Law & Ethics in the Business Environment

Chapter 2-BConflicting Loyalties; Pierce v. Ortho Pharmaceutical Corp; & Montana: Wrongful Discharge From Employment Act

Presented By: Nida Khan

Halbert, Terry, and Elaine Ingulli. Law & Ethics in the Business Environment. 7th ed. Mason, OH: South-Western Cengage Learning, 2012.

1. Dr. Thomas Stockmann is a Medical Officer of the municipal Baths, which the town recently built to help its economy.

2. Peter Stockmann (The MAYOR) is Dr. Stockmann’s brother. He is the chairman of the Baths’ committee.

3. Dr. Stockmann, after conducting an investigation, discovers the Baths’ drainage system is contaminated, and people are bathing in polluted water.

4. The Mayor, in response, tells Dr. Stockmann the investigation exaggerates the situation. He tries to convince Dr. Stockmann that the necessary repairs would be too expensive and will take too long to complete (2 years). The Mayor further says the board might make changes in a few years, because losing the Baths right now would be catastrophic to the town’s economy.

5. Dr. Stockmann is enraged. The Mayor demands that further studies be conducted and Dr. Stockmann must make a public announcement that his findings were not as dangerous as Dr. Stockmann imagined.

6. The Mayor stresses that as a member of the staff, Dr. Stockmann has no rights to “personal convictions.”

7. Dr. Stockmann replies that as a doctor, he is free to speak his mind.

Conflicting Loyalties – an excerpt from:

An Enemy of the PeopleA Play By: Henrik Ibsen

Conflicting Loyalties: Whistleblowing and Professional Ethics

“Conflicting Loyalties – to one’s employer, and to one’s conscience – the dilemma faced by a person who must decide whether to become a ‘whistleblower’ (Halbert & Ingulli at 46.)”

• Whistleblowers are people who decide to report unethical or illegal activities.

◦ They feel morally driven to call attention to problems they see at work.

◦ They are often at the risk of bringing damaging repercussions upon themselves.

• “Those who blow the whistle very often must choose between silence and driving over a cliff (Halbert & Ingulli at 52.)”

Whistleblowing

• A set of standards adopted by a professional community.

• Often referred to as code of ethics.

• “Employees who are professionals owe a special duty to abide not only by federal and state law, but also by the recognized codes of ethics of their professions (Halbert & Ingulli at 54.)”

Professional Ethics

• Earliest example of professional ethics is the Hippocratic Oath.

• This oath was historically taken by doctors promising to practice medicine ethically.

• It is believed to be written by Hippocrates.

Hippocratic Oath

“Gives employers unfettered power to dismiss employees at will for good cause, for no cause, or even for cause morally wrong, without being thereby guilty of a legal wrong (Halbert & Ingulli at 49).”

Employment-at-will

Dr. Grace Pierce, Plaintiff-Appellant• She was an at-will employee at Ortho

Ortho Pharmaceutical Corporation, Defendant-Respondent• Specializes in developing and manufacturing

therapeutic and reproductive drugs.

Pierce v. Ortho Pharmaceutical Corp. Supreme Court of New Jersey, 1980

417 A.2d 505

Does an at-will employee have a cause of action against the employer to recover damages for termination following the refusal to continue a project viewed as medically unethical by the employee?

Pierce v. Ortho: Issue

• Dr. Pierce was the only medical doctor on Ortho’s team developing loperamide for treating diarrhea in infants, children, and the elderly.

• The formulation of loperamide contained saccharin. Because of its safety concerns, Dr. Pierce felt that by continuing to work on loperamide, she was violating the Hippocratic Oath. She opposed work being done on loperamide at Ortho.

• Her immediate supervisor, Dr. Pasquale informed her she would no longer be assigned to the loperamide project. He asked her to choose other projects.

• Even though her salary was not decreased, Dr. Pierce felt she was being demoted, Dr. Pierce resigned. Dr. Pasquale accepted her resignation.

Pierce v. Ortho Pharmaceutical Corp. Facts:

1. Dr. Pierce sued for damages after termination, claiming Ortho pressured her to violate her ethical principles.

2. The trial court judge dismissed her claim, mainly because of the employment at-will doctrine. The trial judge granted defendant’s motion for summary judgment.

3. The appellate court reversed and remanded for a full trial.

4. Dr. Pierce appealed to the New Jersey Supreme Court. The Supreme Court granted the defendant’s petition for certification. The Supreme Court reversed the Appellate Division and reinstated the summary judgment.

Pierce v. Ortho Pharmaceutical Corp.

