Corporate social responsibility (CSR) is usually defined as "Certain expectations that society has of organizations on economic, legal, ethical, and discretionary levels at a given point in time" (Carroll and Buchholtz 2003, p. 36). The idea of corporate social responsibility implies moral, ethical, and philanthropic responsibilities of organizations along with their responsibilities to earn a fair return for investors and comply with the law. Legal and ethical responsibilities that the companies have toward their clients are to provide the standards of care which correspond to what they promise of their products, establishing certain ethical codes of contract in order to control their business’s practices and to protect the company, its staff and shareholders. “By sharing with clients, workers, and shareholders the capital resources the businesses have created, companies play an important role in the improvement of their lives” (Bateman & Stair, 2006, p. 175). This statement is the first principle of the responsibility of businesses beyond shareholders toward stakeholders. Business ethics comprises the moral principles and standards that dictate certain pattern of behavior in the business environment (Sexty, 2011, p.54.)
One of the bright examples of a company endangering its customers because of the designing its products is an eight-year-old diet drug lung injury case the Pennsylvania Supreme Court ruled Jan. 22, 2011 (Moylan, 2014). According to Pennsylvania law, drug companies are allowed to be sued for the failure to stop manufacturing and putting in market drugs which are considered to be harmful, and implies that the manufacturers do not have the immunity for not being sued for harm for lack of due care.
The story started in 1997, when Catherine Lance took dexfenfluramine of Redux-brand in order to lose weight. Seven years later, Lance died within a month after having been diagnosed with PPH (Primary Pulmonary Hypertension). A couple years after that, in 2006, Patsy Lance, Lance’s mother sued Wyeth (formerly American Home Products Corp., now Pfizer Inc.), Redux manufacturer for negligence for the marketing of a dangerous drug and failure to remove Redux from the market before January 1997. The plaintiff alleged that reports of a relation between Redux and valvular heart disease had been stated by mid-1997. However, the manufacturer did not take Redux out of the market until September 1997.
The trial court granted moving for summary judgment to Wyeth. Considering Redux was considered reasonably safe by the U.S. Food and Drug Administration, a plaintiff doesn’t have any rights to sue for injuries unless they can present reasonable proofs that the drug was labeled inadequate or impure.
A claim of negligent design defect was found the only legal allege for Lance to proceed with after she had appealed in 2010. It rejected Lance’s allegation of Wyeth’s negligent failure to withdraw Redux from the market. Nevertheless, the court agreed that Lance’s negligent design defect claim was valid. It lead to Lance and Wyeth’s cross-appeal, arguing the Superior Court’s holding that according to Pennsylvania law, drug companies can be sued for negligent drug design and that claims of negligent marketing, testing and failure to withdraw are not possible. It finished with a 4-2 vote with one justice refraining. The majority held that, “Pennsylvania law blames pharmaceutical companies in the violation of their duty of care when introducing a drug into the market, or continuing a previous tender, with existent or constructive knowledge that the drug is harmful to be used by anyone.”
In this case, the court blamed the company in violation of business ethics and endangering the clients.
Another substantial example of manufacturers and sellers holding responsibility for any dangerous defects of their products is DeGennaro v. Rally Manufacturing case. On January 30, 2009 Alfred DeGennaro sued Rally and Pep Boys for negligence against their packaging company, after the lead-acid battery pack he had bought from a New Jearsey Pep Boys store exploded in his hands. The plaintiff sought monetary compensation for his injuries and listed both manufacturer and retailer in his lawsuit.
The manufacturer addressed that the Rally “Boost-It” battery pack was defectively packaged, therefore manufacturers cannot hold responsibilities for any injuries caused by their products. In its turn, the seller admitted that under New Jersey Products Liability act, retailers of defective consumer products do not hold responsibility if they prove that they did not create any defect by damaging the product during shipment, and that they did not play any part in designing, manufacturing, packaging and labeling the product. However, since the warning labels and instructions on the product (battery pack) contained a warning that it may emit explosive gas, it should have been noticed by the seller. Pep Boys, selling auto parts and accessories, should have known that the given product must be ventilated to prevent explosion. Also, a trained eye should have inspected the item and reveal the building of pressure inside the packaging, and therefore indicated a potential danger. None of this was done and the retailer sold the product with a potential dangerous defect, which resulted in injuries of the purchaser. Given the aforementioned circumstances and the failure of the retailer to provide a safe purchase of potentially dangerous item, Alfred DeGennaro was able to receive monetarily compensation from Pep Boys (New Jersey District Court, 2011).
Thus, this New Jersey court case highlighted the companies’ necessity of abiding social and ethical business responsibilities in securing their customers’ safety for the value of the products they purchase. The companies should also establish certain conductions of contracts where they guarantee to hold responsibility for violation of ethical business laws. The protection of their clients’ and workers’ safety should be the companies’ priority, since the organizations’ profit and manufacturing are conducted by the workers and oriented towards the loyalty of the customers. The clients have full rights to feel safe and protected when starting their cooperation with the company, and the company should prove its trustworthiness, as one of the important business rules is to grant stability, predictability and continuity for the customers (Cross&Miller, p.2).
References:
Bateman, S. & Snell, A. (2007). Management: Leading and collaborating in a competitive world (7th ed.). New York: McGraw-Hill.
Carroll, A.B., and A.K. Buchholtz (2003). Business and Society: Ethics and Stakeholder Management. 5th ed. Australia: Thomson South-Western, 2003.
Cross F.B & Miller R. (2010) The Legal Environment of Business: Text and Cases - Ethical, Regulatory, Global, and Corporate Issues , 8th Edition, TX, Austin. Retrieved on Web on January 27, 2014:
< http://bookre.org/reader?file=1423765&pg=1>
Moylan, T. (2014) LexisNexis Legal Newsroom Litigation. Pa. Supreme Court says Drug Companies Can Be Sued for Manufacturing Dangerous Drugs. Retrieved from web on January 27, 2014:
< http://www.lexisnexis.com/legalnewsroom/litigation/b/litigation-blog/archive/2014/01/23/pa-supreme-court-says-drug-companies-can-be-sued-for-marketing-dangerous-drugs.aspx>
Sexty, R. (2012). Canadian Business and Society: Ethics & Responsibilities (2nd edition). Part III. Ethics and Corporate Responsibity. Retrieved from web on January 27, 2014:
< http://mhhe.com/irwin/m/pages/downloads/batemanM2e_sample_ch03_small.pdf>
Sheridan, P.G. Justia US Law (2011). New Jersey District Court. DeGennaro v. Rally Manufacturing INC. et al – Document 49. Civil Action No.:09-443 (PGS). Signed on October 27, 2011. Retrieved on web on January 27, 2014: < http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/3:2009cv00443/224365/49>
