Posted by Abigail Anaemeje.

In September of this year, a settlement was finally reached involving GM and their issue involving small- car ignition switches. In the last year, the company has had to recall over 2.6 million of their older cars to replace defective switches that, “shuts off the engine and disables power-assisted steering, power brakes and the air bags.” Such problems have been found in models such as the Saturn Ion and Chevrolet Cobalt. This deadly case drew even more attention when it was the cause of at least 124 deaths and 275 injuries. GM, the Detroit automaker, admits that, “some of its employees knew about the problem for more than a decade, but no cars were recalled until early last year.” After hiring a federal prosecutor, Anton Valukas, he discovered that there has been no wrongdoing made by the top executives. However, in light of the incident, 15 employees of GM have been fired for falling to act in correcting the issue.

Overall, GM Motors will have to pay a wire fraud charge of $900 million in a late prosecution agreement. As for the families who have lost their loved ones, each will receive at least $1 million. In addition, $625 million has been set aside to compensate people who will agree with the settlement. Ironically, this case occurred a year after Toyota was caught hiding information about its defects that caused similar outcomes. Since it was much severe, Toyota agreed to pay a penalty of $1.2 billion; making it the largest penalty enforced on an automobile company.

Abigail is a finance major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Dana Domenick

Takeda Pharmaceutical Company is Asia’s largest pharmaceutical company and one of the most successful in the world. In the late 1990s, Takeda globally released an antidiabetic drug known as Actos. According to the FDA, the purpose of pioglitazone, the generic name for Actos, is to “improve control of blood sugar in adults with type 2 diabetes mellitus” (fda.gov).

Eli Lilly and Company is an American pharmaceutical company based in Indianapolis, Indiana. Takeda entered a partnership with Eli Lilly in which the American company would market Actos in the United States. In 2011, a New York resident, Terrance Allen and his wife filed a suit against Eli Lilly and Takeda claiming that the drug caused Terrance Allen to develop bladder cancer. The defendant had evidence to prove that the company failed to warn that Actos increases the risk of cancer. The trial took place in Lafayette, Louisiana. The jury sided with the plaintiff and awarded $9 billion in punitive damages. Lilly had to pay $3 billion while Takeda had to pay $6 billion. Both drug companies appealed the verdict and the damages were slashed to $36.8 million.

This suit was just one of the almost 9,000 pending claims toward Takeda made by Americans who had used the drug. All litigants argued that the company failed to warn them that use of the drug heightened their risk of cancer. In April 2014, the Japanese pharmaceutical company came to a settlement of $2.4 billion to cover the damages in all of the suits and costs against them in the United States. According to the New York Times, the damages given to each plaintiff will vary depending on individual factors including the amount of drug consumed and each individual’s physiological history (Andrew Pollack). According to Business Insider, Takeda expressed that the company is not concerned about the large settlement and they will continue to sell the drug.

Dana is a psychology major at Seton Hall University, Class of 2017.

Sources:

http://www.nytimes.com/2014/04/09/business/international/japanese-drug-maker-ordered-to-pay-6-billion-over-cancer-claims.html http://www.fda.gov/Drugs/DrugSafety/PostmarketDrugSafetyInformationforPatientsandProviders/ucm109136.htm

http://www.businessinsider.com/afp-takeda-warns-of-loss-after–2.4-bn-diabetes-drug-settlements-2015-4

Posted by Philip D Lacki.

‘The lid popped off”? How does a lid pop off without someone doing something to cause it to pop off? Just like the Liebeck v McDonald’s case, I find this case involving someone suing Starbucks for a faulty lid to be morally wrong in the sense of business law. “The stress activated [the plaintiff’s] Crohn’s disease, and as a result, he lost part of his intestine. He claims damages of $50,000. His wife also sued for loss of companionship.”

The eggshell skull rule is a well-established legal doctrine used in some tort law systems. It means that saying the injured person is frail is not a defense in a tort case.

