From: RDShattTo: ir@expedia.comSent: 8/30/2009 11:10:19 A.M. Central Daylight TimeSubj: To Expedia directors: Re King County, WA taxes/service fees litigation
Dear Expedia directors,
I am dismayed that the Expedia Board decided to capitulate in the King County, Washington, class action lawsuit. See Expedia Litigation Settlement Website.
I have sent this email to Judge Benton and hope to take further action to register my strong citizen's disapproval about this litigation. Whether there is any support the Board, or individual directors, can give to me on the matter, I don't know, but any such support will be most appreciated.
Thank you.
Sincerely,
Robert Shattuck
Sunday, August 30, 2009
Email to Judge Benton
From: RDShatt
To: laura.dorris@kingcounty.gov
CC: steve@hbsslaw.com, jkaren@jonesday.com
Sent: 8/29/2009 11:52:09 A.M. Central Daylight Time
Subj: In re EXPEDIA HOTEL TAXES AND FEES LITIGATION (Judge Benton)
Dear Judge Benton,
I don't know if the bailiff will pass this email along to you. I hope the bailiff does, but that is the bailiff's call to make and not mine.
I have received notice as a purported member of the plaintiff class, but I am writing this email more as a citizen who has strong beliefs that class action lawsuits such as this Expedia litigation, on balance, ill serve important societal interests, they do not contribute positively to advancing relevant societal interests in a way that justifies them, and such litigation should be prevented from occurring.
Whether I, as a member of the plaintiff class, will actually file an objection with the court is something I will decide later. In the meantime I am copying this email to counsel for the plaintiffs and counsel for the defendant (the plaintiffs' law firm does not appear to provide email addresses for its individual attorneys and I am using this general contact email address steve@hbsslaw.com for the plaintiff firm that appears on its website and hopefully the email will be passed on to Mr. Volk).
One of the reasons I believe this sort of class action litigation ill serves important societal interests is that I believe the litigation undermines corporate business ethics. My argumentation in support of this contention is set forth at length in this online article of mine: Does the Civil Liability System Undermine Business Ethics? I hope you will take a look at that article and see what you think.
For your information, I expect to be taking other steps to express my citizen's disapproval of this litigation, and I will be indicating my actions in this Section J8 of my blog How To Combat Plaintiffs' Lawyers.
Thank you.
Sincerely,
Robert Shattuck
To: laura.dorris@kingcounty.gov
CC: steve@hbsslaw.com, jkaren@jonesday.com
Sent: 8/29/2009 11:52:09 A.M. Central Daylight Time
Subj: In re EXPEDIA HOTEL TAXES AND FEES LITIGATION (Judge Benton)
Dear Judge Benton,
I don't know if the bailiff will pass this email along to you. I hope the bailiff does, but that is the bailiff's call to make and not mine.
I have received notice as a purported member of the plaintiff class, but I am writing this email more as a citizen who has strong beliefs that class action lawsuits such as this Expedia litigation, on balance, ill serve important societal interests, they do not contribute positively to advancing relevant societal interests in a way that justifies them, and such litigation should be prevented from occurring.
Whether I, as a member of the plaintiff class, will actually file an objection with the court is something I will decide later. In the meantime I am copying this email to counsel for the plaintiffs and counsel for the defendant (the plaintiffs' law firm does not appear to provide email addresses for its individual attorneys and I am using this general contact email address steve@hbsslaw.com for the plaintiff firm that appears on its website and hopefully the email will be passed on to Mr. Volk).
One of the reasons I believe this sort of class action litigation ill serves important societal interests is that I believe the litigation undermines corporate business ethics. My argumentation in support of this contention is set forth at length in this online article of mine: Does the Civil Liability System Undermine Business Ethics? I hope you will take a look at that article and see what you think.
For your information, I expect to be taking other steps to express my citizen's disapproval of this litigation, and I will be indicating my actions in this Section J8 of my blog How To Combat Plaintiffs' Lawyers.
Thank you.
Sincerely,
Robert Shattuck
Saturday, August 29, 2009
Saturday, May 30, 2009
Letter to Alabama Gov. Riley
From: RDShatt
To: RDShatt
Sent: 5/29/2009 5:42:21 A.M. Central Daylight Time
Subj: email sent to Gov. Riley using online form
The Honorable Bob Riley, Governor
State of Alabama
State Capitol
600 Dexter Avenue
Montgomery, Alabama 36130
Re: Piling on against weakened Alabama businesses
Dear Governor Riley,
There is an egregious piling on that is going on against weakened Alabama businesses that I think you should know about. You may be able to do something about it, and I hope you will. I have previously written Dr. Bronner about the matter, and he should be able to give you his views quickly. Also, I am in the process of contacting "experts" on the subject, and I will pass along to you whatever I learn from them. Further, I will try to publicize this matter by contacting the media.
