Strict Joint and Several Liability and Justice

The American tort system regularly conducts a sort of lottery in which plaintiffs try to name as many defendants in a tort action as they can in order to collect a large judgment from at least one of them. This procedure is encouraged under strict joint and several liability, which permits plaintiffs to recover greater damages from defendants – usually businesses – with less moral culpability for the tort than poorer defendants, who bear greater culpability. In a case involving the Disney Corporation and a negligent amusement park rider, for instance, Disney was forced to pay 86% of the court award to the plaintiff, even though the jury found the company to be only 1% liable for the injury. The legal principle of joint and several liability violates morality in several different ways. Even though the principle appears to be better in the short run for plaintiffs, I will show that it fails not only to satisfy utilitarianism, but compensatory justice as well. Hence, the legal principle of joint and several liability should be eliminated in favor of a better, fairer law, which I will briefly sketch at the end.     

Consumer Product Failure Causing Personal Injury Under the No-Fault Accident Compensation Scheme in New Zealand—a Let-off for Manufacturers?

This article examines how the no-fault accident compensation system in New Zealand operates to relieve manufacturers from liability to consumers for product failures which cause personal injury or death. The state-run accident compensation scheme pays compensation to persons who suffer “personal injury by accident” and bars claims for compensation from the party at fault. The advantage for consumers is that they are entitled to compensation from the accident compensation scheme as of right and do not need to make claims against manufacturers of products which cause injury or death. The article outlines some limited circumstances when consumers may claim compensation from manufacturers and identifies other avenues for holding manufacturers responsible for injury or death caused by faulty products. The paper makes three recommendations to increase manufacturer responsibility: (1) allow the regulatory body which administers the Accident Compensation system to claim compensation, by way of subrogation, from manufacturers in limited circumstances; (2) require manufacturers to pay an additional “product liability” levy to the accident compensation scheme; and (3) amend the Health and Safety at Work Act 2015 to cover non-workplace accidents exposing manufacturers of unsafe products to Worksafe investigation and possible criminal liability. The article argues that imposing additional responsibility on manufacturers for product failures which cause personal injury or death is justified on the grounds of fairness. Arguments based on corrective fairness and distributive fairness can both be relevant in cases of personal injury caused to consumers by manufacturers.     

Marketing Strategy, Product Safety, and Ethical Factors in Consumer Choice

Firms that wish to be morally responsible in providing products that meet a high standard of safety may face problems competing against firms that make unsafe products and sell these products at cheap prices; these problems may be compounded when consumers do not accurately process information about safety and risk. This paper presents a conceptual argument that the tort system may serve to promulgate information which makes it feasible for firms to market safe products even in the face of these competitive obstacles.To corroborate the conceptual argument, the paper presents the results of an experimental study about the impact of negligence liability information on consumer product safety evaluation. The results show that provision of negligence information heightens consumer concern for safety and firms' ethical behavior, and increases the proportion of consumer choices in favors of the brands sold by manufacturers with a favorable track record for quality. More importantly, they indicate that provision of negligence information reduces the likelihood that brands which conform to inferior safety standards will be chosen by consumers who care about safety standards.     

Decision making in compromise situations: guidelines based on J. S. Mill's doctrine of political half‐measures

The purpose of this article is to offer guidelines to deal with hard choices, specifically in situations where some compromise among opposing values is inescapable. The guidelines are intended to help ethicists and practitioners to delineate different alternatives and to dismiss some of them as morally unacceptable. This article explores the view that compromises arise from negotiations but from ethical predicaments as well. For this reason, I distinguish between strategic and moral compromises. Both managers and employees are individual moral agents who have to confront the possibility of unpalatable and even disgusting compromises, so that they are forced to put their integrity into risk in certain compromise situations. However, I shall argue for the possibility of palatable moral compromises. The guidelines to cope with those situations and to identify the unpalatable compromises are based on J. S. Mill's moral philosophy. Mill suggested that half‐measures passed in Parliament must have certain key elements to be morally acceptable. I make use of this doctrine to put forward compromise guidelines in the form of a set of hallmarks, internal and external elements of palatable compromises. Two minicases are used to test the guidelines and to emphasize the importance of compromises for ethical decision making and commitment to company.     

