Recognizing_and_Minimizing_Tort_and_Regulatory_Risk_Plan

Recognizing and Minimizing Tort and Regulatory Risk Plan University of Phoenix LAW/581 June 28, 2010 Recognizing and Minimizing Tort and Regulatory Risk Plan The failure to comply with governmental regulations is the cause of a host of regulatory risks. These risks have the potential to impact a company’s earnings and often its reputation. Concerning tort liability stemming from non-compliance it is in the company’s best interests to identify those risks and implement a plan to avoid them. When those risks come to fruition there needs to be a system to manage and prevent damage to the reputation and loss of monetary value to the company. Five years ago Alumina, Inc. was cited for discharging higher levels of PAH than were permitted. Through the use of preventive, detective, and corrective measures they can identify and manage these risks to reduce the probability of non-compliance of regulations in the future. The legal issues and the appropriate legal principles connected to this organization are displayed in Appendix A. Preventive measures Alumina Inc. was in violation during a routine inspection involving negligence about five years ago and was charged with a punitive fine for corporate irresponsibility. The PAH concentrations were over the prescribed level in the test samples. Alumina Inc. was ordered to clean up the PAH by the EPA and it was confirmed that they corrected the issues and were in compliance. Another issue with a local resident threatened their good record stating that her daughter’s illness escalated from the contamination of water. To prevent Alumina Inc. from receiving another violation, it must remain in compliance with all laws. Regulatory risks may be identified and managed by preventive measures through the implementation of procedures and processes to self monitor PHA and other regulated substances to ensure compliance. Even though they have a good record, a public accusation was made to the company claiming that it is still polluting the water supply with the prior incident five years ago. Since the EPA’s claim was labeled as negligence by the company, public perception will be a large motivator in resolving the issue. This liability could have been reduced by Alumina, Inc. by allowing public access to federal regulatory improvements and compliance over the last five years. Detective measures Alumina, Inc. could avoid the unintentional tort; negligence, by conducting or installing a detection system in their processing and production operations. By setting up strict quality control systems that detect the amount of PAH concentration levels being released, Alumina, Inc. could guarantee they were always within the Environmental Protection Agency, (EPA) standards. The question of negligence would not have come up five years after an incident, if Alumina, Inc. did not breach its responsibility of duty of care, “The obligation people owe each other to cause any unreasonable harm or risk” (Cheeseman, pg: 81, 2010). Detecting the levels of PAH released through production from the onset and by staying abreast of any changes in EPA standards and emission levels is vital to safe operation procedures and helps ensure lawsuits or liability claims are not filed against Alumina, Inc. By investing in equipment or personnel that would focus on compliance, other potential violation areas could come to light. Continuing to be proactive in its detection methods Alumina, Inc. could ward off potential litigation by making it nearly impossible for potential plaintiffs to show or prove negligence on its part. Although there are other methods to correct or prevent unintentional release of excessive amounts of industrial byproducts, detection shows a company is proactive in its quest to service the public. Corrective measures Several options were available to Alumina Inc. could have used to keep this negligence claim from becoming a problem. Because the company decided not to follow their “duty of care”, there are corrective measures the company should use to correct the situation. The company could take no action in regard to the PAH concentration detection and only deal with the case itself. If they choose this course of action, they would be liable for the entire situation and have to pay all fees incurred from the process. The company could enhance their institutional controls. The quality control managers should draft a proposal for how to manage the risks of these chemicals being released into the water or being increased by traffic. The company could also use containment actions. They should run tests to ensure that the waters are less than the proposed amounts of PHA. They could also install monitors to monitor constantly levels so situations like this do not happen. They could also use active remediation as a source to control the situation. Although the case will damage the reputation of the company, they should still focus on the case and how to correct the situation with the least amount of damage to all parties involved. Identification An exceptionally pervasive tort among business lawsuits is that of negligence. We can see this in the case of Alumina Inc., in which a corrected discharge level continues to cause legal action against them. Unlike the Exxon Valdez leak of 1989, Alumina immediately took action to remedy the situation and has been in good standing with the EPA ever since. Despite this compliance that incident opened Alumina up to negligence lawsuits filed against them for the damages that had already been done. Negligence is an unintentional tort that includes duty of care, breach of duty, injury to plaintiff, actual