Case Studies from The Business Ethics Workshop
Discussion #5
Hot Coffee – Source: Case Studies from The Business Ethics Workshop, Chapter 12: The Selling Office: Advertising and Consumer Protection
In a world of get-rich-quick schemes, few are mentioned more frequently than lawsuits. One of the reasons is the infamous McDonald’s coffee case (Liebeck v. McDonald’s Restaurants). This is what happened in 1992 in Albuquerque, New Mexico. Stella Liebeck, seventy-nine, was riding in a car driven by her grandson. They stopped at a McDonald’s drive-through, where she purchased a Styrofoam cup of coffee. Wanting to add cream and sugar, she squeezed the cup between her knees and pulled off the plastic lid. The entire thing spilled back into her lap. The searing liquid left her with extensive third-degree burns. Eight days of hospitalization—which included skin grafts—were required. Initially, she sought $20,000 from McDonald’s, which was more or less the cost of her medical bills. McDonald’s refused. They went to court. There it came to light that about seven hundred claims had been made by consumers between 1982 and 1992 for similar incidents. This seems to indicate that McDonald’s knew—or at least should have known—that the hot coffee was a problem. Most of the rest of the case turned around temperature questions. McDonald’s admitted that they served their coffee at 185 degrees, which will burn the mouth and throat and is about 50 degrees higher than typical homemade coffee. More importantly, coffee served at temperatures up to 155 degrees won’t cause burns, but the danger rises abruptly with each degree above that limit. So why did McDonald’s serve it so hot? Most customers, the company claimed, bought on the way to work or home and would drink it on arrival. The high temperature would keep it fresh until then. Unfortunately, internal documents showed that McDonald’s knew their customers intended to drink the coffee in the car immediately after purchase. Next, McDonald’s asserted that their customers wanted their coffee hot. The restaurant conceded, however, that customers were unaware of the serious burn danger and that no adequate warning of the threat’s severity was provided. Finally, the jury awarded Liebeck $160,000 in compensatory damages and $2.7 million in punitive damages (about two days’ worth of McDonalds’ coffee sales). The judge, however, reduced the $2.7 million to $480,000. McDonald’s threatened to appeal, and the two sides eventually came to a private settlement agreement.
QUESTIONS
1.What does caveat emptor mean? According to this doctrine, who is responsible for Stella Liebeck’s burns? Explain your answer using course materials for support.
- In order for an implicit contract to arise, the following three conditions must be met:
- Both sides must enter the contract freely.
- Both sides must be reasonably informed of the agreement’s terms.
- Both sides must be honest.
Were these three conditions met in the McDonald’s coffee case? Explain using course materials for support.
- The concept of manufacturer liability gives consumers the right to sue manufacturers for defective goods. There are three kinds of product defect:
- Design defects (errors in the product’s design)
- Manufacturing defects (errors in the production of one specific case of a generally safe product)
- Instructional defects (poor or incomplete instructions for a product’s safe use)
Which (if any) of these defects are applicable in the McDonald’s coffee case? Explain using course materials for support.
- Of these three ethical structures for conceiving of the coffee-buying consumer and her protections—caveat emptor, the implicit contract, and manufacturer liability—which do you believe is best? Why? Use course materials to support your opinion.
