Session 4 – Case Study – Legal, Ethical, and Social Values of Business

Session 4 – Case Study – Legal, Ethical, and Social Values of Business
Please answer the questions at the end of the case study (E-Cigarettes) attached and write your initial response to the case questions one to two brief paragraphs per question, in which you answer the case study question asked, justify any conclusions in a well reasoned manner, and support any legal, moral, and social responsibility conclusions by making reference to legal, ethical, and social responsibility principles. You must also provide an example, real or hypothetical, from the book or current events, as well as a brief explanation of the example.

Case Study
E- Cigarettes: Legal and Ethical Controversy
Prepared by Professor F. Cavico
The Wall Street Journal reported in June of 2009 a new tobacco
controversy emerging – this one involving so-called “E-Cigarettes”
– a smokeless, nicotine-filled electronic cigarette that a growing
number of people are trying to help them quit smoking “real”
cigarette, but also to avoid bans on smoking in public. Electronic
cigarettes, the Wall Street Journal reports, typically consist of a
metal tube, containing an atomizer, a battery, and a cartridge filled
with liquid nicotine. When a user sucks on an E-Cigarette, a lightemitting
diode causes the tip to glow, and then the atomizer turns
the liquid nicotine into a vapor. The Wall Street Journal said that
this process is not called “smoking” but rather “vaping.” Like
tobacco smoke, the vapor can be inhaled and exhaled, thereby
producing a cloud that resembles cigarette smoke, but which
dissipates more quickly and does not produce the lingering odor of
tobacco smoke.
Several anti-tobacco and smoking organizations, such as the
American Lung Association, the American Cancer Society, the
American Heart Association, and the Campaign for Tobacco-Free
Kids have demanded that E-Cigarettes be removed from the
market. These groups and other critics contend that the product has
not yet been proven safe, and also that children may be attracted to
the product. They also stress that some of the E-Cigarettes come in
flavors such as chocolate and strawberry which may be appealing
to children.
The E-Cigarette companies counter by saying their product is safe
and a better alternative to “real” cigarettes because there is no
combustion or smoke involved. Currently, there are three large
U.S. companies and many smaller ones that sell E-Cigarettes, most
of which, the Wall Street Journal noted, are made in China. Two
years ago there were hardly any sales of the product, but now the
Wall Street Journal reports that in the past 12 months sales have
nearly doubled to $100 million. The E-Cigarette product includes a
start-up kit, which contains the e-cigarette device, a set of nicotine
cartridges, and batteries, all of which costs between $60 and $120.
E-Cigarette companies contend that the cost of using their product
is less expensive than the cost of regular cigarettes in the long-run
on a “cost-per-puff” basis.
Government regulators in the U.S. contend that the produce is a
drug device that needs regulatory approval before it can be
marketed and sold in the United States. The Food and Drug
Administration said it was evaluating the E-Cigarette situation to
determine the appropriate action to take. It is interesting to note
that the FDA has the power to regulate smoking-cessation
products, but not, based on court decisions, tobacco. Drugs and
drug delivery devices must first obtain FDA approval before being
marketed. The E-Cigarette companies contend that the FDA lacks
jurisdiction because the product is merely an alternative to
smoking tobacco, and not a drug device aimed at helping people
quit smoking. Nonetheless, the Wall Street Journal reported that
many smokers “swear” by the E-Cigarette as a tool for quitting
smoking. The E-Cigarette also typically has a warning label that it
contains nicotine (which is addictive, but not a cancer-causing
product). The Wall Street Journal noted that the E-Cigarette has
become more popular in the United States as more states and cities
ban indoor smoking as well as substantially increase the tax on
cigarettes.
Bibliography: Etter, Lauren, “Controversy Swirls Around ECigarettes,”
The Wall Street Journal, June 2, 2009, p. B7.
Questions for Discussion:
1. Discuss the legal issues involved in the E-Cigarette
controversy, for example, tort, product liability, and
regulation of advertising and marketing issues. Is this a
legal product? Why or why not?
2. Do you believe that the product is a drug device subject to
regulation by the Federal Drug Administration in the
United States? Why or why not?
3. Is this a moral product pursuant to Utilitarian ethics? Why
or why not?
4. Is it a moral product pursuant to Kantian ethics? Why or
why not?
5. How should the makers of the E-Cigarette approach this
controversy using the principles of Value Driven
Management?
6. What should a “socially responsible” maker or seller of ECigarettes
be doing for society?

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