disinter¬ested, unaffected lay jurors in the first instance to appraise the reprehensibility of a defendant's conduct. Here, the jury heard about what Exxon knew, and what its officers did and what they failed to do. Knowing what Exxon knew and did through its officers, the jury concluded that Exxon's conduct was highly reprehensible.
Punitive damages should reflect the enormity of the defendant's offense. Exxon's conduct did not simply cause economic harm to the plaintiffs. Exxon's decision to leave Captain Hazelwood in command of the Exxon Valdez demonstrated reckless disregard for a broad range of legiti¬mate Alaska concerns: the livelihood, health, and safety of the residents of Prince William Sound, the crew of the Exxon Valdez, and others. Exxon's conduct targeted some financially vulnerable individuals, namely subsistence fisher¬men. Plaintiffs' harm was not the result of an isolated inci¬dent but was the result of Exxon's repeated decisions, over a period of approximately three years, to allow Captain Hazelwood to remain in command despite Exxon's knowl¬edge that he was drinking and driving again. Exxon's bad conduct as to Captain Hazelwood and his operating of the Exxon Valdez was intentionally malicious. [Emphasis added.]
Exxon's conduct was many degrees of magnitude more egregious [flagrant] [than defendant's conduct in other cases]. For approximately three years, Exxon management, with knowledge that Captain Hazelwood had fallen off the wagon, willfully permitted him to operate a fully loaded crude oil tanker in and out of Prince William Sound-a body of water which Exxon knew to be highly valuable for its fisheries resources. Exxon's argument that its conduct in permitting a relapsed alcoholic to operate an oil tanker should be characterized as less reprehensible than [in other cases] suggests that Exxon, even today, has not come to grips with the opprobrium [disgracefulness] which society rightly attaches to drunk driving. Based on the foregoing, the court finds Exxon's conduct highly reprehensible.
[T]he court reduces the punitive damages award to $4.5 billion as the means of resolving the conflict between its conclusion and the directions of the court of appeals. [T]here is no just reason to delay entry of a final judgment in this case. The Court's judgment as to the $4.5 billion puni¬tive damages award is deemed final.