In class, we discussed the McDonalds case and looked into the case. When do ends justify the means? In my discussion post about the video, we watched the video about the case and talked about how one may use bad or immoral methods as long as you accomplish something good by using them. (Not everyone agrees with this idea). The man suing Starbucks for $50,000 used immoral methods to accomplish something bad.

In class, we also discussed the Gucci case where a person in China was selling counterfeit Gucci products and selling them online. Gucci, who realized what was happening, notified the person in China without getting a response. The man in China was using immoral methods to accomplish something bad, and though it might be a bit extreme to compare, you can see how these two cases have similarities in both business and legal aspects.

Philip is a public relations major with a minor is business administration at Seton Hall University, Class of 2017.

Posted by Rilind Dauti.

$18 billion in goods alone in 2004. Every supplier wants to make deals with the inventory giant, Wal-Mart. To keep the deals going for the prices,Wal-Mart wants to negotiate, and these suppliers are forced to cut their costs (pay their workers less), in order to keep their contracts with Wal-Mart.

It doesn’t stop at the low wages. Wal-Mart’s healthcare plan has one of the lowest premiums, ranging from $9 to $27 dollars per pay period. What they don’t tell you is that there is a $5,000 annual out-of-pocket fee. If workers make an average of $20,000, the fee is approximately ¼ of an employee’s salary. Employees are forced to take advantage of government-funded programs like Medicaid. This insurance is covered by taxpayers, so taxpayers are forced to spend their money on Wal-Mart employees.

So what does this mean? Wal-Mart is where it is now because of their low wages, worker exploitation, and inadequate healthcare for its employees so that they can guarantee you their lowest prices. Their prices are low because of the unethical practices enforced by their CEO and higher officials in the corporation.

Rilind is a business student at the Stillman School of Business, Seton Hall University.

Posted by Briana Encarnacion.

The articles by CBS News, USA Today, and Time Magazine below all discuss a case between a woman named Cynthia Robinson and R.J. Reynolds Tobacco Co., a cigarette making company. Ms. Robinson had filed suit against R.J. Reynolds on behalf of her husband, Michael Johnson, Sr., who passed away in 1996 due to lung cancer. According to Time Magazine, “Johnson got hooked on cigarettes when he was just 13-years-old, and eventually smoked up to three packs a day.” The article goes on to demonstrate how truly addicted Mr. Johnson was to cigarettes by quoting his wife, “When you’re on oxygen and you have to step outside for a cigarette, you can’t stop. You’re addicted.” So it was clear that Mr. Johnson was addicted to cigarettes and that is why he developed lung cancer, but the question was, how exactly was R.J. Reynolds to blame?

In an article published in USAToday, Christopher Chestnut, an attorney for Ms. Robinson, was quoted stating, “The environment today is completely different than it was in the ’50s and ’60s, when Ms. Robinson’s husband was alive . . . Reynolds knew its product was addictive, but it didn’t market it correctly. The company lied and marketed cigarettes as safe, yet they contained countless harmful chemicals.” This statement alone tells us who was to blame. It was R.J. Reynolds. Had the company been more transparent as opposed to intentionally hiding the negative effects of smoking their cigarettes, the punitive damages would have never been so great. However, because they intended to make profits by lying to their customers and causing harm to them in the process, punitive damages were granted to Ms. Robinson.

Time Magazine quotes Willie E. Gary, another attorney of Ms. Robinson, stating, “We expected every dime and more . . . Johnson started smoking when he was a teen. How aware of the risks can you be at that age? But [the tobacco industry] would market and target kids. To this day they are going after our youth, stuffing their pockets. It’s all about the profits and it’s nothing about the health and safety of the people.” This is exactly right. From what I have learned through studying business law, the ends do not necessarily justify the means, an idea conveyed in the principle of “double effect;” it is all about the intent. However, the means do in fact justify the end and in this case, R.J. Reynolds did not have good intentions. As Gary stated, they were focused solely on profit. Their goal was to make money by selling cigarettes that were addictive and contained harsh chemicals known to cause cancer. They knew that by targeting the youth and hiding the reality that their cigarettes could cause cancer, they would attain a market large enough to bring in a great deal of revenue. They failed to consider the long-run effects of this decision and in the end it came back to haunt them. Ms. Robinson and her son were awarded $7,302,625 and $9,591,208 in compensatory damages, respectively, and not to mention the $23,623,718,906.62 in punitive damages, according to cvn.com.

