Corporate Social Responsibility
The market and business forces adhere to government rules and regulations placed to protect the various players in the market, and that influence corporate social responsibility ensuring the corporation protects the consumers from any harm related to their products or activities. A key player in ensuring businesses in the United States respond positively to laws and uphold their corporate responsibilities to the society, is the Supreme Court, which works with the US Chamber of Commerce towards maintaining a good environment for the businesses to operate.
Recently, the Supreme Court has been involved in US Chamber of Commerce cases involving customer injury that show the corporations have not maintained their responsibility in protecting the customer; in the cases the Court has ruled in favor of the businesses denying customers the opportunity to claim injury or damage.
Therefore, the Supreme Court is become more pro-business thus being of benefit to the business community, thus preventing consumers the right to seek legal remedy for business caused injuries. However, despite the benefit to the businesses in reducing consumer litigation, it serves to undermine the power of corporate social responsibility, where the corporation should safeguard its consumers.
The Relationship between Supreme Court and Businesses
The relationship between the Supreme
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Nevertheless, in 2008 the Chamber of Commerce and the Supreme Court has realized more agreement, with the court ruling favorably. For example, the Chamber of Commerce won 13 of the 15 cases filed in the year, marking the highest number since the Chamber’s existence; furthermore, among the 30 business cases filed, the Supreme Court attained a unanimous decision for 22 of the cases with only one or two dissenting votes (Rosen 38).
With the won cases, the Supreme Court showed its disagreement in consumers and others using lawsuits in challenging corporate misconduct under the disguise that some of the cases were unmerited, and without adequate reasoning to file lawsuits. Although the Supreme Court ruling has been beneficial to the businesses, the consumers suffer under the ruling because it denies them the recourse for legal measures in the case of corporate transgressions and undermines the corporate social responsibility.
Protection of Consumers from Harmful Products
The protection of the consumer from the probability of taking in harmful products is one aspect of the corporate social responsibility. Corporate social responsibilities refers to standards that companies engage in to demonstrate their responsibility towards the investors, legislators, shareholders, employees, customers and the general public, which they do through enhancing their corporate image and minimizing risk factors that may harm the corporate reputation (Moskowitz).
When a company is reported to have produced and marketed a product with the potential to harm the customer or that does not meet the foretold standards, the case has the potential to harm the company. Furthermore, it may effectively imply that the company is unable to fulfill its obligation to customers and the public, as well as encourage the company to forego the obligations in pursuit of profitability because of legal protection.
Despite the consequences to the company, the court system offers consumers the possibility of claiming damages in cases where products certified and sold by the company do meet the expected standards of cause harm. However, as discussed in the opening paragraphs, the Supreme Court is denying consumers the opportunity and the right to claim damages through pro-business rulings.
For example, in 2008 the Supreme Court ruled in the case Riegel v. Medtronic, Inc. that the consumer might not claim personal injury in cases where the product in question received pre-market approval in accordance to the Medical Device Amendments to the Food, Drug, and Cosmetic Act (National Chamber Litigation Center 11). The court denied the plaintiff the opportunity to claim damage after the death of her husband caused by a balloon catheter manufactured by the defendant.
The court determined that the catheter had undergone through approval by the Food and Drug Administration thus preempting the case for damage. Consequently, the ruling affords businesses the latitude for continued recklessness and ensures easier appeal in cases of negligence, which in effect undermines their responsibility to the customers and puts forward the case for pursuing profitability regardless of harm caused.
Consumer Vulnerability to Poor Business Decisions
Another aspect of corporate social responsibility is protecting consumers from being vulnerable to poor business decisions made by the businesses that may endanger the consumer’s assets such as witnessed in the subprime crisis in the United States. In the case Watters vs. Wachovia, the Supreme Court made a ruling preventing states from pursuing policies that regulate subsidies of national banks, which though protecting the banks as businesses exposed the consumers to predatory lending practices from the banks and other lending institutions (Lendman).
The court’s decision curtailed the state powers in enforcing consumer laws against subsidies of nationally chartered banks, which meant that the court failed to consider the potential harm to consumer assets and monies attributed to unfair practices by the banks or subsidies. Within the corporate social responsibility role, organizations pursue corporate attributes that facilitate positive communication to the stakeholders, consumers, employees, and the public, especially by following responsible investment moves (Moskowitz).
A responsible investment move using the example of the subprime crisis, would mean that the banks would refrain from pursuing risky lending ventures that had the potential to risk customer and stakeholder assets, as well as cause a ripple economic impact. The customers mostly depend on the bank to make the correct decision concerning the ability to borrow money, and for the institution to investigate their capability for payment. However, in this case the banks and their subsidies produced a borrowing scheme that was risky both to the consumer and to the banks.
