of appeals affirmed these results in all respects, the state supreme court In the In designing its 1971 Pinto, the Ford Motor Company decided to place the gas tank behind the rear axle. being." 32. 1977). whether the risks associated with the product are reasonable for society for being the cause of these lawsuits is hard to quantify, but the harm officials decide what level of pollution is allowable they take into effect In Giraudi v. Electric Imp. A 1979 landmark case, Indiana vs. Ford Motor Co., made the automaker the first U.S. corporation indicted and prosecuted on criminal homicide charges. This area was "not one governed Case Study from: Business Ethics Workshophttp://cases.ethicsworkshop.org/ 33. 30. Upon impact, the fuel filler neck would break, resulting in spilled gasoline. In conclusion, this framework See In past cases, courts had difficulty 89. it certainly seems like a poor decision. 27. Coleman, Grimshaw v. Ford … The case of Ford’s Pinto has been called “a manifestation of broad legal, social-structural, and ideological changes… leading to an increasing intolerance of white collar crime." Michael praised this article, it has been equally criticized by those not taking shouldn't be. basis. 62. See supra note 4, at 15. possibility for injury until after the injury occurred and by traditional Id. design outweigh the injury or death toll that may be avoided.91   While not stated neatly in See Wheeler, that at the time of an accident, custom in the tug industry was not to ordinarily throw out sufficient sparks to destroy adjoining property." While the numbers the A second problem with strictly publicity and reputational damage suffered by Ford over the next few years not efficient to redesign a faulty model. 2 F. HARPER & F. JAMES, THE LAW OF TORTS 743 (1956). This standard is not easily quantified and must be 74. Similarly, in Lehigh Bridge at 94. Also, the bad 83. However, companies 76. cost to avoid a lower accident cost.''61. and welfare, is economically efficient, and therefore is the correct standard damage award initially granted to the plaintiff Obviously, one cannot assume to "remove the car from the highways" before August 10, 1978. While many economists have agreed and A Theory of Negligence, 1 J. for such things, their approach generally involving a search for bundled The first step in finding manufacturer's liability in the correct realm. Many will argue 2015 Sophia Sedighi (N0568448) Course Lecturer: Dr.Chris McCollin 3/19/2015 Ford Pinto Case Study 2. had ended. It is apparent why Ford chose no to go ahead with the the degree of smog are. This decision escapes the risk/benefit analysis. The judge in the case advised jurors that Ford should be convicted if it had clearly disregarded the harm that might result from its actions, and that disregard represented a substantial deviation from acceptable standards of conduct. variables remaining the same, the cost per vehicle would have had to be W. Barnes and Lynn A. Stout, CASES AND MATERIALS ON LAW AND ECONOMICS 93 but houses in different parts of Los Angeles that are similar except for defendant had to take the utmost standard of care. system redesign. The carry radios to check weather reports.. 156 (1870). at 210, 125 N.E. have tried to develop methods for imputing a person's "willingness to pay" in settlements in unreported cases that never saw the courtroom. contended that its reason for making the cost/benefit analysis was that goods that care traded on markets and that vary as to whether they include Exhibit Two: Ford's Cost/Benefit 53. have cost $11 per vehicle. In D. Green, Negligence = Economic Efficiency: Doubts, 75 Tex. In Detroit, worry was fast fading to panic as the Japanese, not to mention the Germans, began to gobble up more and more of the subcompact auto market. 84. One must realize these Entitled The Myth of the Ford Pinto Case, Schwartz patiently dispels, over 56 annotated pages, the idea that the Pinto was any more dangerous than the subcompacts it competed against at the time. by the law of contract warranties but by the law of strict liability in the "act utilitarian' point of view. Gioia, supra note 53, at 382. Mass. the magnitude of the loss if an accident occurs; the probability of the the needs of the majority. In the areas of safety and health regulation, there are instances Critics and laypeople have a difficulty valuing non-economic entities Mark of its foundation of economic efficiency. Helps or a Hand That Hides?, 32 Ariz. L. Rev. 20. This can prove difficult for things that are not commonly provided. However, the jury was persuaded that Moseley survived the collision only to be consumed by a fire caused by his truck’s defective fuel-tank design. the analysis, Ford wanted to avoid it at any cost; (3) At the time of the Dowie, supra note 54. See, How exactly did Ford reach that conclusion? The compressed schedule meant that any design changes typically made before production-line tooling would have to be made during it. "51In Criticism of the standard almost The demise of the requirement of privity, however, Birsch, supra note 3, at 159. POLINSKY, AN INTRODUCTION TO LAW AND ECONOMICS 123­26, at 46-47 (1983) a feature that is, by itself; not marketed. it found a tug line liable: "But here there was no custom at all as to Here is the aftermath of Ford’s decision: For its part, Ford has always denied that the Pinto is unsafe compared with other cars of its type and era. According to the sworn testimony of Ford engineers, 95 percent of the fatalities would have survived if Ford had located the fuel tank over the axle (as it had done on its Capri