An Appraisal of Shareholder Proportional Liability

Shareholders of corporations have their liability for actions of the corporation limited by law. Unlike the equity holder in a partnership or proprietorship, the assets that a shareholder has distinct from her holdings in the enterprise can not be taken to satisfy liabilities arising from actions of the enterprise itself. This paper argues that a reasonable principle of fairness argues for an alternative to limited liability, proportional liability. Proportional liability makes a shareholder liable for the same proportion of a corporation's excess of liabilities over assets that her number of shares bears to the total number of shares outstanding. The key idea is that it is unfair in situations in which explicit agreements can not be reached for shareholders to bear only limited risk when they may receive gains from stock dividends and appreciation that are not limited to any pre-determined amount. Proportional liability has not been much examined in the financial literature. Good utilitarian arguments have been given for limited liability over unlimited liability for corporate shareholders, but these arguments do not clearly support the choice of limited liability over proportional liability.     

Property owners may be liable for defective products offered to guests by a third-party tenant

Although it is unusual to impose strict liability upon hotel keepers for defective equipment and furnishings, a Florida court applied the strict-liability doctrine to hold a resort liable after a guest was injured by a sailboat she had rented from a commercial tenant of the resort.     

销售者的产品责任归责原则辨正

《侵权责任法》关于销售者的产品责任归责原则的规定既不是无过错责任,也不是过错责任,更不是无过错责任与过错责任的结合。过错责任原则符合产品责任制度的发展趋势,应该成为销售者的产品责任归责原则的理性选择。但只有修改相关立法,销售者的产品责任归责原则才能得以明确。     

Business ethics and doing what one ought to do

There are situations in human life where the failure to perform a certain act can be morally blameworthy and at the same time not constitute the failure of moral duty or obligation. While traditional approaches to ethics have not acknowledged the possibility of these acts, recent contributions to the literature have made a strong and convincing case for their existence. Here I explain the nature of these acts, present some examples of these acts as they might arise in one's business or professional life, and point out the importance of recognizing and performing these acts for those who wish to practice good ethics in their business or professional lives.Gregory Mellema is Professor of Philosophy at Calvin College. He has writtenIndividuals, Groups, and Shared Moral Responsibility andBeyond the Call of Duty and has published articles inAmerican Philosophical Quarterly, Philosophical Studies, Canadian Journal of Philosophy, Philosophia, Analysis, andJournal of Value Inquiry. In recent years he has taught courses and spoken widely on topics in Business Ethics.     

Product liability and safety: Perspectives from business versus public policy makers

Product liability and the improvement of product safety are major concerns confronting business executives and public policy makers. This article reports the results of a mail survey that explored some of the major issues surrounding product liability and safety. The survey solicited the opinions of manufacturing executives, insurance executives, and state insurance commissions. Analysis of the data involved comparison of the opinions of the three groups of respondents. In general, the respondents agreed that (1) the increased emphasis on safety has caused prices to rise, but products are safer; (2) the salesforce should be used more as a source of information on the safe use of products; (3) a good safety record is a competitive edge for a manufacturing firm; (4) small businesses should not be treated more leniently than large ones in product liability cases; and (5) the CPSC's activities have generally been favorable. In contrast, manufacturing and insurance executives were more negative regarding the application and enforcement of strict liability than were insurance commission respondents.     

The economic effects of withdrawn antidumping investigations: is there evidence of collusive settlements?

This paper analyzes the effects of antidumping cases initiated from 1990 to 1997 that ended in withdrawn petitions without a suspension agreement or voluntary restraint agreement. Monthly import data are used to estimate the price and quantity effects of the withdrawn cases. The estimated effects of the petition being withdrawn do not support the accepted wisdom that withdrawn petitions are a signal of collusion. This is an important issue, since out-of-court settlements of unfair trade cases which restrict quantities or increase prices are not only welfare reducing but are also actionable under the antitrust laws; they are not exempt under the Noerr-Pennington doctrine.     

