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Philosophy, Ethics, and Business Law involving DWI Inc.

Congratulations! You have just been hired by Denise Worldwide Industries (DWI), Inc., as the Vice President of Risk Management. DWI is headquartered in West Palm Beach, Florida, and has over 150 offices in 30 countries. DWI is incorporated in the State of Delaware; its ships are flagged by Liberia and the Bahamas.

The Corporation's principal activities are grouped into the following areas:

? ENVIRONMENT: Water and water treatment, waste management;
? OIL & ENERGY: Exploration, production, transport, refining, wholesale marketing, alternative fuels research;
? COMMUNICATIONS: Telecommunications, Internet, audiovisual activities, publishing and multimedia;
? LEISURE & RECREATION: Hotels, casinos, cruise ships;
? REAL ESTATE: Builds homes and manages properties in active adult, age-restricted communities;
? FINANCIAL: Brokerage for capital market investments in Russia, Eastern Europe, China, and emerging markets;
? MANUFACTURING: Produces, distributes, markets, exports and imports spirits and wines.

Your duties as the VP for Risk Management will require that you develop knowledge and expertise in all areas of business law, consult with corporate and outside counsel on legal matters, and advise the board as to available options to reduce or minimize the risk and liability of DWI in its ongoing activities.

The leisure group of DWI owns and operates several hotels and casinos, one of which is "The Queen of The Nile" casino, on the Mississippi River waterfront in New Orleans. This Egyptian themed hotel and casino is quite popular with Arab-Americans and visitors who are citizens of nations in the Middle East and Northern Africa.

Recent events in the Middle East have led to an increase in anti-Arab sentiment, and several fringe groups have actually resorted to violence against persons who appear or are believed to be of Middle Eastern decent and damage to properties they own or frequent. In recent weeks, DWI and the hotel have received threats against the property and its guests via mail, phone, and e-mail. In response, DWI has circulated a memo to employees advising them of the threats and has increased security patrols on the premises. Last night, one or more snipers shot at arriving and departing guests who appeared to be of Middle Eastern descent; two guests and one employee were injured and there was damage to several doors and windows near the hotel entrance.

Additional threats against the hotel have been received, threatening bombings and additional violence unless DWI stops allowing persons believed to be Arab-Americans or others of Middle Eastern descent to stay at or visit the hotel property; several employees have claimed to be sick and have failed to appear at work this morning; Arab-American groups and others are threatening a boycott of DWI products and services worldwide if the company acquiesces to the blackmail.

The Telecommunications Group of DWI owns and Operates several local telephone companies. One service that DWI provides to its commercial customers is the use of "900 numbers" by which third-parties (clients of DWI customers) receive products & services. Billing for these products and services is delineated as charges owed to DWI instead of the business provider (e.g. Dudes with Dough, Lonely College Co-Eds, Madame Marie - Psychic to the Stars, etc.) and often blends into the small-print of phone bills and is overlooked by spouses, parents, and persons other than the third party user who might have access to the bill.

DWI owns and operates Appalachian Bell, the local service provider for the mountain areas of North Carolina and Tennessee. You've just received a letter from Dewey Cheatham, Esq., who represents Ma & Pa Kettle of Mountaintop, NC. About a month ago, an employee in DWI's accounts receivables department called the Kettle home regarding the $500.00 Delinquency on their phone account and attempted to collect the debt. The Kettles denied any knowledge of anyone using these services and refused to pay the charges.

Further investigation revealed that the phone calls to the dating hotline made from the Kettle phone were made by the Kettle's 12 year old grandson and some of his friends, who often spent weekends with them.

All ships owned by DWI are flagged in the Bahamas and Liberia. The "flag of convenience" rules have both public law and private law implications. Private law comes into play in the employer-employee, passenger contract, and cargo contract obligations of the ship. Public law also interfaces with these rules in that ship and companies pick and choose flags of convenience for individual ships based upon liability concerns such as negligence, contractual, labor, customs, immigration, and/or environmental laws.

The "flag of convenience" arrangement, also known as foreign registries, offered by the Bahamas, Liberia, Panama and other countries, permit ship owners to avoid most of the wage and labor laws of the United States. A ship is subject to liability as if it were "within" the country whose flag it flies. DWI's passenger tickets and contracts also make reference to this fact that all claims by passengers or employees must be litigated in and under the law of the country whose flag the ship in question flies.

Mr. and Mrs. Lowell were passengers on one of DWI's smaller cruise ships, The Minnow, for a weeklong journey from Miami, with stops in Nassau, Key West, and Grand Cayman. The Minnow flies the flag of Liberia. One night during the cruise, the Howells returned to their cabin and find two ship employees removing cash and Mrs. Lowell's jewelry from the ship-provided safe. Mr. Lowell struggled with the men, but he collapsed and suffered a fatal heart attack. Mrs. Lowell was locked inside the cabin restroom and the robbers escaped. A few hours later, the ship docked in Grand Cayman, and the two robbers left the ship with the cash and jewelry stolen from the Lowell's safe; the robbers did not return to the ship. Mrs. Lowell was rescued several hours after the ship left Grand Cayman and identified the two employees in a photo lineup.

The day after her return to Miami, Mrs. Lowell's attorney faxed DWI a letter threatening to sue them for negligent supervision, training, and hiring of employees; breach of contract; infliction of emotional distress; assault; battery; theft; and wrongful death unless DWI tendered the sum of $10 Million dollars within 10 business days.

Assume that under Liberian law, a wife is the property of the husband and has no standing to sue or claim damages for his injuries, and further that any property within the possession of Husband and Wife is deemed to be the sole property of the husband.

The Hon. Justice Potter Stewart once wrote: "There is a big difference between what we have the right to do and what is right." Give four examples of possible DWI business situations which would illustrate this principle and explain.

Solution Preview

DWI is a company with many tentacles. Oftentimes, when a company gets very large, it becomes difficult to manage it effectively and properly. This is what has begun to happen with DWI. As the Hon. Justice Potter Stewart wrote: "There is a big difference between what we have the right to do and what is right." This has to do with the difference between legalities and ethics. So, what is the difference? Legalities have to do with statutory law -- no more, no less. It does not have to do with right or wrong, good or bad, but rather adherence to a certain statutory law. On the other hand, ethics has to do with right and wrong. Essentially, ethics can be understood as the science of morality. As a branch of philosophy, we refer to ethics as "moral philosophy." So, when we speak of morality or ethics, we must begin to understand about duty and responsibility.

It doesn't take too much thinking to realize that ethical standards are often far above legal standards. And this is what your professor is driving at.

Consider the practice of having "fine print" in its contracts with customers. Fine print by definition is smaller than normal. As such it may be difficult to read, and in many cases impossible to read by many people who have bad eyesight. We must begin to address the reason why companies use "fine print" in their contracts. Is it to save paper? Are they really that noble and concerned about the environment? Do you really think so? Maybe these companies believe that the issues raised in the fine print is so irrelevant that the one signing the contract needn't be concerned about it. But if that's the reason, then why have those statements in the contract in the first place?

Could it be that fine print is used by companies for contracts to make it difficult for its potential customers to know all that they have agreed to? I'm being a bit facetious here, but specifically so in order to make a point. Is there any statutory law ...

Solution Summary

Analyzing a complex situation is not that difficult if we break it down into small pieces and approach it systematically with sound principles. That is what I do for this problem. I clearly explain the difference between what we have the right to do and what is right. Legalities and are not the same as ethics and morality. This is a great case study which can illustrate this principle.