Let me try to explain the "piling on" that is going on.
Let's say I am an Alabama corporation and that, beginning at a certain point in time, some corporate officers of mine engage in accounting fraud or make misrepresentations about my business condition. While this is going on, my stock price becomes artificially inflated compared to what it would be if the truth were known, and during the period that my stock price is artificially inflated, millions of my shares are bought and sold on the stock exchange by parties who do not know the stock price is artificially inflated. Sellers during this time (call them the "lucky" shareholders) get the benefit of an artificially inflated stock price and walk away with windfall gains totaling possibly hundreds of millions or billions of dollars. The buyers during this period (call them "unlucky" shareholders) have overpaid for their shares by approximately the same total amount of the windfall gains the "lucky" shareholders obtained. At some point, the accounting fraud or the other misrepresentations made by corporate officers become publicly known, and the artificially inflated stock price falls back down to a non-artificially inflated level.
Now for the piling on.
I, as a corporation, have "unlucky" shareholders with real financial losses. I also have "lucky" shareholders who by chance sold my shares and have walked away with windfall gains corresponding to those "unlucky" shareholders' losses.
Who do the plaintiffs' lawyers sue? They sue me the corporation. I, however, don't have the windfall gains in my corporate coffers. In the end, the windfall gains remain in the hands of the "lucky" shareholders who are not before the court, and the lawsuit generates a circular payment that accomplishes a shuffling around of the losses among my shareholders who experienced the losses and also shifting a part of the losses to other of my shareholders who did not have losses (or windfall gain), and also shifts a part to some of the lucky shareholders who had windfall gains but who, by chance, are subject to a some partial reclamation of their windfall gains because they did not sell all their shares. In addition, the shareholder losses in question are more than just shuffled around; they are increased in total by the huge cut taken by the plaintiffs’ lawyers and also by very sizable attorney fees I have to pay to the lawyers who I have to hire to defend me in the lawsuit.
Does the foregoing sound crazy? It is crazy.
And the plaintiffs' lawyers are doing it and getting away with it all over the country. They got nearly a half billion dollars in legal fees from Tyco (see this link about Tyco (http://robertshattuck.blogspot.com/2007/11/november-2007-tyco-class-action.html)), and I learned of two other cases involving Xerox and Monster, Inc. because I received class action notices. See this link about Xerox (http://robertshattuck.blogspot.com/2008/04/letter-to-judge-thompson.html) and this link about Monster Inc. (http://robertshattuck.blogspot.com/2008/11/why-arent-government-retirement-systems.html)
Moreover, these crazy lawsuits are continuing to go on currently, at a time when our economy is in a recession, and businesses and banks are in a weakened condition and struggling to turn things around. The last thing they need is huge class action lawsuits that do nothing more than arbitrarily shuffle around losses in random ways and that divert hundreds of millions of dollars of needed corporate assets in order to pay off plaintiffs' lawyers who purvey this nonsense and to pay defense lawyers to defend against the nonsense.
I am writing you this letter because I learned that in February the plaintiffs lawyers have recently filed one of these cookie cutter class action lawsuits against Colonial BancGroup. See this link about Colonial class action (http://securities.stanford.edu/1042/CNB_01/).
Besides the general concern you as Governor have for Alabama banks and businesses to regain their health and be able to hire Alabama workers, there are also Alabama governmental retirement plans which are very likely invested in corporations and banks, such as Colonial BancGroup, that are having their values reduced by these class action lawsuits.
I hope you will try to take action to stop this "piling on" by plaintiffs' lawyers, particularly at a time when Alabama businesses and banks are in a weakened state, and when assets in Alabama's governmental retirement plans are greatly suffering in value.
Sincerely,
Robert Shattuck
3812 Spring Valley Circle
Birmingham, AL 35223
(205) 967-5586
To: RDShatt
Sent: 5/29/2009 5:42:21 A.M. Central Daylight Time
Subj: email sent to Gov. Riley using online form
The Honorable Bob Riley, Governor
State of Alabama
State Capitol
600 Dexter Avenue
Montgomery, Alabama 36130
Re: Piling on against weakened Alabama businesses
Dear Governor Riley,
There is an egregious piling on that is going on against weakened Alabama businesses that I think you should know about. You may be able to do something about it, and I hope you will. I have previously written Dr. Bronner about the matter, and he should be able to give you his views quickly. Also, I am in the process of contacting "experts" on the subject, and I will pass along to you whatever I learn from them. Further, I will try to publicize this matter by contacting the media.