Still, as stressed in the article published by CBS News, the money was not what was important to Ms. Robinson and her family. What was important was that the tobacco industry learn their lesson and stop targeting the youth. Ms. Robinson’s attorney Gary stated, “The lawsuit’s goal was to stop tobacco companies from targeting children and young people with their advertising. . . If we don’t get a dime, that’s OK, if we can make a difference and save some lives” (CBS News). It was clear that although punitive damages might have been seen as overly excessive by the tobacco industry, especially R.J. Reynolds themselves, that was not the goal of Ms. Robinson. It was merely an added bonus to doing what was right on behalf of her husband.

This case is a great example of the theory of double effect and a good one to study when it comes to the debate on whether or not punitive damages should have a cap. Opinions will vary of course, however, it is interesting to study cases such as these and decide on your own whether or not you agree with the verdict.

Briana is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2018.

Sources:

http://www.usatoday.com/story/money/business/2014/07/19/jury-hits-rj-reynolds-with-23b-verdict/12887315/
http://time.com/3016961/23-6-billion-lawsuit-winner-to-big-tobacco-are-you-awake-now/
http://www.cbsnews.com/news/r-j-reynolds-tobacco-hit-for-billions-in-michael-johnson-sr-lawsuit/
http://cvn.com/proceedings/cynthia-robinson-v-rj-reynolds-tobacco-company-et-al-trial-2014-03-03

Posted by Michael Habib.

Many people today always hear about the search warrant and are police required to have probable cause to search a suspect’s cell phone. Recently, a case was heard in the Supreme Court regarding a robbery and police accessing information from the cell phone carriers that lead to Mr. Quartavious Davis’s arrest in Florida. Mr. Davis was convicted of a string of robberies in 2010 and was sentenced to approximately 162 years in prison, without parole. Mr. Davis challenged and argued that police did not access a search warrant when seeking information from his cellphone carrier MetroPCS Communications Inc. The information provided resulted and provided evidence of the approximate location of Mr. Davis during the time of the string of robberies. According to Lawrence Hurley, in May, the “11th U.S. Circuit Court of Appeals ruled that the failure of obtaining a warrant did not violate Davis’ right to be free from unreasonable searches and seizures under the Fourth Amendment to the U.S. Constitution.” This lead Davis to seek Supreme Court review and the result was the same as the 11th U.S. Circuit court of Appeals. The big question here that is constantly brought up by many people is how much privacy people and business have? Specifically, the four main cell phone carriers Verizon, AT&T, T-Mobile and Sprint, should they fight to keep their customers information private? According to Lawrence Hurley, this information is requested by law enforcement tens of thousands times per year. Many lower level courts have similar cases regarding business protecting the privacy of their customers and infringement of privacy.

A counter-argument can be for purpose where businesses and law enforcement may want to have the availability of this information to quickly solve cases such as Mr. Davis’s robberies. Business owners may support this for the purpose to protect their business from these robberies, however other business such as the cell phone carriers may argue that this is infringement of privacy towards their customers and hurts their business.

Michael is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2017.

Posted by Deane Franco.

While reading the Wall Street Journal, I found an article that deals with insider trading and why certain charges were being dropped. A year ago, SAC agreed to plead guilty to securities fraud and wire fraud and pay a $1.8 billion penalty and take responsibility for the actions of their employees, including Mr. Steinberg. Mr. Steinberg is a senior employee at SAC Capital Advisors LP who was charged with insider trading, along with 6 other analysts. The charges has since been dropped because Prosecutor Mr. Bharara said holding the accused any longer would be a form of injustice, since no information can be found incriminating the accused on their chargers. Before this came to light there were a few preceding facts. First, SAC’s founder Mr. Cohen has been on the radar of the SEC for years, as they try and gather proof that he used insider trading to boost his success. Also, Mr. Steinberg is a confidant to SAC founder Mr. Cohen, so this might have been the prosecutor’s way into discovering information about Mr. Cohen. Whatever the reason may be, after the public attention SAC Capital Advisors LP has now rebranded itself to be Point72 Asset Management LP. With all these facts being known, Mr. Bharara has still dismissed the charges against Mr. Steinberg and the case is currently in the process of being assessed by the SEC to see if they will accept the dismissal.