The Supreme Court ruling curtailing the power of the state in reining the subsidies powers in lending provided an avenue in which the banks and subsidies can entice the consumer towards unrealistic deals that though looking beneficial would prove catastrophic such as in the subprime crisis. Furthermore, apart from endangering the consumer to predatory bank lending practices, it gave banks the leeway to pursue the predatory practices.
If the court ruling supported the consumer, it would have offered a chance to protect the consumer and ensure the banks and subsidies followed through well-structured packages that would prove beneficial for the customer and the banking system thus avoiding substantial crisis. The ruling would also provide the businesses an incentive to prove they can make responsible investment moves thus increasing consumer confidence, whereas the current ruling decreased consumer confidence and trust, and increased their distrust in the motivation towards the businesses activities.
Consumer Vulnerability to Fraud
In addition, pro-consumer Supreme Court rulings ensure that the consumers are protected from fraud, whereas pro-business ruling especially in cases where the consumer is not guarded encourages malfeasance where the business fails to fully meet the expectations of certain contracts with consumers (Lendman). The Supreme Court has the potential to provide investors with the power to uphold laws concerning fraud, or deny them thus making them vulnerable to fraud investments.
An example of such a ruling is in the case, Stoneridge Investment Partner, LLP v. Scientific Atlanta, Inc, in which the Supreme Court ruled that the consumer is not authorized to a private rights act against third parties unless when the plaintiff has substantial evidence showing the defendant’s own conduct is to blame (NCLB 18). The ruling based on Section 10(b) of the Securities Exchange Act was in dismissal of charges against a scheme by Charter Communication of cable TV set-top box makers that involved overcharging customers for the equipments with revenue rebated to Charter in purchased advertising (Lendman).
The dismissal meant that the Supreme Court upheld the position of the defender or businesses while ensuring that consumers were not in a position in the future to file charges against fraud cases of a similar nature.
Companies that respect their corporate social responsibility towards maintaining a good relationship with their customers ensure that they maintain a culture of integrity in which the customer and other stakeholders feel secure from the possibility of foul play in their dealings with the company (Moskowitz). However, in a case where customers have no mandate to ensure that the company always delivers its promises without swindling money out of the customer, the company could try to deceive the customer without fear of reproach.
In circumstances where the customer has recourse for action, the company be encouraged to more efficiently focus on ways to deliver as expected to the customer, within the reasonable range of charge. When businesses engage in business deals that do not deliver the expected outcome within the agreed pricing, they may loose customer trust because it communicates a loss of integrity and responsibility towards the customer, which are aspects of the corporate social responsibility. This means that even though the Court rulings may save the businesses from undergoing private litigation, they are at risk of loosing more because of encouraging unscrupulous business behavior.
In conclusion, the Supreme Court as federal organization that works on cases involving businesses represented by the US Chamber of Commerce has the potential to make decisions that negative influence the ability of businesses to respect their call towards corporate social responsibility. In 2008, the Court made rulings on three cases, Riegel vs. Medtronic, Watters vs. Wachovia, and Stoneridge vs. Scientific Atlanta, which exemplifies business cases whose ruling can negative affect companies responsibility towards customers.
The rulings failed to protect consumers from harmful products, vulnerability to poor business decisions, and protection from fraud, through denying them the right to pursue legal recourse to damages. Furthermore, the rulings diminish the businesses ability to maintain their corporate social responsibility for lack of legal incentive. Instead of maintaining the pro-business, the Supreme Court should pursue a middle point with the help of the US Chamber of Commerce and organizations representing consumers, towards establishing a way that consumers can have the right of legal recourse while eliminating unsupported claims.
The current pro-business rulings maintain an environment where consumers will continue suffering under the inability of seeking legal damage, while the companies will continue undermining their corporate social responsibility to the consumer.
Lendman, Stephen. Supreme Court, Inc.: Supremely Pro-Business. Slaves and Others, July 7, 2008. Accessed June 24, 2009 from <http://www.selvesandothers.org/article16517.html>
Moskowitz, Jerry. “The Growing Importance of Corporate Social Responsibility.” Ethisphere, June 3, 2008. Accessed on June 24, 2009 from <http://ethisphere.com/the-growing-importance-of-corporate-social-responsibility/>
National Chamber Litigation Center. 2008 Accomplishments. Washington, DC: National Chamber Litigation Center, 2009.
Rosen, Jeffrey. “Supreme Court Inc.” The New York Times, March 16, 2008, pg.38.