Let me try to explain the "piling on" that is going on.
Let's say I am an Alabama corporation and that, beginning at a certain point in time, some corporate officers of mine engage in accounting fraud or make misrepresentations about my business condition. While this is going on, my stock price becomes artificially inflated compared to what it would be if the truth were known, and during the period that my stock price is artificially inflated, millions of my shares are bought and sold on the stock exchange by parties who do not know the stock price is artificially inflated. Sellers during this time (call them the "lucky" shareholders) get the benefit of an artificially inflated stock price and walk away with windfall gains totaling possibly hundreds of millions or billions of dollars. The buyers during this period (call them "unlucky" shareholders) have overpaid for their shares by approximately the same total amount of the windfall gains the "lucky" shareholders obtained. At some point, the accounting fraud or the other misrepresentations made by corporate officers become publicly known, and the artificially inflated stock price falls back down to a non-artificially inflated level.
Now for the piling on.
I, as a corporation, have "unlucky" shareholders with real financial losses. I also have "lucky" shareholders who by chance sold my shares and have walked away with windfall gains corresponding to those "unlucky" shareholders' losses.
Who do the plaintiffs' lawyers sue? They sue me the corporation. I, however, don't have the windfall gains in my corporate coffers. In the end, the windfall gains remain in the hands of the "lucky" shareholders who are not before the court, and the lawsuit generates a circular payment that accomplishes a shuffling around of the losses among my shareholders who experienced the losses and also shifting a part of the losses to other of my shareholders who did not have losses (or windfall gain), and also shifts a part to some of the lucky shareholders who had windfall gains but who, by chance, are subject to a some partial reclamation of their windfall gains because they did not sell all their shares. In addition, the shareholder losses in question are more than just shuffled around; they are increased in total by the huge cut taken by the plaintiffs’ lawyers and also by very sizable attorney fees I have to pay to the lawyers who I have to hire to defend me in the lawsuit.
Does the foregoing sound crazy? It is crazy.
And the plaintiffs' lawyers are doing it and getting away with it all over the country. They got nearly a half billion dollars in legal fees from Tyco (see this link about Tyco (http://robertshattuck.blogspot.com/2007/11/november-2007-tyco-class-action.html)), and I learned of two other cases involving Xerox and Monster, Inc. because I received class action notices. See this link about Xerox (http://robertshattuck.blogspot.com/2008/04/letter-to-judge-thompson.html) and this link about Monster Inc. (http://robertshattuck.blogspot.com/2008/11/why-arent-government-retirement-systems.html)
Moreover, these crazy lawsuits are continuing to go on currently, at a time when our economy is in a recession, and businesses and banks are in a weakened condition and struggling to turn things around. The last thing they need is huge class action lawsuits that do nothing more than arbitrarily shuffle around losses in random ways and that divert hundreds of millions of dollars of needed corporate assets in order to pay off plaintiffs' lawyers who purvey this nonsense and to pay defense lawyers to defend against the nonsense.
I am writing you this letter because I learned that in February the plaintiffs lawyers have recently filed one of these cookie cutter class action lawsuits against Colonial BancGroup. See this link about Colonial class action (http://securities.stanford.edu/1042/CNB_01/).
Besides the general concern you as Governor have for Alabama banks and businesses to regain their health and be able to hire Alabama workers, there are also Alabama governmental retirement plans which are very likely invested in corporations and banks, such as Colonial BancGroup, that are having their values reduced by these class action lawsuits.
I hope you will try to take action to stop this "piling on" by plaintiffs' lawyers, particularly at a time when Alabama businesses and banks are in a weakened state, and when assets in Alabama's governmental retirement plans are greatly suffering in value.
Sincerely,
Robert Shattuck
3812 Spring Valley Circle
Birmingham, AL 35223
(205) 967-5586
Stanford Securities Class Action Clearingouse
From: RDShatt
To: grundfest@stanford.edu
Sent: 5/27/2009 5:13:32 P.M. Central Daylight Time
Subj: Colonial Bancgroup securities law class action lawsuit
Dear Professor Grundfest,
I have gotten agitated by securities law class action lawsuits in which there is an alleged artificially inflated stock price period by reason of alleged misrepresentations by the corporation and by officers, directors and others, such as accountants. In the class actions, the plaintiff class consists of persons who made stock purchases during the artificially inflated period, possibly from the corporation but more typically on the open market. I have gotten agitated because, if there has been such misrepresentation and an artificially inflated stock price, it seems that there was a windfall gain by the sellers on the open market that corresponds to the loss experienced by the purchasers, the windfall gain is in the pockets of the selling shareholders, and the class action lawsuit against the corporation in the end is only an arbitrary reallocation of losses among non-windfall gain shareholders.
