Ethics and Legal Environment

Jerry is one of two partners who owns a chain of twenty-four family style restaurants in the Northeast.The restaurants have a reputation for serving high quality food at reasonable prices. Since the opening of the first restaurant thirty-five years ago, the restaurants have built up a loyal clientle. However, many of the customers are now over 50, and the restaurants are not attracting a younger clientle. Economic conditions have resulted in a downturn in the restaurant industry in general recently. Jerry and his partner George decided to update the restaurants’ image to appeal to a younger crowd. In order to do this, Jerry and George took on quite a lot of debt to remodel the restaurants, update the menus, and market the new image.
Five of the twenty-four restaurants are in Boston. In the last few days, Jerry has received seven phone calls from people who claim they have gotten sick after eating at his restaurant in the North End. After investigating, he discovers that a shipment of frozen sausage was contaminated with Salmonella ohio, a rare form of food poisoning. How should Jerry respond to the seven customers who have already called? How should he respond to any additional complaints? If he denies that the contamination was caused by his restaurants, it is possible that no one will find out. After all, there are hundreds of restaurants and grocery stores in Boston that could have poisoned the customers.In his heart, Jerry feels that he should pull all of the shipments of sausage from his freezers to prevent the possibility that anyone else will be hurt. He also believes that the business should offercompensation to the seven people who became sick. However, his partner, George disagrees. George says that nothing has been proven, and they should not offer to compensate anyone or pull any product until it has been proven that they are responsible. Besides, if the sausage is contaminated, it’s most likely the fault of the sausage manufacturer. Why should they jump in to pay the victims? George argues that if they compensate these seven people they could become liable for compensating many more, and it just isn’t financially feasible for the restaurants.

How should Jerry balance the ethical considerations with the economic implications? Should his response vary depending on whether the restaurants are a corporation or a partnership? Should his response vary if they are covered by liability insurance?

Use either the Ethical Leaders’ Decision Tree or Professor Badaracco’s framework to analyze the ethics of the situation. Based on your analysis, advise Jerry about what he should (not just could) do. Your analysis should present options, but you need to provide a recommendation for Jerry and tell him what you would do if you were in his shoes. Given your word length limitations, it is not necessary to restate the facts of the case. You may simply stipulate to the facts as stated, and just include relevant facts in the other parts of your discussion. If you need additional information to analyze the situation, you should state what additional information would be useful. When applying the frameworks, be sure to include a discussion of ethical values, principles and tests.

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