This case raises huge ethical flags to me because although prosecutors have not found any evidence to charge SAC capital Advisors with penalties, I think all its actions to this point have proven him guilty. A company has a moral duty to take responsibility for the actions of its employees as its own wrong doing. For that reason, employees conducting insider trading means the company also conducts insider trading and should be penalized for such. SAC Capital Advisors felt the heat of the media and SEC pressure to the point where they “rebranded” themselves as a new company, and now only manage Mr. Cohen’s fortune and no outside clients. An innocent company has no reason to hide behind the act of rebranding if their company truly acted in an ethical way. I would be curious to see if the SEC turns up any wire fraud charges or some procedural error in the way SAC Capital Advisors conducted their insider trading business.

The reason why I think insider trading and other illegal investment activities like this should be penalized harshly is because the educated few, take nonpublic information to give themselves an advantage that will take advantage of those who know less about the markets. When it comes to investing, investors should feel safe that they have received adequate information to make an informed decision that could eventually lead to a return on their investment. These dishonest acts in trading tip the scale to make investors not feel secure and confident that their money will not be consumed by a cheating wealthy party; and then who really loses when investors stop investing? I understand that so far, no evidence has risen to provide factual evidence of wrong doing, but there must be some leadership member of SAC who will own up to SAC’s ethical responsibility to society.

Deane is a finance and information technology management major at the Stillman School of Business, Seton Hall University, Class of 2018.

Posted by Michael Habib.

A growing and popular phenomenon in the U.S. is fantasy football. A person reported by The New York Times won $350,000 on FanDuel in a contest. There are two companies that dominate the fantasy football market: FanDuel and DraftKings. “The two companies together enjoy 95% market share of the daily-fantasy industry, have come under the harsh light of regulatory scrutiny, with investigations launched by the New York State Attorney General and the FBI,” according to Daniel Roberts. Both of these companies ecently have been banned in the State of Nevada. The State of Nevada Gaming Control Board ruled that all unlicensed daily fantasy sports companies must cease and desist in the state. It is very ironic in the state with the largest gambling industry shuts down two major fantasy football companies.

Many argue that fantasy football is not gambling, but more skill. Nevada labels it as gambling and not a game of skill; now these companies need to obtain a gambling license to continue to do business in Nevada. Companies such as Draftpot, StarsDraft and even Yahoo’s daily fantasy football also now needs to obtain the gambling licenses. However, other state’s laws differ on the definition of gambling. In “Kansas a contest must prove only that it involves more skill than change.” In “Tennessee and Arkansas, the contest must prove it involved no change and all skill.” Currently, these companies operate in 44 states. Since some state laws are unfriendly to the gambling business, it affects fantasy football drastically. FanDuel and DrafitKings stated that this will only be a growing problem, however they will fight to have everybody back to enjoying the contest.

Michael is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2017.

Posted by Ashley O’Connell.

Relating to the topic of criminal law, I found an article published on November 11, 2015 from FoxNews.com called, “‘The biggest sham’: Sheriffs fume at mass release of 6,000 federal inmates.” Numerous sheriffs, policeman, and local community attendees shared their concern in regards to their safety and their thoughts on the release of 6,112 inmates. These inmates were released from a federal prison and has caused worry for citizens in early November. The release took place at the El Reno federal Correctional institution in Oklahoma.