I have tried to write blasting, or at least blistering, letters about these class action lawsuits, addressed to judges and others, dealing specifically with Tyco , Xerox and Monster, Inc.
I am from Alabama and I have learned from your Securities Class Action Clearinghouse website that another one of these class actions is in the works against Colonial Bancgroup, based in Alabama. I assume there are Alabama state and local government retirement plans that own Colonial stock. As an Alabama taxpayer who provides a source of funding for such plans, I intend to write strongly worded letters to Governor Riley, Alabama Attorney General King, and trustees of Alabama governmental retirement plans, to complain vociferously about what is going on in these cases and urging Alabama officials and governmental entities to intervene/object in the Colonial case and complain about the situation to Judge Thompson.
Before I write my letters, I would like to ask you whether you think I am wrong in objecting strongly as I have done and as I plan to do in the Colonial Bancgroup case.
Thank you.
Sincerely,
Robert Shattuck
To: grundfest@stanford.edu
Sent: 5/27/2009 5:13:32 P.M. Central Daylight Time
Subj: Colonial Bancgroup securities law class action lawsuit
Dear Professor Grundfest,
I have gotten agitated by securities law class action lawsuits in which there is an alleged artificially inflated stock price period by reason of alleged misrepresentations by the corporation and by officers, directors and others, such as accountants. In the class actions, the plaintiff class consists of persons who made stock purchases during the artificially inflated period, possibly from the corporation but more typically on the open market. I have gotten agitated because, if there has been such misrepresentation and an artificially inflated stock price, it seems that there was a windfall gain by the sellers on the open market that corresponds to the loss experienced by the purchasers, the windfall gain is in the pockets of the selling shareholders, and the class action lawsuit against the corporation in the end is only an arbitrary reallocation of losses among non-windfall gain shareholders.
I have tried to write blasting, or at least blistering, letters about these class action lawsuits, addressed to judges and others, dealing specifically with Tyco , Xerox and Monster, Inc.
I am from Alabama and I have learned from your Securities Class Action Clearinghouse website that another one of these class actions is in the works against Colonial Bancgroup, based in Alabama. I assume there are Alabama state and local government retirement plans that own Colonial stock. As an Alabama taxpayer who provides a source of funding for such plans, I intend to write strongly worded letters to Governor Riley, Alabama Attorney General King, and trustees of Alabama governmental retirement plans, to complain vociferously about what is going on in these cases and urging Alabama officials and governmental entities to intervene/object in the Colonial case and complain about the situation to Judge Thompson.
Before I write my letters, I would like to ask you whether you think I am wrong in objecting strongly as I have done and as I plan to do in the Colonial Bancgroup case.
Thank you.
Sincerely,
Robert Shattuck
More emails on scholarship front
From: RDShatt
To: weaverg@lerner.udel.edu
CC: LTrevino@psu.edu
Sent: 5/27/2009 6:48:13 A.M. Central Daylight Time
Subj: Re: Beyond Moral Reasoning: A Review of Moral Identity Research and Its Impl...
Dear Professor Weaver,
Thank you. Professor Boatright also mentioned Professor Hasnas' book, and I wrote Professor Hasnas the below email yesterday.
I know I can be accused of having an "agenda" and I have been strident in trying to advance the same. I have toned down my main article, and I may even try to convert it to something that qualifies as scholarship. If I do that, I will pass it on to you. Again, thank you.
Robert Shattuck
In a message dated 5/26/2009 6:50:38 A.M. Central Daylight Time, weaverg@lerner.udel.edu writes:
Robert -- I don't know that anything we have written directly addresses your issues. But you might want to look into this book, by John Hasnas of Georgetown U: "Trapped: When acting ethically is against the law".
________________________
Gary R. Weaver, Ph.D.
From: RDShatt
To: hasnasj@georgetown.edu
CC: jboatri@luc.edu
Sent: 5/26/2009 4:26:13 P.M. Central Daylight Time
Subj: Trapped: When Acting Ethically Is Against the Law
Dear Professor Hasnas,
Ethics professors have referred me to you in the past, and Professor Boatright has recently referred me to you.
I listened to the April 17, 2006 Cato Institute online book forum about your book.
You, as a business ethicist, are importantly concerned about the application of the criminal law to corporations and how it should be utilized to affect corporate behavior. In the book forum you discussed at length the interplay with employees.
In the book forum, you said some other things that were of particular interest to me.
