Ethics and the Law

1. Ethics and the Law Jody Blanke, Professor Computer Information Systems and Law Mercer University, Atlanta

2. The Law Evolves • “The laws of society are more powerful than any law that Congress can put on the books. Woe to any businessman who doesn’t read the laws of society and understand them.” • Tom Stephens, CEO of Manville Corporation, 1988

3. Law and Public Policy • “Public law – the formal rules embodied in constitutions, statutes enacted by legislatures, judicial decisions rendered by courts, and regulations promulgated by administrative agencies – both reflects and helps shape social expectations.” • Constance Bagley and Diane Savage, 2009

4. Schools of Ethical Thought • Deontological • Duty-based ethics (rights-based ethics) • Focus is on the action • Moral duties, e.g., tell the truth • Immanuel Kant • Categorical imperative • “What if everyone acted in this manner?”

5. Schools of Ethical Thought • Teleological • Outcomes-based ethics • Focus on the consequences • Utilitarianism • “Greatest good for the greatest number” • Cost-benefit analysis • Jeremy Bentham • John Stuart Mill

6. Ethical Leadership • “The CEO has a unique responsibility; he’s a role model. What he does, how he lives, and the principles under which he operates become pretty much those the rest of the corporation emulate.” • William F. May, Chair, Trinity Center for Ethics and Corporate Policy, 1998 • “Good leadership means doing the right thing when no one is watching.” • Carly Fiorina, former CEO, Hewlett-Packard, 2003

7. Ethical Leadership • BUT … • Walk the walk … • “You will be confronted with questions everyday that test your morals. The questions will get tougher and the consequences will become more severe. Think carefully, and for your sake, do the right thing, not the easy thing.” • Dennis Kozlowski, former CEO, Tyco International, commencement address, St. Anselm's College, 2002 (just before his indictment)

8. Corporate Scandals • Adelphia • Arthur Andersen • Enron • Health South • Imclone • Tyco • WorldCom

9. Corporate Social Responsibility • “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” • Milton Friedman, Nobel Prize winner, 1972 • A.P. Smith v. Barlow (1953)

10. The Rules of Society • Regina v. Dudley and Stephens (1884)

11. Promoting Values • Charitable Immunity • Flagiello v. Pennsylvania Hospital (1965) • Good Samaritan Laws • The Death of Lady Di • The Seinfeld Finale • Van Horn v. Watson (2008)

12. 1982 Chicago Tylenol Murders • Sept. 29 – the first of 7 people died after taking Tylenol capsules purchased in the Chicago area • Tylenol accounted for 15% of J & J’s net earnings of $468M in 1981 • Tylenol held 35% of the $1.2B painkiller market • Oct. 5 – J & J recalled 31 million bottles of Tylenol (worth an estimated $100M) • Tylenol quickly recaptured market share • Prompted change to caplet and tamper-evident safety seals on boxes and bottles

13. Balancing Rights • Kelo v. New London (2005) • 90-acre development plan • 115 privately owned properties

14. Balancing Rights • Poletown v. Detroit (1981) • GM wanted to keep 6,000 jobs in Detroit • Poletown was 465 acres, had 4,200 residents, 1300 homes, 140 businesses, 6 churches, 1 hospital

15. Balancing Rights • Poletown 1961 Poletown 1997

16. Balancing Rights • Chattanooga, Baltimore

17. Playing By The Rules • Merck – Vioxx • risk