Course Material
Chapter 12: The Selling Office: Advertising and Consumer Protection (pages 529-566) – Attached Separately
Theme 1: Ethical Issues Related to Marketing
Offensive/Exploitive/Insensitive/Violent—short of illegal
https://www.ranker.com/list/urban-outfitters-controversy-list/brigittenajarian
https://www.theguardian.com/world/2012/oct/02/ikea-apologises-removing-women-saudi-arabia-catalogue
False Claims to Making One Healthier, Richer, Younger–illegal
https://www.businessinsider.com/false-advertising-scandals-2011-9
https://nypost.com/2018/07/11/controversial-lollipop-ad-goes-up-in-times-square/
https://www.womenshealthmag.com/weight-loss/a19935515/weight-loss-ads/
https://www.vox.com/the-goods/2018/9/11/17840984/skin-care-anti-aging-drunk-elephant
https://www.federalreserve.gov/boarddocs/supmanual/cch/ftca.pdf
Exploitive/Dangerous to Children & Vulnerable Populations
https://www.latimes.com/food/dailydish/la-dd-monster-drinks-marketing-children-20140115-story.html
https://www.nbcnews.com/health/kids-health/e-cigarette-ads-target-millions-kids-cdc-says-n490601
https://www.cbsnews.com/news/candy-flavored-e-cigarette-ads-appeal-to-kids/
Stealth Advertising/Conflicts of Interest/Biased Reviewers
https://www.newyorker.com/tech/annals-of-technology/the-never-ending-war-on-fake-reviews
https://kernelmag.dailydot.com/issue-sections/staff-editorials/10971/mommy-blogging-child-privacy/
Theme 2: Ethical Issues Related to Brand Protection
Controversial Ingredients and Testing of Ingredients
https://www.cbsnews.com/pictures/controversial-caffeinated-products/10/
https://i-sight.com/resources/5-lessons-learned-from-mattels-lead-paint-crisis/
https://stakeholder13.wordpress.com/2015/03/31/mattel-playing-with-ethics/
https://www.hindawi.com/journals/ijpedi/2017/4705618/
http://blog.practicalethics.ox.ac.uk/2012/04/animal-antibiotics/
Assembly & Manufacturing Problems
https://www.diamonds.pro/education/ethical-diamonds-conscientious-consumers-need-know/
Consumer Privacy
https://9to5mac.com/2018/10/03/tim-cook-eu-gdpr-comittee-talk/
Pricing
https://blogs.pugetsound.edu/econ/2017/02/17/ubers-surge-pricing-is-it-ethical/
Theme 3: Ethical Issues Related to Food & Drink Production
https://www.cnn.com/2014/01/28/justice/cantaloupe-listeria-deaths-sentencing/index.html
https://www.cnn.com/2015/09/20/us/peanut-butter-salmonella-trial/index.html
Discussion #6
Marriott International
Marriott International, an American hospitality company founded in 1927, is the largest hotel chain in the world, with 30 different brands in 131 countries. It has been on the Fortune 500 list of 21 years, and prior to the COVID pandemic, was ranked 151 on this list.
Marriott acquired the Starwood Hotels chain in 2016. Starwood Hotels had run upon some difficult times in the previous couple of years. In 2014, Chinese State Sponsored Attackers were able to install malware to steal debit and credit card data at some of the Starwood Hotels. When discovered in 2015, Starwood Hotels reported this breach of customer information, with a total of over 50 of their hotels and their guests impacted.
However, in 2016 when Marriott bought Starwood Hotels for $13 billion, they decided to maintain the same IT system within the Starwood properties. Only the Starwood IT staff were replaced.
In 2018, after using the original Starwood IT system for two years, a security tool inside Marriott picked up on a “suspicious event” within the guest reservation system. After further research, Marriott determined that the Starwood reservation system had been accessed. An internal investigation determined that the hack resulted in the data of 500 million customers being stolen. Worse, it was found that this breach had been going on since 2014.
Click this link to read the Official Statement made by Marriott in 2018:
Marriott Official Statement Nov 30 2018
QUESTIONS
- What are the ethical issues surrounding the breach? Support your answer with course materials.
- In ethical terms, what is at the root of this issue for Marriott and the Starwood acquisition? Even though the breach happened in 2014, how is Marriott now complicit? Or is Marriott not at fault at all? Support your answer with course materials.
Course Material
Theme 1: Emerging Technology
https://www.youtube.com/watch?v=pQ1VaCeRoyA
https://qz.com/1260121/facebook-is-making-public-the-rules-it-uses-to-police-content/
https://www.cnbc.com/2017/12/13/net-neutrality-rules-look-doomed–will-consumers-pay.html
Theme 2: Data Protection
https://www.insurancejournal.com/news/national/2018/02/13/480357.htm
https://www.cloudmask.com/blog/the-cost-of-data-security-are-cybersecurity-investments-worth-it
https://www.bbc.com/news/technology-27421969
https://www.youtube.com/watch?v=f_f5wNw-2c0
https://www.moneywise.co.uk/work-family/family-life/what-happens-to-your-digital-assets-when-you-die
Theme 3: Privacy
http://web.simmons.edu/~chen/nit/NIT%2796/96-025-Britz.html
http://healthvoices.org.au/issues/november-2017/ethics-advanced-medical-devices-need-new-approach/
Consumer Privacy Bill of Rights—not the law
Discussion #7
IBM and IBM – Source: Case Studies from The Business Ethics Workshop, Chapter 12: The Green Office: Economics and the Environment
Bernadette Patrick moved away from her home in Endicott, New York, saying this about the town: “It was very neighborly and well kept, with lots of kids and families. Then all of a sudden it seemed like they put a skull and crossbones on all the doors. It was like a scene from a science fiction movie.” The science fiction part is the large, white metal boxes attached to Endicott homes. With tubes burrowing down in the earth and shooting up high into the air, they’re wired to pump air from below and jet it above. The idea is to disperse toxic vapors rising up through the ground. The vapor’s source is industrial solvents poured down drains and dripped out of leaky pipes at the local IBM factory over the course of its seventy-five-year history. Those seventy-five years have otherwise been good ones. IBM money and jobs drove the small town forward. As Wanda Hudak put it, “The IBM plant paid for a lot of college educations and cottages at Perch Pond.” The good feelings ended when a company IBM hired started showing up at people’s homes to test the air and offer to install the mechanical ventilation systems.