Speaking from memory, I think you said you thought it was wrong to hold a corporation criminally liable because it results in punishment of innocent parties. Also, you said that the only way to prevent corporate crime is to prevent employees from committing corporate crime. (Subsequently in the book forum you indicated there were situations in which the totality of employees' knowledge and actions could constitute a corporate crime but no single employee committed a crime.) Further, you said there were studies that showed a "command and control" approach to employee behavior had only modest effect, and an approach of more autonomy and respect for the employee can produce better results, including less willingness of employees to tolerate deviance by other employees.
In the book forum Ms. Alice Fisher mentioned the adverse effect on business competitors when a corporation breaks the law and is not caught and punished.
The book forum gave me a greater appreciation of issues and concerns related to the application of the criminal law to corporations and how it should be utilized to affect corporate behavior.
For a couple of years I have been interested in issues and concerns about the application of the civil law to corporations. I believe the civil law greatly affects corporate behavior, and I think that how it does so is worthy of investigation and consideration by business ethicists. I think things you said in the forum that I mentioned above are relevant to my civil law issues. I would be interested in whether there are studies that have relevance to my civil law issues or whether there are studies that could be done. My civil law issues are complicated by the fact that the civil law, unlike the criminal law, has a compensation objective, as well as a deterrence objective.
I continue to look for scholarship that addresses my civil law issues.
I believe I have previously given you the link to my article that discusses my civil law issues. Here it is again: Does the Civil Liability System Undermine Business Ethics?
Thank you for your attention to this email.
Sincerely,
Robert Shattuck
From: RDShatt
To: lauferw@wharton.upenn.edu
CC: jboatri@luc.edu, Benedict.Sheehy@newcastle.edu.au
Sent: 5/25/2009 9:58:37 A.M. Central Daylight Time
Subj: For what is worth: Prof. Boatright's book review
Dear Professor Laufer,
I have also gotten hold of Prof. Boatright's review of your book Corporate Bodies and Guilty Minds. For what it is worth to you, I append two emails I sent to Prof. Boatright related to his review.
Sincerely,
Robert Shattuck
From: RDShatt
To: jboatri@luc.eduSent: 5/24/2009 5:55:40 A.M. Central Daylight Time
Subj: I honed in on these statements
Dear Professor Boatright,
From my angle, I particularly noted three statements in your book review.
First, the statement:
I agree, and I consider it a very significant problem that needs addressing.
Second, the statement:
Third, the statement:
One statement from the Michael article caught my attention, to wit:
Thanks again for sending me the materials.
Sincerely,
Robert Shattuck
From: RDShatt
To: jboatri@luc.edu
Sent: 5/23/2009 1:03:00 P.M. Central Daylight Time
Subj: A question for you, and my answer to the same
Dear Professor Boatright,
Your book review says:
My question is: To try to deter employees, do you think it is a realistic and potentially fruitful to advocate a course of action of trying to impose "sanctions against risk-neutral shareholders . . . to induce them to impose, indirectly, the same level of discipline against risk-averse employees that could be achieved directly by criminal prosecution" ?
I think not.
First, I don't know what kind of high cost sanctions against shareholders you are talking about. A criminal conviction of a corporation can destroy a corporation and destroy shareholder value, and huge corporate fines can reduce shareholder value. Shareholders take that risk and have taken that risk, and there have been cases in which very significant financial risk of loss has been realized (e.g., Merck and Vioxx, which was admittedly in civil context but I don't see that making much of a difference for shareholders). I am not aware that financial loss or risk of financial loss has resulted in shareholders taking action to impose discipline on the corporation's employees. Are you aware of any examples of shareholders, as a result of actual financial loss or the risk of financial loss, taking action to impose discipline on a corporation's employees?
Second, I think that to acheive that level of discipline on the corporation's employees requires the same type of sanctions the criminal law imposes (jail, fines, etc.) or other drastic sanctions, such as employment termination.
For lower level employees, the corporate codes of ethics and the corporations' enforcement of them should be sufficient to provide the needed level of employee discipline, and shareholder action and involvement would seem unnecessary overkill and unncessarily cumbersome.
The crux of the problem is with respect to corporate wrongdoing that is effectuated with the involvement of higher level management. Let's take Merck and Vioxx. There has been a multi-billion dollar liability imposed on Merck to the detriment of the stockholders. What is it suggested that the stockholders do or be able to do to impose discipline on Merck officers and employees? It would seem that there would need to be investigations and tribunals to determine whether there were wrongdoing officers and employees who should be sanctioned. This will cost money. Do the shareholders need to vote on whether Merck will spend the money to conduct the investigations and have the tribunals? Should the shareholders be allowed to vote and summarily fire or fine officers and employees without investigations or tribunals? Won't there be a lot of sentiment that officers and employees are entitled to an opportunity to defend themselves against sanctions? What about the Merck shareholders acting to promulgate standards and guidelines for the future to try to prevent future wrongdoing? Again that takes money, time and effort.
