Law for Business 10th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 2

Richmond Plasma Corporation (RPC) is a wholly owned subsidiary of Automated Medical Laboratories, Inc. (AML). The Food and Drug Administration (FDA) had closed RPC twice before because of problems with overbleeding of donors (removing more blood from a donor than federal regulations allow). Following the first closing, RPC made Partucci, a regional manager, the responsible head of RPC and charged him with ensuring compliance with FDA regulations. Partucci established a special compliance office that supervised a compliance team. Just prior to an FDA inspection, the compliance team ordered RPC employees to falsify records and, in some instances, the compliance team members falsified records themselves. After several RPC employees reported these activities to the FDA, AML was indicted for engaging in a criminal conspiracy to falsify records. AML argued that there was no evidence that any officer or director at AML knowingly and willfully participated in or authorized the unlawful practices at RPC or that the criminal acts were undertaken to benefit AML. The court disagreed. It held that the company may be criminally liable for the unlawful practices at RPC if its agents were acting within the scope of their employment. The fact that many of their actions were unlawful or against company policy did not absolve AML from legal responsibility. Specifically, how might an advocate of corporate social responsibility use this case to attack the arguments in favor of relying on profit maximization?