The first response AI took to the allegations was to conduct an inclusive independent site study of PAH levels in the effluent system. The PAH levels were found to be lower than the prescribed limit finding in favor of EPA standards.
May 2002, another article posted in the newspaper regarding Ms. Bates daughter and AI’s violation of PAH limits in 1997. On the cusp of this article, AI was notified by the EPA that the plaintiff had requested an audit report under the Freedom of Information Act (FOIA). AI had to decide whether disclosure of information was necessary and if so should there be a full disclosure or limited. Taking into consideration the company has maintained environmental compliance and there being no direct correlation of the PAH and leukemia a limited disclosure was made.
Despite AI’s disclosure of information, Bates nevertheless “threatened a million dollar personal injury lawsuit against Alumina to recover compensatory and punitive damages” (University of Phoenix, 2008). AI is now faced with deciding the next course of action to take in regard to resolution of the conflict. Three options are available; negotiate with Ms. Bates and offer a trust, seek mediation through the American Arbitration Association, or allow Ms. Bates to file charges and take it to trial. The choice that AI decides needs to allow the company to be “exonerated” within the community while appeasing the concerns Ms. Bates has brought to the fore. Negotiating with Ms. Bates alone may come across as a pay off and send a message of guilt to the community. Dispute resolution through mediation will bring in a third party that can guide both parties to an equivocal decision. Allowing Ms. Bates to file charges leading both parties into litigation will be costly in both the monetary and reputation aspects for AI.
In light of the choices, AI decides to seek the intervention of the American Arbitration Association (AAA) to resolve the conflict with Bates through mediation. This decision was beneficial to both parties. Ms. Bates will have all previous and future medical expenses paid and dependent on the success of treatments the daughter will receive full college tuition from AI. AI will receive a confidentiality agreement and a release of all claims to be signed by Ms. Bates (University of Phoenix, 2008).
Values, Stakeholders and Ethical Dilemma
The Lead Team, consisting of CEO, COO, Head PR, and Legal Counsel (Table 1) are the spearhead behind the image that AI will portray to an already prejudiced public opinion portrayed with the present allegations. The CEO, Roger Lloyd and COO, Chris Blake, are in conflict with Head PR Diane Richards, in that Richards has a more of a reactive vs. proactive approach to how the situation should be handled. Richards’ idea of a private investigation of Bates (plaintiff) is within itself an ethical dilemma. Were the company to investigate Ms. Bates and this became known, the company would lose the social standing required for success in a community. Lloyd and Blake have conflicting views on the disclosure of information due to the good standing that AI has with environmental compliance. Blake deems that full disclosure would be worthwhile, whereas Lloyd sees no reason to disclose any information that which can remain confidential. The ethical dilemma faced here is on the trade secret policies that companies have and how much information is too much to disclose to the public. Non disclosure can leave the public with the perception that AI has something to hide placing the integrity of the company open for reprisal. Legal Counsel, Arthur Todd, suggests the partial disclosure giving the plaintiff and public what it seeks and maintaining confidentiality that the CEO is insistent on. Ms. Kelly Bates, the mother and plaintiff has the health and future of her daughter and others in the community in regard to accountability for AI as the highest value. Ms. Bates believes that AI is responsible for her daughter’s condition and is expecting AI to account for the responsibility of the situation. The shareholders value the financial standing of the company and with such negative publicity and accusations the profit margin could be greatly affected if not handled properly. Lastly the employees, valuing foremost job security, pay, and benefits are also dependent on the outcome of the allegations. Employer and work pride are also on the line as employees want to be proud of the place that employs them. Should AI be found guilty of the allegations then the employees will lose morale and pride in the work and place of employment greatly reducing the loyalty needed for a thriving company.
Counsel’s Basic Issues on Regulatory Issues
Legal Counsel is typically retained in large companies as a lot of complexities are found throughout the business, such as can be found with environmental concerns. The Environmental department is in charge of the day to day compliance standards; legal counsel is sought when allegations such as the Bates case has brought to the forefront. The concerns are not just environmental, but also include ethics and social responsibility. All decisions made must be comply with all the legalities. Seeking the advice of the company’s legal counsel should be done before any decisions are made on the actions being proposed. Questions that should be asked are: Was there a violation of any regulations as alleged? The company must ensure that all documentation, to include analytical data and reports are available and in order as these will be asked for during the discovery process if the case moves into litigation. “Accordingly, the organization must be committed to handling the results of such an investigation in an appropriate and ethical manner (i.e., if problems are encountered that show violations of the law, the organization would be well advised to address them in a straightforward manner and with all due haste)” (Alumina Legal Process, 2008). Asking what information is pertinent to the present issues is the next question. AI needs to decide on the records deemed exempt and excludable, a right under the FOIA. An organization need not release records that are considered confidential and of no relevance to the alleged violation. Use scrutiny when making the objections known as perception on this disclosure will be highly scrutinized by the opposing counsel and public. Finally, what are the factors that should be taken into consideration in the decision making process on AI’s defense in regard to litigation, attempted negotiations, or Alternate Dispute Resolution (ADR)? In the case of litigation; financial costs, time and public scrutiny will be the key factors that would dissuade the organization. ADR offers advantages that cannot be found in litigation, such as with cost, time, efficiency and control. The parties have the advantage of mediator choice. Determination of whether to use the arbitration method offering a binding decision or mediation offering a non binding decision, both offer the privacy and confidentiality that is a benefit to all parties. Careful consideration must still be made with ADR as there are disadvantages with this method of resolution. ADR is not well suited for cases where an important precedent must be set, opens the organization up to more ADR cases, and inappropriate for certain cases, such as with intellectual property infringement (Alumina Legal Process, 2008).