In short, I don't think shareholders can impose employee discipline at a lesser cost than direct criminal prosecution or other regulatory controls on higher level employees, and further there would be much inefficiency and cumbersomeness, and perhaps ultimate unworkability, in shareholders trying to impose employee discipline.
Sincerely,
Robert Shattuck
To: weaverg@lerner.udel.edu
CC: LTrevino@psu.edu
Sent: 5/27/2009 6:48:13 A.M. Central Daylight Time
Subj: Re: Beyond Moral Reasoning: A Review of Moral Identity Research and Its Impl...
Dear Professor Weaver,
Thank you. Professor Boatright also mentioned Professor Hasnas' book, and I wrote Professor Hasnas the below email yesterday.
I know I can be accused of having an "agenda" and I have been strident in trying to advance the same. I have toned down my main article, and I may even try to convert it to something that qualifies as scholarship. If I do that, I will pass it on to you. Again, thank you.
Robert Shattuck
In a message dated 5/26/2009 6:50:38 A.M. Central Daylight Time, weaverg@lerner.udel.edu writes:
Robert -- I don't know that anything we have written directly addresses your issues. But you might want to look into this book, by John Hasnas of Georgetown U: "Trapped: When acting ethically is against the law".
________________________
Gary R. Weaver, Ph.D.
From: RDShatt
To: hasnasj@georgetown.edu
CC: jboatri@luc.edu
Sent: 5/26/2009 4:26:13 P.M. Central Daylight Time
Subj: Trapped: When Acting Ethically Is Against the Law
Dear Professor Hasnas,
Ethics professors have referred me to you in the past, and Professor Boatright has recently referred me to you.
I listened to the April 17, 2006 Cato Institute online book forum about your book.
You, as a business ethicist, are importantly concerned about the application of the criminal law to corporations and how it should be utilized to affect corporate behavior. In the book forum you discussed at length the interplay with employees.
In the book forum, you said some other things that were of particular interest to me.
Speaking from memory, I think you said you thought it was wrong to hold a corporation criminally liable because it results in punishment of innocent parties. Also, you said that the only way to prevent corporate crime is to prevent employees from committing corporate crime. (Subsequently in the book forum you indicated there were situations in which the totality of employees' knowledge and actions could constitute a corporate crime but no single employee committed a crime.) Further, you said there were studies that showed a "command and control" approach to employee behavior had only modest effect, and an approach of more autonomy and respect for the employee can produce better results, including less willingness of employees to tolerate deviance by other employees.
In the book forum Ms. Alice Fisher mentioned the adverse effect on business competitors when a corporation breaks the law and is not caught and punished.
The book forum gave me a greater appreciation of issues and concerns related to the application of the criminal law to corporations and how it should be utilized to affect corporate behavior.
For a couple of years I have been interested in issues and concerns about the application of the civil law to corporations. I believe the civil law greatly affects corporate behavior, and I think that how it does so is worthy of investigation and consideration by business ethicists. I think things you said in the forum that I mentioned above are relevant to my civil law issues. I would be interested in whether there are studies that have relevance to my civil law issues or whether there are studies that could be done. My civil law issues are complicated by the fact that the civil law, unlike the criminal law, has a compensation objective, as well as a deterrence objective.
I continue to look for scholarship that addresses my civil law issues.
I believe I have previously given you the link to my article that discusses my civil law issues. Here it is again: Does the Civil Liability System Undermine Business Ethics?
Thank you for your attention to this email.
Sincerely,
Robert Shattuck
From: RDShatt
To: lauferw@wharton.upenn.edu
CC: jboatri@luc.edu, Benedict.Sheehy@newcastle.edu.au
Sent: 5/25/2009 9:58:37 A.M. Central Daylight Time
Subj: For what is worth: Prof. Boatright's book review
Dear Professor Laufer,
I have also gotten hold of Prof. Boatright's review of your book Corporate Bodies and Guilty Minds. For what it is worth to you, I append two emails I sent to Prof. Boatright related to his review.
Sincerely,
Robert Shattuck
From: RDShatt
To: jboatri@luc.eduSent: 5/24/2009 5:55:40 A.M. Central Daylight Time
Subj: I honed in on these statements
Dear Professor Boatright,
From my angle, I particularly noted three statements in your book review.