QUESTIONS
1.IBM is paying millions for cleanup efforts. They’re installing air cleaners on homes and pumping contaminated groundwater to the surface for safe disposal. An IBM spokesman said this about the toxic pollution, “None of it was done intentionally, but we still are sticking around to take care of it. We feel obligated legally, ethically. We are not going anywhere.”
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- Make the ethical case that those who contaminated the environment—IBM—should pay all the cleanup costs. Support your answer with course materials.
- Make the case that those who benefit from a clean environment—the locals who work at the company and those who don’t—should pay for the cleanup. Support your answer with course materials.
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- One critical element of the notion of corporate social responsibility is the idea of sustainability.
- In both environmental and economic senses, what is sustainability? Support your answer with course materials.
- What would be sustained by a cleanup in this case? How? Support your answer with course materials.
- One critical element of the notion of corporate social responsibility is the idea of stakeholder theory.
- Who are the obvious stakeholders in this case? Support your answer with course materials.
- Thinking about the situation from the directorship of IBM, what are the company’s responsibilities to each of the stakeholders? Support your answer with course materials.
Course Material
Chapter 14: The Green Office: Economics and the Environment (pages 627-664) – Attached Separately
Theme 1: Ethical Issues Related to the Environment
https://www.youtube.com/watch?v=KkFdDPBbn20
https://helpsavenature.com/what-is-environmental-ethics
https://www.feedstuffs.com/news/perdue-farms-announces-animal-care-changes
https://e360.yale.edu/features/global_scarcity_scramble_for_dwindling_natural_resources
http://www.theworldcounts.com/stories/Depletion-of-Natural-Resources
https://www.livescience.com/27692-deforestation.html
https://www.youtube.com/watch?v=TrbeuJRPM0o
Theme 2: Sustainable Business Practices
Discussion #8
This final week of our class is devoted to thinking about the lessons we will take away from the course and discussion topics over the past eight weeks. Answer the questions below using course materials from ALL eight weeks as support.
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- What are our ethical responsibilities to ourselves and the business we work for?
- What responsibilities should employers have toward their employees and to society?
- How do we act ethically across the borders of many countries, with innovative technology, and environmental sustainability?
Be sure to use the course materials from all eight weeks of the class to support and substantiate your responses.
Course Material
Chapter 4: Theories Responding to the Challenge of Cultural Relativism (Start on section 4.1 What is Cultural Relativism and read pages 137 – 153) – Attached Separately
Theme 1: Global Business Ethics
https://saylordotorg.github.io/text_international-business/s07-04-global-business-ethics.html
Theme 2: Foreign Corrupt Practices Act
https://www.business-anti-corruption.com/compliance-quick-guides/united-states/
https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2012/11/14/fcpa-english.pdf
https://www.jonesday.com/Foreign_Corrupt_Practices_Act_Overview/
Sub Theme 1: Operating in China
https://money.cnn.com/2018/05/09/news/economy/foreign-companies-china-taiwan-compromise/index.html
Sub Theme 2: Operating in India
https://www.ukibc.com/india-guide/how-india/
http://www.bbc.com/capital/story/20150826-the-challenges-of-setting-up-shop-in-india
https://www.aii.unimelb.edu.au/blogs/20-essential-tips-for-doing-business-with-india/
Sub Theme 3: Operating in Latin America
https://www.weforum.org/agenda/2017/03/risks-business-latin-america/
Sub Theme 4: Operating in Russia
https://hbr.org/2017/05/navigating-the-complexities-of-doing-business-in-russia
Sub Theme 5: Operating in Africa
http://www.myafricanplan.com/2015/04/03/doing-business-in-africa/
https://leaglobal.com/thought_leadership/LEA%20AfricaWhitepaperFINAL.pdf
http://smallbusiness.chron.com/role-government-business-ethics-65128.html
https://economistsview.typepad.com/economistsview/2015/09/on-the-ethics-of-redistribution.html