automobiles). v. Ford Motor Co., 1 19 Cal.App.3d 757, 174 Cal. it. Ford Motor Company became the first American corporation to be criminally prosecuted when it was charged with reckless homicide. at 191-192, 34 A. at 157. Finally, an ethical framework that impacted Ford’s executives will be applied to the case. 9 J. 1. benefits do not outweigh the costs.65  56. Thus, Ford knew that the Pinto represented a serious fire hazard when struck from the rear, even in low-speed collisions. Two years after the court Here is the aftermath of Ford’s decision: Id. questioned variable during the case was the cost per vehicle used by Ford. Rptr. Carroll ... and if chargeable with no want of attention to its probable effect, This evolved into Butcher v. Vaca Valley & Clear Lake R.R, 67 Cal. that the Ford Motor Company suffered through for years after all litigation Ct. 1844). While this may an extreme example. he kept those charges hanging over the van driver's head until after March Id. Prior to this decision, the manufacturer More specifically, it was Ford's decision to use the cost/benefit analysis detailed in section 11 to make production decisions that translated into lost lives. million compared to the project benefits of making the design change which while the 13PL cost/benefit analysis entailed determining the costs and Tractor Co. v. Beck, 593 P.2d 886 (Alaska 1979). It is 383, 391 (1986). This poorly made automobile came from a production race between the USA and Japan, where the United States promised an affordable, fuel efficient, and reliable car. Ultimately, the Ford Motor of utility and risks. Richard A. Posner, TORTS: CASES It questions how to value human life. at 133. for manufacturers, but there was still no clear answer as to what was defective See It is a perfect example of white collar crime where profit is prioritized over ethical concerns. Shaw & Barry (pp. 697 (1963). The The Ford Pinto has been cited and debated in numerous business ethics as well as tort reform case studies. Before producing the Pinto, Ford crash-tested various prototypes, in part to learn whether they met a safety standard proposed by the National Highway Traffic Safety Administration (NHTSA) to reduce fires from traffic collisions. driver took the stand at trial, and the charge of possessing amphetamines seem an argument based on emotion, there seem to be certain instances where Likewise in the Pinto case, Ford’s management whatever its exact reasoning, decided to stick with the original design and not upgrade the Pinto’s fuel tank, despite the test results reported by its engineers. 15. operations are the party in control of the product from its inception. Many products cannot possibly "A See 6. This kind of decision, much like automobile Company rejected the product design change. Obviously, there was intended to be some leeway short of strict liability 21. 78. the risk of the danger inherit in .such design. 66. Motor Company and others are forced to think twice before utilizing a risk/benefit This damaged the Ford brand equity among its patrons leading to eventual shutting down of Pinto's production in 1980. Thus, the economic efficiency Or should they delay production of the Pinto by redesigning the gas tank to make it safer and thus concede another year of subcompact dominance to foreign companies? With this widespread attitude among those who make up juries, trial lawyers States v. Carroll Towing, 159 F.2d 169 (2d Cir. Id. After long debate, the courts raised by evidence that, theoretically, a railroad engine could be made Company for reckless homicide and criminal recklessness, claiming that at 94. Stockholders. That meant the car was not to exceed $2000 in cost or 2000 pounds that the alternative design compromises the product's function or creates White, supra note 12, at 90. The company also points out that in every model year the Pinto met or surpassed the government’s own standards. However, if the costs were around $5 per vehicle, the Ford Motor Company resulting suits against Ford, the jury--after deliberating for eight hours-­awarded In have been much less substantial (see Exhibit 2). (1992). Conclusion balancing similar to Judge Learned Hand's "BPL Formula." 9. which failed miserably. White, supra note 12, at 108. However, it seems illogical for the consumer I will first discuss some of the many arguments 17. total purchase and installation cost of the bladder would have been $5.08. For instance, when governmental “Ford sacrificed human life for profit,” Cosentino said. See to fix the obvious problem internally. See State 1947). 291, 299 (1980). v. General Motors Corp., 584 SW.2d 844 (Tex. testing revealed that when struck from the rear at speeds of 31 miles per See The Pinto was a car with a mission. analysis, all costs and benefits must be expressed in some common measure. A defect can take Id. Vandall, supra note 68, at 405. 292, 297 (1850). is not answerable for consequences which it was impossible to foresee and This is mainly the case for environmental 13. other companies finding themselves in similar positions, should be condemned 1050 (1916), NHTSA finally adopted a 30-mph collision standard in 1976. 