First, the statement:
In practice, the complexity of organizational behavior and the secrecy around it
make it very difficult for prosecutors to obtain evidence of wrongdoing and to
identify the individuals responsible.
I agree, and I consider it a very significant problem that needs addressing.
Second, the statement:
It has also been spurred by a tension in public policy between encouragingThis statement is in reference to imposing vicarious liability on the corporation. I think the tension is relevant as well to holding employees liable.
risk-taking in business that advances the economy and regulating corporations to
prevent the inevitable abuses, . . ..
Third, the statement:
For legislators, regulators, and prosecutors who have created the newI think judges as well should read the book.
cooperative model of law enforcement, and also business ethicists who promote
this model, the book provides a sobering contrary assessment.
One statement from the Michael article caught my attention, to wit:
Third, despite references to promoting ethical conduct, the SentencingI think the impact of the civil liability system on corporate behavior is as significant as the impact of the criminal law, and business ethicists should be scrutinizing the civil liability system as closely as they are scrutinizing the criminal law.
Guidelines actually define a "compliance and ethics program" as one "designed to
prevent and detect criminal conduct'""* and would seem narrowly satisfied by a
program limited to criminal activity rather than also to ethical or even civil
law issues.
Thanks again for sending me the materials.
Sincerely,
Robert Shattuck
From: RDShatt
To: jboatri@luc.edu
Sent: 5/23/2009 1:03:00 P.M. Central Daylight Time
Subj: A question for you, and my answer to the same
Dear Professor Boatright,
Your book review says:
To explain further, ultimately the only actors that can be deterred are
individuals;organizations can be deterred only by influencing the behavior their
agents. The relevant difference between sanctioning organizations and individuals
is whetherindividuals will be deterred directly by the application of the
criminal law or indirectlyby creating incentives for shareholders to monitor
employees. In other words,is it better to have government prosecutors or the
shareholders' representatives bethe first line of defense in preventing
wrongdoing? The answer to this questionwould seem to be a matter for
cost-benefit analysis: which approach can producethe greatest amount of
deterrence at the lowest cost? Although there are largecosts in government
prosecution of individuals, the sanctions against risk-neutralshareholders would
have to be relatively high to induce them to impose, indirectly,the same level
of discipline against risk-averse employees that could be achieveddirectly by
criminal prosecution. If compliance programs cause a risk-shift from organizations to individuals, this effect may be desirable to the extent
that the greaterlegal liability of individuals achieves more deterrence at lower
cost than imposingthe preponderance of risk on organizations.
My question is: To try to deter employees, do you think it is a realistic and potentially fruitful to advocate a course of action of trying to impose "sanctions against risk-neutral shareholders . . . to induce them to impose, indirectly, the same level of discipline against risk-averse employees that could be achieved directly by criminal prosecution" ?
I think not.
First, I don't know what kind of high cost sanctions against shareholders you are talking about. A criminal conviction of a corporation can destroy a corporation and destroy shareholder value, and huge corporate fines can reduce shareholder value. Shareholders take that risk and have taken that risk, and there have been cases in which very significant financial risk of loss has been realized (e.g., Merck and Vioxx, which was admittedly in civil context but I don't see that making much of a difference for shareholders). I am not aware that financial loss or risk of financial loss has resulted in shareholders taking action to impose discipline on the corporation's employees. Are you aware of any examples of shareholders, as a result of actual financial loss or the risk of financial loss, taking action to impose discipline on a corporation's employees?
Second, I think that to acheive that level of discipline on the corporation's employees requires the same type of sanctions the criminal law imposes (jail, fines, etc.) or other drastic sanctions, such as employment termination.
For lower level employees, the corporate codes of ethics and the corporations' enforcement of them should be sufficient to provide the needed level of employee discipline, and shareholder action and involvement would seem unnecessary overkill and unncessarily cumbersome.
The crux of the problem is with respect to corporate wrongdoing that is effectuated with the involvement of higher level management. Let's take Merck and Vioxx. There has been a multi-billion dollar liability imposed on Merck to the detriment of the stockholders. What is it suggested that the stockholders do or be able to do to impose discipline on Merck officers and employees? It would seem that there would need to be investigations and tribunals to determine whether there were wrongdoing officers and employees who should be sanctioned. This will cost money. Do the shareholders need to vote on whether Merck will spend the money to conduct the investigations and have the tribunals? Should the shareholders be allowed to vote and summarily fire or fine officers and employees without investigations or tribunals? Won't there be a lot of sentiment that officers and employees are entitled to an opportunity to defend themselves against sanctions? What about the Merck shareholders acting to promulgate standards and guidelines for the future to try to prevent future wrongdoing? Again that takes money, time and effort.