Knobe, Side Effects, and the Morally Good Business

This paper focuses on Joshua Knobe’s experiments which show that people attribute blame and intentionality to the chairman of a company that knowingly causes harmful side effects, but do not attribute praise and intentionality to the chairman of a company that knowingly causes helpful side effects. Knobe’s explanation of this data is that people determine intentionality based on the moral consideration of whether the side effect is good or bad. This observation and explanation has come to be known as the “Knobe Effect.” One implication from the Knobe Effect is that it seems profit-driven businesses can only intentionally cause harmful and never good side effects. This paper examines the Knobe Effect, and argues for a way that business persons can understand it and avoid its implications. The argument has three parts. The first point is that business persons who care only about profits are blameworthy and rightly should not get credit for good side effects. Second, when a morally praiseworthy person who cares about values other than profits causes side effects, her actions are intentional and praiseworthy. Therefore, profit-driven business persons can be praised for intentionally producing good side effects if they consider other moral values as moral agents should. Finally, morally praiseworthy business persons need only to be Minimally Good Samaritans and not totally altruistic. When a business person strives for profits, adheres to other morally important values, and produces morally good side effects, then we should say that she intentionally caused those effects and is praiseworthy.     

Retailer–manufacturer responsibility in the marketing of firearms: exploring the concept of negligent distribution

One of the most divisive, controversial issues confronting Americans today is the regulation of firearms. Statistics pertaining to firearm-related injuries and death in the United States are staggering; approximately 32,000 Americans die annually from gunshot wounds, the vast majority of which can be attributed to handguns. Estimates of the costs of gun-related violence in the United States run as high as $100 billion/year. Not surprisingly, the firearms death rate in the United States is among the highest in the world, and clearly the highest among industrialized nations. To what extent, if any, do manufacturers and retailers share responsibility for harm caused by firearms? Manufacturer/retailer responsibility for firearm-related injuries may be tested under any one or more of a number of legal theories: products liability, public nuisance, and negligence. Of particular interest to marketers and retailers is the assertion that responsibility can be traced to negligent distribution practices. Although negligent distribution has been alleged in a number of key cases, the concept remains ambiguous. What does seem clear is that legal responsibility for injuries and death attributable to handguns has expanded, and negligence in marketing and distribution practices will become a paramount issue shaping the future direction of the firearms industry worldwide.     

Should Corporations Have the Right to Vote? A Paradox in the Theory of Corporate Moral Agency

In his 2007 Ethics article, “Responsibility Incorporated,” Philip Pettit argued that corporations qualify as morally responsible agents because they possess autonomy, normative judgment, and the capacity for self-control. Although there is ongoing debate over whether corporations have these capacities, both proponents and opponents of corporate moral agency appear to agree that Pettit correctly identified the requirements for moral agency. In this article, I do not take issue with either the claim that autonomy, normative judgment, and self-control are the requirements for moral agency or the claim that corporations possess them. I claim that if both of these claims are correct, then corporate moral agency entails that, in a liberal democracy, corporations should have the right to vote. I show that under the conception of democracy supported by most liberal political theorists, all parties subject to the law are entitled to the right to vote, and all parties that possess autonomy, normative judgment, and self-control are subject to the law. Therefore, if the proponents of corporate moral agency are correct, then corporations satisfy the requirements for the right to vote. I then consider potential objections to this argument. I show that the strongest objection to the corporate right to vote is undermined by Pettit’s own argument for corporate autonomy. I then show that objections derived from other arguments for limiting the rights of corporations are equally unavailing. I conclude with some observations about the implications of my argument for the question of corporate speech rights.     

Legitimating Market Egoism: The Availability Problem

It is a common enough view that market agents are self-interested, not benevolent or altruistic – call this market egoism – and that this is morally defensible, even morally required. There are two styles of defence – utilitarian and deontological – and while they differ, they confront a common problem. This is the availability problem. The problem is that the more successful the moral justification of self-interested economic activity, the less there is for the justification to draw upon. Religious justifications of market egoism at least make a stab at dealing with the problem; secular accounts typically do not. I thank Annette Kilarr.     

Color me moral: White and black product colors influence prosocial behaviors

There are “moral meanings” that people ascribe to objects in white and black colors. Namely, it seems that people have been conditioned to see objects in white color as potentially “morally good” and those in black color as potentially “bad.” In the current inquiry, we would therefore hypothesize that consumers see buying a product in white color as an act that is morally good and buying a product in black color as an act that is morally bad. If so, then, in accordance with the moral regulation theory, those who buy white‐colored products should feel licensed to behave less prosocially afterward, while those who buy black‐colored products should be more prosocial as they feel a need to compensate for their initial misconduct. We investigate such a hypothesis in six studies, examining prosociality after buying white‐ or black‐colored products. The results are consistent with our hypothesizing and highlight a moral credentials framework in particular in explaining why the effect occurs. Consequently, product colors do not only satisfy the diversity of consumer tastes but they also impact consumers’ prosocial behavior well‐beyond product choice and outside of retail domains.     