cause and proximate cause, (Cheeseman, 2010). Many special negligence doctrines are included under the negligence umbrella: “professional malpractice, negligent infliction of emotional distress, negligence per se, and res ipsa loquitur, (Cheeseman, 2010).” Alumina Inc. is looking at the possibility of negligence due to actual cause, which means that Kelly Bates believes her daughter has leukemia as a direct result of drinking the polluted water. Negligence is not only a fiscal issue, but also an image problem. Kelly Bates capitalized on the latter and went straight to the press with claims of ongoing wrongdoing. By doing this, Kelly herself has become vulnerable. If it is found that her claims are false, she may have a countersuit on her hands claiming defamation of character. This is an intentional tort, which means that the defendant, in this case Kelly Bates, knew that her actions could cause harm. After Kelly’s accusation, Alumina did an enormous deal of testing to make sure that their water levels were under the EPA guidelines. If Alumina also found that Kelly knew the current levels were safe, Alumina could sue for disparagement, or trade libel, for damage done to the business’s image. Many know about defamation of character, which is similar, but does not have the clause of malicious intent. Thankfully, the parties made an agreement out of court. The initial contamination could have caused the leukemia, and Kelly Bates probably made false or exaggerated statements out of malicious intent. Risk management Many risks exist throughout an organization, and the risk plan needs to be in place for this company to prevent legal issues. To manage and control legal issues, Alumina Inc. has to comply with all federal and state laws. Alumina will have to conduct studies and tests on a consistent basis to improve the quality of the water supply. The company will also create a control system to reduce the risk to negligence and torts by complying with EPA standards. An effective proposal plan will be set up to manage quality control of the water system, along with continuing running test and consistent monitoring of all levels of the water system. Preventive, detective, and corrective are the tools that must be used on an daily basis to ensure that Alumina Inc. is on the right path of effectiveness. Preventive will ensure that Alumina is in compliance with all laws. Detective will ensure a system, which detects high risk issues that may occur within the company. Finally, corrective will provide that proper plans are set into place to prevent current and future issues within the company. Conclusion Alumina, Inc. was cited for higher than allowed levels of PAH five years ago and since then has been the scapegoat for the cause of multiple illnesses throughout the local community. Through the use of preventive, detective, and corrective measures it was found that they are no longer in breach of any regulations the government has on allowable levels of PAH discharge. The legal issues involved in this process are varied but in the end mediation through a third party is how this company could solve their disagreement with one local resident. References Cheeseman, H. R., Business law: legal environment, online commerce, business ethics, and international issues, 7th ed. 2010, Retrieved from the University of Phoenix eBook Collection Database. Appendix A |Legal Issues |Legal Principles | |EPA violation PAH over the allowed limits -  |Not meet prescribed standards | |Conducting a private investigation of someone |Invasion of privacy | |Submitting an independent study |Bias/not all encompassing | |Objection to the release of the EPA audit |Not complying with the FOIA | |False accusation of causal relationships |Defamation of Character/ Liable | |Relationship of chemical to Leukemia |Duty of care | |Spill five years ago |Negligence | |Plaintiff knowingly stating wrongly the Leukemia relationship to |Intentional Misrepresentation | |chemical spill | | |There are certain activities that can place the public at risk of |Rationale | |injury even if reasonable care is taken. | | |The public should have some means of compensation if such injury | | |occurs (Cheeseman, 2010) | | Recognizing and Minimizing Tort and Regulatory Risk Plan |Content |Points Available |Points Earned |Additional Comments: | |60 Percent |6 | | | |Contains preventative, detective, and corrective | |5.8 |Good flow to your paper, I would have expanded on the | |measures for a company to manage regulatory risks| | |Freedom of Information and how will the employees be | |Clearly identifies common business torts | | |involved in this process'   | |Clearly identifies other common regulatory risk | | | | |as found in the readings this week | | | | |Describes specific measures to manage torts and | | | | |other regulatory risks identified | | | | |Organization / Development |Points Available |Points Earned |Additional Comments: | |20 Percent |2 | | | |Written in fewer then 1,400 words | |2 | Good flow to the paper. | |Paragraph transitions are present, logical, and | | | | |maintain the flow throughout the paper. | | | | |Mechanics |Points Available |Points Earned |Additional Comments: | |20 Percent |2 | | | |Formatting or layout and graphics are pleasing to| |2 | Good layout. | |the eye (font, colors, spacing). | | | | |Rules of grammar, usage, and punctuation are | | | | |followed, and spelling is correct. | | | | |Sentences are complete, clear, and concise. | | | | |Sentences are well constructed, strong, and | | | | |varied. | | | | |Assignment is formatted consistent with APA | | | | |guidelines. | | | | | |Total Available |Total Earned | | |  |10 |9.8 |  |