In short, I don't think shareholders can impose employee discipline at a lesser cost than direct criminal prosecution or other regulatory controls on higher level employees, and further there would be much inefficiency and cumbersomeness, and perhaps ultimate unworkability, in shareholders trying to impose employee discipline.
Sincerely,
Robert Shattuck
Monday, May 18, 2009
More on Professor Laufer's book
From: RDShatt
To: jboatri@luc.edu
Sent: 5/18/2009 6:53:33 A.M. Central Daylight Time
Subj: Your book review of Corporate Bodies and Guilty Minds
Dear Professor Boatright,
I am not a subscriber to Business Ethics Quarterly and cannot find a way to gain online access to your above book review in the July 2008 issue. I would be very appreciative if you would be in a position to send me an electronic copy of your review.
Also, I sent the below emails to Professor Laufer and Professor Sheehy, who also wrote a review of Professor Laufer's book.
I would like to ask you as well how your views fit in with my thinking and argumentation that I set forth in this article: Does the Law Undermine Business Ethics?
Thanks.
Robert Shattuck
From: RDShatt
To: Benedict.Sheehy@newcastle.edu.au
Sent: 4/26/2009 10:54:30 A.M. Central Daylight Time
Subj: Fwd: CORPORATE BODIES AND GUILTY MINDS
Dear Professor Sheehy,
I have sent Professor Laufer the below email following my reading of your review of his book.
I am wondering how your own views fit in with my thinking and argumentation that I set forth in this article: Does the Law Undermine Business Ethics?
I hope I hear back from you.
Thanks.
Sincerely,
Robert Shattuck
Forwarded Message:
Subj:CORPORATE BODIES AND GUILTY MINDS
Date:4/26/2009 10:27:50 A.M. Central Daylight Time
From:RDShatt
To:lauferw@wharton.upenn.edu
Dear Professor Laufer,
I have emailed you before but I don't think you responded.
In researching, I have found the above book of yours and have read this review of it: http://www.bsos.umd.edu/gvpt/lpbr/subpages/reviews/laufer0107.htm
I am not sure I am able to tell from the review your exact stance and your exact advocacy derived from that stance. I hope to find out more about that.
In the meantime, finding your book and reading the review has renewed my interest in finding out the extent to which you agree with the argumentation and contentions I set forth here: Does the Law Undermine Business Ethics?
I hope very much that I will hear from you.
Thank you.
Sincerely,
Robert Shattuck
To: jboatri@luc.edu
Sent: 5/18/2009 6:53:33 A.M. Central Daylight Time
Subj: Your book review of Corporate Bodies and Guilty Minds
Dear Professor Boatright,
I am not a subscriber to Business Ethics Quarterly and cannot find a way to gain online access to your above book review in the July 2008 issue. I would be very appreciative if you would be in a position to send me an electronic copy of your review.
Also, I sent the below emails to Professor Laufer and Professor Sheehy, who also wrote a review of Professor Laufer's book.
I would like to ask you as well how your views fit in with my thinking and argumentation that I set forth in this article: Does the Law Undermine Business Ethics?
Thanks.
Robert Shattuck
From: RDShatt
To: Benedict.Sheehy@newcastle.edu.au
Sent: 4/26/2009 10:54:30 A.M. Central Daylight Time
Subj: Fwd: CORPORATE BODIES AND GUILTY MINDS
Dear Professor Sheehy,
I have sent Professor Laufer the below email following my reading of your review of his book.
I am wondering how your own views fit in with my thinking and argumentation that I set forth in this article: Does the Law Undermine Business Ethics?
I hope I hear back from you.
Thanks.
Sincerely,
Robert Shattuck
Forwarded Message:
Subj:CORPORATE BODIES AND GUILTY MINDS
Date:4/26/2009 10:27:50 A.M. Central Daylight Time
From:RDShatt
To:lauferw@wharton.upenn.edu
Dear Professor Laufer,
I have emailed you before but I don't think you responded.
In researching, I have found the above book of yours and have read this review of it: http://www.bsos.umd.edu/gvpt/lpbr/subpages/reviews/laufer0107.htm
I am not sure I am able to tell from the review your exact stance and your exact advocacy derived from that stance. I hope to find out more about that.
In the meantime, finding your book and reading the review has renewed my interest in finding out the extent to which you agree with the argumentation and contentions I set forth here: Does the Law Undermine Business Ethics?
I hope very much that I will hear from you.
Thank you.
Sincerely,
Robert Shattuck
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