Ethical Dilemmas and Value Alignment
Facing allegations of environmental violations can have very diverse effects on a company, weighing the risks involved when making the path forward to be taken is very important in helping determine the best possible outcome. The alternatives availed to AI are; allow Bates to file formal charges and seek litigation, conduct an independent study of the link between the PAH discharged and leukemia, or show cause for the local traffic emissions limits to have been the culprit.
Analyzing the risks associated with the alternatives that AI is considering allows for more effective decision making. Allowing the plaintiff; Bates, to take the case to court is of high risk to AI in cost, time, and public image. Bates is a single mom and AI will be labeled “the big bad company” due to what will be portrayed as unfair treatment of a local citizen who “has already suffered”, an unnecessary connotation to portray. Additionally the risks of exposing company ‘sensitive’ materials are greatly increased and cannot be mitigated within the litigation arena due to the discovery process. This alternative will not benefit either party, let alone AI.
AI can conduct an inclusive time study on the levels of PAH emitted through plant effluents and the link between these carbons and leukemia. The risk level is mediocre at best as it shows good faith to the community, however costly to AI if proven to have no direct correlation there is exoneration for future allegations. Hiring a reputable outside laboratory would mitigate any risk of bias in the test results Bates would receive no monetary gain if the tests are inconclusive, in favor of AI. AI would gain back positive favor within the community and all other stakeholders.
The final alternative for AI to consider would be to show cause that the excess carbon (PAH) emissions in local traffic have a causal relationship in cancerous diseases. Excess limits of PAH reduces air quality and has more of an adverse effect on the health of humans. Breathing in hazardous waste can be more intrusive and detrimental to human health. AI’ s ability to show cause that the air quality has been and could be the precursor to the possible diminished health of the local community will be a boon to the company’s image of integrity and social responsibility. The state government would then be responsible for determining the limits and mitigation needed to alleviate the hazard through new standards and emission rates.
AI would benefit from discarding the litigation alternative and choosing to marry the air quality from emissions with the inclusive time study on effluents alternatives. AI can find exoneration from both present and future allegations with the latter alternatives. The cost will be minimal in comparison to court and settlement causes. Placing responsibility on the state government in the aspect of poor air quality can be further enhanced with inconclusive results of the time study. Bates will have no choice but to look towards the state for rectification of her allegations. That AI is willing to take the time and effort to have the effluents tested extensively shows good faith and integrity to the community, a vital ingredient to the success of any company.
Conclusion
Choosing to marry the last two alternatives and move forward with the choice will bring AI closer to removing the negative connotation placed on the company at the outset of the allegations by Ms. Bates. Exonerating the company will return the values that the lead team, shareholders, and employees look for such as; integrity, social responsibility, and accountability. Taking the time and money to initiate the time study will elevate environmental standard precedents in industry. Bates may not receive the monetary gain desired from AI, however the peace of mind brought about through changes in EPA state standards on PAH air quality limits should alleviate any punitive damages sought.
References
Alumina Legal Process. (2008). Week three overview. Retrieved April 22, 2008 from University of Phoenix, Week Three rEsource. MBA560—Enterprise Risk.
Reed, L.O., Shedd, P.J., Morehead, J.W., and Corley, R.N. (2004). The legal & regulatory environment of business (13th ed.). [University of Phoenix Custom Edition e-text]. New York: The McGraw Hills Companies. Retrieved April 7, 2008, from University of
Phoenix, Resource, MBA560 – Enterprise Risk Course Web site.
University of Phoenix. (2008). Z-Wing. [Computer Software]. Retrieved June 18 2008, from the University of Phoenix, rEsource, Simulation, MBA570 – Sustainable Customer Relationships Web site.
Wisconsin.gov. (2004). Polycyclic aromatic hydrocarbons (PAHs). epartment of Health & Family Services. Retrieved April 29, 2008, from http://www.dhfs.state.wi.us/eh/chemFS/fs/PAH.htm
Table 1
Stakeholders Perspectives
Table 2
Risk Analysis Matrix
