Legal Environment Of Business

Simulation: Business Regulation

Legal Environment of Business

Simulation: Business Regulation

Alumina Incorporation

Alumina Incorporation is an USA-based $4 billion alumni maker. It operates in eight countries around the world with the USA counting for seventy percents of its sales. Situated in the fringes of Lake Dira in the state of Erehwon, Alumina Inc. has business interests in automotive components and manufacture of packaging materials, bauxite mining, etc. Alumina Inc. falls under the jurisdiction of region six of the EPA.

There was a routine EPA evaluation inspection five years ago, and Alumina Inc. was found guilty in violation of environmental discharge norms. This was the only bad incident in company's records. EPA evaluations are necessary in order to protect public health and to eliminate water pollution. Apparently, Alumna's image is about to be damaged again by the allegations posted in the Erhwon Reporter newspaper. A 38-year-old single mother, Kelly Bates has accused Alumina Inc. of repeatedly contaminating the waters of Lake Dira with carcinogenic effluents, and has alleged that consumption of the contaminated water is the proximate cause of her 10-year-old daughter's leukemia.

Team Members' Result

After running the simulation, each team members) came up with the same result. The results are as follow:

* Conduct an independent site study to check for any new violations

* Allow partial release of environmental audit report

* Seek American Arbitration Association's intervention in resolving the Bates dispute through alternative means.

Strategy to Solve the Challenge

Environment regulations are the most stringent area of government's regulation of business. The government had established the Environmental Protection Agency (EPA) to coordinates public control of private action as it affects the environment.

When taking charge of the damage control exercised, the best approach is conducting an independent research to check for any environmental and pollution violations. Approaching Ms. Bates to test her results can have a negative impact on Alumna Inc. As result, Ms. Bates can consider proceeding legally against the company. Hiring a private investigator can bring accusation of "invasions of privacy" which are not in favor of Alumna Inc.

Under Freedom of Information Act, The Erhwon Reporter journal and Ms. Bates can request the environmental audit report to see if there was any violation of the Clean Water Act. According to Reed et al., Clean Water Act has defined goals such as: making the nation's water safe for swimming and, in the same time, protect wildlife; setting deadlines and strong enforcement provisions that must be followed by all polluters (para 6, p.503). Refusing to comply can influence Ms. Bates to file suit against the company. Or acting under pressure and releasing all the reports can give room to misinterpretation for the public. References as" breakdown of pollution control system or eminent hazard of recurrence of mishap in the future" can dissolve the trust of the community in Alumna Inc.

Furthermore, the Erhwon Reporter journal could imply that Alumna Inc tries to be defensive. But if the company releases only a partial report, it will prove that there was no violation of environment discharge norms, and will give the opportunity to show all the company's efforts to have a clean record. Fortunately, bringing positive news to the table, an American scientific society reports in its quarterly journal that increased traffic in the area is poisoning the waters of Lake Dira, posing danger to animals, aquatic, and human life. Approaching Ms. Bates in negotiating a sum in order to help with medical expenses can prove that there was indeed something wrong happened and Alumna Inc is trying to cover up. Even though there was no link established between the company's violations five years ago and Ms. Bates' daughter leukemia, she will file charges. In this case, as private citizen, Ms. Bates can sue the presumed polluting company by mentioning the environmental law. This case can become complicated and it can shake Alumna's competitive position in the global aluminum trade. Even more than that, the punitive damages can be very expensive for the company.

The best way to respond to the issue is with AAA intervention that will help resolve this dispute through alternative in mediation. Alternative dispute resolution can help the company manage risk and resolve disputes in short period of time, with minimum expenses, and less negative publicity.

CEO's Action Regarding Bates' Dispute

As CEO of Alumina Inc., the decision to consider defending the lawsuit filed by Kelly Bates and settling the case depends on a variety of factors. The CEO has to weigh the cost and time involved in litigation, likelihood of a favorable outcome, and the negative publicity associated with the suit. Kelly Bates alleges that the dumping of polycyclic aromatic hydrocarbons (PAH) into Lake Dira by Alumina Inc. caused her daughter's leukemia. The health of Kelly Bates' daughter will touch the community's heart leading to a public outcry against Alumina Inc. The publicity given to the case by the media may create a sympathetic jury pool and thus Alumina Inc. may not get a fair trial. Alumina Inc. could lose millions of dollars in legal fees, expert opinions, research costs, loss of clients because of the negative publicity, and ultimately the jury could award the Bates' family millions in compensatory and punitive damages. Therefore, before making any decisions regarding settling or defending the suit that Kelly Bates filed, the CEO decided to advise counsel to set up a mock jury.

According to Neil (2003), any major case where there are significant damages at stake, the only way to prepare for litigation is with a mock trial. Robert A. Clifford, a proponent of mock trials, "raises the possibility that lawyers who fail to conduct jury research or engage in trial preparation techniques could lead themselves open to malpractice claims" (Neil, 2003, p36). The cost of a mock trial can range anywhere from one thousand to as much as ten thousand dollars. However, the benefits far outweigh the costs. Neil (2003) states there are three advantages of a mock trial. First, it helps a lawyer develop effective