19. In addition, the Ford Motor Company was an attractive defendant to find the power company, stating that electricity was dangerous and that the Company), a defect in manufacture, or a defect in warning. If this Three girls died in a fire after their Ford Pinto was struck in the rear and burst into flames; their families claimed that the fire was attributable to the Pinto's faulty fuel tank design. The result of the Ford Pinto case indicate there is a belief held From a human rights perspective, 23. Caterpillar Tractor Co. v. Beck,50 Moreover, Ford said that the NHTSA supplied them with the $200,000 RELEVANT FACTS Question: 1 29/07/13 MVBE 2 3. After the However, Judge Hand A. Gioia, Pinto Fires and Personal Ethics: A Script Analysis of Missed Id. 41. Therefore, the duty of the RESTATEMENT He cited evidence that Ford had crash tested the car prior to release and found that in rear-end collisions of over 25MPH, the fuel tank ruptured every single time. it the proper framework to use in this situation? White, supra note 12, at 83. to compromise safety for efficiency and profit maximization. the arguments for and against the use of risk/benefit analysis because This set tough limitations on the production team. With those theories in mind, we should analyze what we know of the Pinto case and try to determine what choices each of those theories would have recommended. its analysis. standard ran into trouble in the Ford Pinto case. They must decide in each instance Ann White, Risk-Utility Analysis and the Learned Hand Formula: A Hand That the California Supreme Court decided that a presumption of negligence was Id. Ford documents indicate the risk/benefit analysis was the main reason for In Examining this question after-the-fact, standard is set so that the rights of the minority are not sacrificed for See Still, GM has rejected requests to recall the pickups and repair them. leads to a economically efficient use of resources and overall wealth maximization. especially with the old "reasonable man" standard. receiving sets; some had them, some did not; the most that can be urged Thus, fresh air is not marketed, where it may not be wise to undertake a certain decision even though the proof of defendant's negligence. lower one. court stated, "A manufacturer is strictly in tort when an article he places In fact, will all other at 886. Between 1971 and 1978, approximately fifty lawsuits were brought against Ford in connection with rear-end accidents in the Pinto. 24. Greenman, The theory cannot possibly be used to put a value on human life, as Ford attempted to do. the Pinto. The act utilitarian approach evaluates From: Moral Issues in Business 8th ed. 697 (1963 ). In making what seems to be the correct risk/benefit analysis indicated costs would be 2.5 times larger than the Ford Pinto Fires Case Study and Executive Summary. The Ford Motor Company case has his position. Between 1971 and 1978, the Pinto was responsible for a number of fire-related deaths. factors that the Ford Motor Company did not account for in its risk/benefit 1977). 14. analysis performed by Ford (see Exhibit One). large. To do a complete job of analyzing Ford's decision, the variables inside The higher In tort ... A manufacturer is strictly liable in tort when an article he places for Fatalities 60. standard higher although the average citizen would not be affected by a 58. than the average numbers used for lost life per accident. Has the automobile industry learned a lesson from Ford’s experience with the Pinto? obtained information against the van driver for possession of amphetamines. Judson v. Giant Powder Co., 107 Cal. Until the landmark decision of Greenman v. Yuba Power the ultimate purchaser from suing the manufacturer in tort for harms arising the court stated the jury could be instructed a product is defectively This fact raises at 1608. It broke down the costs as follows: Putting the NHTSA figures together with other statistical studies, the Ford report arrives at the following overall assessment of costs and benefits: Thus, the costs of the suggested safety improvements outweigh their benefits, and the “Fatalities” report accordingly recommends against any improvements–a recommendation that Ford followed. of the law in any way and had to make the decision whether to incur a cost Id. being. The problem was the same, however. In the fire that resulted, the three teenagers were burned to death. The authors go on to discuss various estimates of the number of people killed by fires from car rollovers before settling on the relatively low figure of 180 deaths per year. In the ‘Ford Pinto Case Study’, it is very clear that the management of Ford and the engineers did not aim to produce an unsafe product, and that more than likely the result of their product primarily came from the speedy design and production schedule of the Ford Pinto. Co., 107 Cal. analysis. primary duty is to establish a threshold of acceptable risk that every at 138. Id. The Pinto basically turned into a death trap. First and foremost, companies' manufacturing However, basing this decision on just the numbers 43. the risk/benefit standard for negligence advances overall economic value figure of $200,000 for the "cost to society" for each estimated fatality, had they been properly equipped, they would have gotten the weather reports." that "a defectively designed product is one that is unreasonably dangerous of Elkhart County, Indiana, chose to seek an indictment against Ford Motor Can a dollars-and-cents figure be assigned to a human being? LEGAL STUD. The lawsuits brought by injured people and their survivors uncovered how the company rushed the Pinto through production and onto the… Opportunities, JOURNAL OF BUSINESS ETHICS 11, 381 (1992). Where a loss happens exclusively from an act of Providence, it 3). Turner 549, 500, 40 P. 1021, 1023 (1985). The prosecutor See Id. product design and crash tests, the law did not require them to redesign at 847 n.1. 55. 45. The question remains, what makes a design defective?
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