Participants of the criminal justice reform have stated how the process of the inmates being released is being highly monitored and “handled responsibly.” The idea of the inmates getting released came from a discussion from the U.S Sentencing Commission when they decided to “reduce sentences for most drug trafficking offenses.” Most of the criminals that were released had been in federal prison for nine years. In the article it states, “[Y]ou don’t have to be a sheriff to realize that a felon after nine years in jail isn’t going to be adding value to the community. A third are illegals and felons so they can’t work.” Reading this quote from the article opened my eyes and made me realize that I am not the only one with this opinion, and even sheriffs feel the same way but they cannot do anything about it.

The 6,112 inmates who were released are only a portion of the total number by the end of the year. Currently, there are 46,000 more cases in which are being investigated and reviewed. Of the number being reviewed along with the amount of people who were released, there is an uproar of concern of whether the inmates are going to be violent or not. A great point about this is brought up, “If the Obama administration is not capable of making honest and prudent decisions in securing our borders, how can we trust them to make the right decision on the release of prisons who may return to a life of crime? I’d be amazed if the 6,000 . . . being released are non-violent.” I agree with this statement in regards to the violence; I believe that there will be a handful of people who will be violent.

Criminal justice advocates disagree with the Sheriffs’ opinion and do not see the issue in releasing the inmates. Their defense was that there are always inmates that are being released and the 6,112 inmates this month are not going to make a difference. The article is closed with a great quote, “There are many sheriffs feeling as though the administration will go through the motions of asking the questions but really not care what the opinion or expert advice of law enforcement is.” With this closing quote, I completely agree with everything that was said in this article. I do believe that the law enforcement is not being taken seriously, and I am afraid of what will happen if more inmates get released on a daily basis.

Ashely is an accounting major at the Stillman School of Business, Seton Hall University, Class of 2017.

Posted by Connor Lynch.

An article from The Wall Street Journal titled, “Toshiba Shares Fall After Loss, Lawsuits” involves an accounting scandal within the Toshiba Corporation. On Monday, Toshiba Corp. shares fell 7.5% after the company shocked the public with their poor financial results. Because of the decrease in share price, the Toshiba Corporation is suing their former executives that are in connection with an accounting scandal which may show prolonged legal uncertainties.

For the latest sixth month period, the technology giant Toshiba released statements that showed a $733 million loss. Investors were surprised by both the huge economic loss and the odd time period for releasing the financial statement. After showing a $1.12 billion dollar profit in the previous year, the publicly traded company is in an obvious state of distress. The corporation is not in a good state as of recently, “Equally unusual was Toshiba’s disclosure that it had sued three former presidents and two other executives, seeking to recover ¥300 million in connection with the scandal. Toshiba has said it overstated profits by ¥155 billion over seven years, prompting the resignation of then-CEO Hisao Tanaka in July.” In the lawsuits, the CEO and two other chief officers are said to have exhibited lax oversights on the financial statements of the company. This accounting scandal has led to several lawsuits that are reflecting poorly on the corporation for obvious reasons.

In July, Mr. Tanaka had released a statement apologizing for the problems but denies knowing about any inappropriate accounting. Because of the lawsuits involving shareholders, the stock price of Toshiba has reached its lowest level since 2012. The scandal is viewed as a disaster and many officials are speculative that Toshiba may have more skeletons in their closet. Toshiba is now viewed as a corporation with a negative outlook with businesses that seem unprofitable and need restructuring. As of now, it is unclear of Toshiba’s true position because of the accounting scandal effects on their financial reports.

The difficulty that Toshiba is experiencing as of late is causing them to consider reconstructing the corporation. Earnings are deteriorating and this is not good for Toshiba, “Sales plunged and losses swelled in the company’s consumer electronics business, and earnings fell sharply in its semiconductor arm, a leading maker of flash memory chips for smartphones and other gadgets. The chip business has been Toshiba’s main money maker in recent years.” Because of the decreasing sales in Toshiba’s business market, it causes the public to wonder if the previous financial success was based solely upon accounting tactics.

Connor is a finance and accounting major at the Stillman School of Business, Seton Hall University, Class of 2018.