An Examination of the Incidence of Purchase Quantity and Timing Acceleration

One potential cause of sales increases for consumer nondurables during promotional periods is purchase acceleration. That is, a promotion may cause consumers to buy larger quantities of a product (quantity acceleration) and/or purchase the product sooner than they normally would (timing acceleration). A number of stud- ies, using a number of different types of products and consumer promotions, have examined the phenomenon but the results have not consistenlly shown that purchase acceleration occurs or is large enough to be perceptible. This study, using rather strict definitions of quantity and timing acceleration, finds evidence of considerable purchase quantity and timing acceleration by households in four product categories. These findings suggest that manufacturers may be overestimating the prof- itability of their promotions. A portion of the sales increase in promotional periods has been borrowed from future periods, where presumably some of the purchases would have been non-promo- tional, higher-margin purchases.     

The customer is not always right

Consumers can sustain markets that are morally questionable. They can make immoral or morally suspect demands of individual businesses, especially small businesses. Even when they do not, the costs to firms of consumer protection can sometimes drive them to ruin. This paper presents cases where deference to the consumer is variously unwarranted, cases that may prompt second thoughts about some kinds of consumerism.Tom Sorell is Reader in Philosophy at the University of Essex. He was educated at McGill University and Oxford. He is on the editorial board ofBusiness Ethics: A European Review, and is the author (with John Hendry) ofBusiness Ethics (Butterworth-Heinemann, 1994).     

Beware of the Watchdog: Rethinking the Normative Justification of Gatekeeper Liability

One of the prevailing explanations of the corporate scandals of the Enron era and the recent financial crisis is the failure of professional gatekeepers—such as auditors, corporate lawyers, and securities analysts—to detect and disrupt corporate misconduct. The alleged solution to this failure—typically proposed and justified on consequentialist grounds—is to impose legal liability on professionals. The purpose of this paper is to critically examine the normative foundations of gatekeeper liability. In the course of this paper, I shall defend the claim that gatekeeper liability may be morally objectionable not only on grounds of fairness but also on consequentialist grounds. The expected contribution of this paper is threefold. First, it systematizes the framing and moral justification of gatekeeping duties. Second, it calls into question the normative underpinnings for targeting intermediaries instead of primary wrongdoers. Third, it anticipates some negative (and often overlooked) results of gatekeeping strategies in the accounting profession, specifically in the realm of clientele selection, the expectation gap, and auditor compensation.     

The AIDS crisis: Unethical marketing leads to negligent homicide

The purpose of this paper is to demonstrate how condom manufacturers and their marketers have failed to adequately promote their product to the male homosexual population (gays). Inasmuch as the AIDS syndrome constitutes a major life-threatening danger and that gays appear to be particularly vulnerable, failure to aggressively promote a known preventive such as condoms to gays constitutes negligent homicide.The method used here defines what is traditionally viewed as a viable target market, analyzes the major elements of marketing with regard to gays, and examines the neglect of condom promotion by their manufacturers.It is concluded that condom marketers have failed to promote a known protection against AIDS to a highly susceptible group. That group would normally be seen as a highly attractive market for condoms and were it not for homophobia, marketers would zealously pursue more aggressive promotion of condoms to gays.Franklin B. Krohn is a Professor of Marketing in the Department of Business Administration at State University of New York (SUNY) College at Fredonia.Laura M. Milner is an Assistant Professor of Marketing in the School of Management at the University of Alaska at Fairbanks.     

The ethics of corporate governance

The failure of the critics of corporate governance to agree on what should be done to improve the governance process can, in most cases, be traced to a different understanding of the role of corporate directors in that process. This article analyzes and contrasts the obligations of directors under two legal theories, the fictional person theory and the organic theory, of the corporation. A comparison of the director's obligations under each theory indicates that the organic theory provides a better basis for assessing the performance of directors and initiating reform.Among the boards of directors of Fortune 500 companies, I estimate that 95% are not fully doing what they are legally, morally, and ethically supposed to do. And they couldn't, even if they wanted to.E. Eugene Arthur, S.J., is Associate Professor of Management and Economics at Rockhurst College. He is a Visiting Fellow at Trinity Center for Ethics and Corporate Policy.