Massey Energy CaseMassey Energy Case

Presenters: Presenters: Theresa Chong Chitra RamdoyalKathrene Genosa Brian HarrisonTracy Leung Kelvin Ling

1. Case analysis2. Underlying issues3. Concepts4. Application to the case5. Alternatives and evaluation6. Conclusion

Company: Massey Energy Founded in 1920 by A. T Massey and started as a

coal brokering business in Richmond, VA produces, processes and sells coal

Competitors: Arch Coal, CONSOL Energy and Peabody Energy

Known for several lawsuits, bad environmental record and poor mine safety. Past cases: deaths of miners waterway pollution in Kentucky and West Virginia mine placement near schools

Upper Big Branch: Massey Coal Mine Located in Raleigh County, West Virginia In production for Coal mining is one of the key industries in

West Virginia Don Blankenship, CEO responsible for this case

Event April 5, 2010: Mine explosion disaster at UBB mine 29 workers killed Greatest mine disaster since 1970s Company is being sued for homicide (federal and state)

Prior to explosion Signs of danger Wrong direction of air flow of deadly gases and coal dust Workers told “not to worry” Whistle blowing was not present

Internal environment Vertical structure, hierarchy Workers conform to rules and regulations (‘loyal’)

Don Blankenship Massey President, CEO and Chairman (since 1992) Recently stepped down December 30, 2010 Money and profit goal orientated 1100 safety violations in the past

three years

"If any of you have been asked by your group presidents, your "If any of you have been asked by your group presidents, your supervisors, engineers or anyone else to do anything other than run supervisors, engineers or anyone else to do anything other than run coal you need to ignore them and run coal. This memo is necessary coal you need to ignore them and run coal. This memo is necessary only because we seem not to understand that coal pays the bills."  - only because we seem not to understand that coal pays the bills."  - Don BlankenshipDon Blankenship

Everett Hager Superintendent Told Massey workers “not to worry about the

unsafe conditions” Possible involvement with company politics

Terry Moore Mine Foreman Felt unsafe about the mine conditions

brought issue to superintendant Almost internal whistleblower

wanted to remain loyal consequences of losing his job

Workers/Miners Without a union Psychological instinct

pressure to obey instructions

Community Successful local business owners Coal is the only thing that brings money into the

area Did not do much to raise issue about poor working

conditions, assuming: lack of knowledge of conditions in the mind did not want to lose those jobs

Frame of reference: sustainability, economic ties

MSHA Safety governmental agency Flagged Massey Energy Co. for not

obeying standards Frame of reference: politics

Shareholders Investors of the company Interested in revenues, profits

Should Massey Energy be held liable or responsible for the death of the mine workers?

Whistle-blowing Rights of employees within a firm Equal treatment Employee duties Unions The right to strike

Changes in society which partially caused this problem The economic downtown which causes the town to

depend on the mines as a major source of income. there has been a lack of internal whistle-blowing since

employees did not want to risk loosing their jobs due to this economic downturn

The MSHA did not want to lose a section of the major source of income of the West Virginia state, the coal industry

Massey sued MSHA because they needed better ventilation

MSHA confuted by saying that the equipment Massey wanted to use for ventilation only increased coal production which Harvey denied

Workers have rights, but also have tasks they were hired to do

Varies for every job position but there are basic obligations that apply to every worker For example, morally obligated to follow moral law,

and legally bound to civil law Employees must think about the good of the

company that they work for. For example, should not work/leak secrets to the

competitorOften, workers are told more often what they must

do ratherthan their rights so workers learn their expectations

quickerthan knowing when their rights are violated.

"No one is morally obliged to do what is immoral"

Corporations expect that workers are obedient and follow

orders as they are told to. But limits to which orders to follow - moral or

immoral?

However, habitual obedience occurs often. Possibility why miners at the Upper Big Branch mine

obeyed orders even though they knew that their safety was compromised

Stems from the rights of individuals to attain their own goals and rights to associate with others to achieve common ends

Unrestricted membership for workers to a

union

Morally obligated to protect the interests of members Prioritizes good for all workers before good of

society

Almost no mention of the miners' union, United Mine Workers of America, in the Upper Big Branch articles

Unions should have renegotiated until working conditions have been improved for the miners in the Upper Big Branch mine

Possibility of corruption within the union, threats and intimidation

Freedom to refuse employment under certainconditions

Exceptions: for example, national army draft

Two moral restrictions: Respect for valid contract Consideration of rights of general public to

necessities of life

Striking employees run the risk of being replaced Techniques to ensure that employees are

not replaced• For example, solidarity of workers

Ceasing mining would not be life-threatening  Non-public sector industry

Varying definition depending on moral values and point of view

 Several types: Internal Personal Governmental Non-governmental, impersonal, external

Popular references to whistle blowing: Erin Brockovich

Determining moral status of whistle-blowing Five conditions that, if satisfied, change the moral

status of whistle blowing:

Civil right: legal right that entitles each person covered by them to certain treatment or that guarantee non-interference in their acting in certain ways

Moral right: does not have to be based on law, but a moral right may also be a civil right.

"If you have construction jobs at your mine that need to be done to keep it safe or productive, make every effort to do thos jobs without taking members and equipment from the coal producing sections that pay the bills" 

                                        - From Don Blankenship's memo

Employees only have rights and duties that they negotiate with their employers as conditions of employment. However, This can be misleading  bounded not only by law but by by moral obligations  and other conditions such as local custom and

existing social circumstances in which the contract is made 

Rights of employees who are more skilled than others- they demand certain rights and privileges 

The Central Ethical Dilemma Negligence about miners' safety- money over safety?

Miners' safety at the workplace is a moral right even if it is not explicitly mentioned in the conditions of employment

By whistle-blowing, we are ensuring that these rights are protected

Internal whistle blowing occurred but was ignored even though it was permissible and morally justified

"When questioned, Terry Moore, mine foreman, said he knew of [the] condition and that he asked Everett Hager, superintendent, about it and he was told not to worry about it

Our solutions are based on the goal of savingworkers and the community rather than

punishingthe executives because:

1. corporate personhood (corporation shield)

2. it is hard to see who is to blame for what

3. ultimately if we hurt the executives then we hurt the workers

 MSHA use power to enforce existing regulations:

More frequent & detailed inspections increase budget  Surprise checkups

MSHA in closer contact with miners MSHA reps working at company to act as +

support whistle blowers

Change the mentality of the company Help subsidize the proper safety

equipment Harsher laws and greater penalties

Give incentives to change Meetings/mine tours every quarter

Improve Law system Shorten the appeal process

Unite miners across to prevent another tragedy

Annually/semi annually conference with union reps from all over the country

Closer ties to union (UMWA) Increase exposure of current issues

Ads Social media

1. Stricter enforcement (MSHA)2. New regulations and law(government)3. Change industry culture(union)

Industry evolution (union) There is limit of what MSHA and

Government can do Miners should take charge over their

own health and safety Correspond to the key ethical issues Focuses on the whole industry

Address the dependency of community balance between economy and safety

issues Case is an on-going process Ethical issues in this cases apply to

other businesses as well Employees have to step up against

immoral actions