Legal History

• Under the common law, the employers of at-will-employees, and the employees may terminate the employment relationship with or without cause.

• The court found that an employee has a cause of action for wrongful discharge when the discharge is contrary to a clear mandate of public policy.

• The controversy at Ortho involved a difference in medical opinions.

• An employer may discharge an employee who refuses to work unless the refusal is based on a clear mandate of public policy.

• The Hippocratic Oath does not contain a clear mandate of public policy that prevented Dr. Pierce from continuing her research on loperamide.

Pierce v. Ortho Pharmaceutical Corp.Reasoning:

• There are a number of codes of medical ethics that proscribe participation in clinical experimentation when a doctor perceives an unreasonable threat to human health.

• It is pointed out that Dr. Pierce contends she may not be discharged for expressing her view that the program is unethical or for refusing to continue her participation in the project.

• The dissonance ends asking, should Dr. Pierce have waited until the first infant was placed before her, ready to receive the first dose of the drug containing 44 times the concentration of saccharin permitted in 12 ounces of soda?

Pierce v. Ortho Pharmaceutical Corp.

Reasoning of Dissent:

An at-will employee does not have a cause of action against the employer to recover damages for termination following the refusal to continue a project viewed as medically unethical by the employee, unless the discharge is contrary to a clear mandate of public policy.

Pierce v. Ortho Pharmaceutical Corp.

Rule of Law

Unlike Dr. Pierce, I would not have opposed working on the development of loperamide. I would have instead worked harder on obtaining an alternative formula containing less saccharin. It is unknown if the FDA would have even approved the Investigational New Drug application (IND). By being a part of the project team, I would have been able to oversee the details that are filed with the FDA. I would share all the relevant results with the FDA and share the adverse information known about the medical controversy of such high doses of saccharin. I would wait for their response. There are several medicines available in the market, and most if not all have some side effects associated with them. It is a matter of deciding if the benefit outweighs the risk. Dr. Pierce was not forced to conduct tests. She had a difference of opinion with the management. Her employment was at-will with Ortho, and by submitting a resignation, she is willingly ending her employment with the company. I agree with the reasoning, as mentioned in Law & Ethics in the Business Environment, “The case would have been different if Ortho had filed the IND, the FDA had disapproved it, and Ortho insisted on testing the drug on humans (Halbert & Ingulli at 55.)” Professional employees do have assertive rights against an employer, but the actions must be for the public interest. “The public has an interest in the development of drugs, subject to the approval of responsible management and the FDA, to protect and promote the health of mankind (55.)”

Pierce v. Ortho Pharmaceutical CorpMy Response

• Passed in 1987 by the Montana legislature

• Designed to preserve at-will-employment

• Specifies the legal basis for a wrongful discharge

• Must be filed within 1 year after the date of discharge.

Montana: Wrongful Discharge From Employment Act (WDEA)

Constructive Discharge• Voluntary termination of employment by employee

because of a situation created.• Can’t be because of employer’s refusal to promote

the employee or improve wages.

Discharge• Includes constructive discharge.• Any other termination of employment, including

resignation, elimination of the job, layoff for lack or work, failure to recall or rehire, and any other cutback in the number of employees for a legitimate business reason.

WDEA: Definitions

Employee• A person who works for another for hire.• Does not include an independent contractor

Good Cause• Job-related grounds for dismissal based on a failure to

satisfactorily perform job duties, disruption of employer’s operation, or other legitimate business reason

Public Policy• A policy in effect at the time of the discharge concerning

the public health, safety, or welfare established by constitutional provision, statute, or administrative rule.

WDEA: Definitions

A discharge is wrongful only if:1. It was in retaliation for the employee’s

refusal to violate public policy or for reporting a violation of public policy

2. The discharge was not for good cause and the employee had completed the employer’s probationary period of employment

3. The employer violated the express provisions of its own written personnel policy.

WDEA: Elements of Wrongful Discharge

WDEA: Remedies & Preemption of Common Law Remedies

Remedies Preemption of common law remedies

1. The employee may be awarded lost wages and fringe benefits for a maximum of 4 years from the date of discharge

2. The employee may claim punitive damages if it is established with clear and convincing evidence that the employer engaged in actual fraud or malice in the discharge of the employee

1. No claim for discharge may arise from tort or express or implied contract

This part does not apply to a discharge:

1. Subject to any other state or federal statute that provides a procedure or remedy for contesting the dispute. Statutes includes those that prohibit discharge for filing complaints , charges, or claims with administrative bodies, or that prohibit unlawful discrimination, and other similar grounds.

2. An employee covered by a written agreement or contract of employment for a specific term.

WDEA: Exemptions