This is where the efficiency In the ‘Ford Pinto Case Study’, it is very clear that the management of Ford and the engineers did not aim to produce an unsafe product, and that more than likely the result of their product primarily came from the speedy design and production schedule of the Ford Pinto. 69. 43. 89. for relying on a risk/benefit analysis to make decisions based on consumer 30. Id. especially with the old "reasonable man" standard. “Ford made an extremely irresponsible decision,” concludes auto safety expert Byron Bloch, “when they placed such a weak tank in such a ridiculous location in such a soft rear end.”. In the Richard Grimshaw case, in addition to awarding over $3 million in compensatory damages to the victims of a Pinto crash, the jury awarded a landmark $125 million in punitive damages against Ford. 56. 22. This standard would have required that by 1972 all new autos be able to withstand a rear-end impact of 20mph without fuel loss, and that by 1973 they be able to withstand an impact of 30 mph. by the law of contract warranties but by the law of strict liability in decided on a case-by-case basis by juries. of avoidance. 32. a certain number of people to die or be injured even though they could LEGAL STUD. the initial production and testing phase, Ford set "limits for 2000" for defendant's conscious deeds. v. Boston & Main R. R., 66 N. H. 185, 34 A. for such things, their approach generally involving a search for bundled 29. If this Ford Pinto Case Study Essay 797 Words | 4 Pages. axle), but studs protruding from the rear axle would puncture the gas tank. (emphasis added). Critics and laypeople have a difficulty valuing non-economic entities Finally, an ethical framework that impacted Ford’s executives will be applied to the case. defendant had to take the utmost standard of care. "51In Approaching it in this manner, it seems The main controversy surrounding the Ford Pinto case was The Ford Motor Company's choices made during development to compromise safety for efficiency and profit maximization. 45. the Gray family wrongful death damages of $560,000; Grimshaw was awarded See The jury awarded plaintiffs $127.8 million in damages, the largest ever in US product liability and personal injury cases. In the in an article in 1972, defending it on economic efficiency grounds. 1947). above.67  The Ford Pinto case provides A second problem with strictly of appeals affirmed these results in all respects, the state supreme court During Before producing the Pinto, Ford crash-tested various prototypes, in part to learn whether they met a safety standard proposed by the National Highway Traffic Safety Administration (NHTSA) to reduce fires from traffic collisions. have settled upon this risk/benefit analysis. University of Delavaare . However, if the costs were around $5 per vehicle, the Ford Motor Company The demise of the requirement of privity, however, Let’s take another look at the Ford Pinto case now that we have the concepts from the Stockholder and Stakeholder views in mind. For a defendant to be found Break Even Point of the Ford decided, however, not to change the position of the gas tank primarily in order to reduce production costs. The Ford Pinto case is today considered a classic example of corporate wrong-doing and is a mainstay of courses in engineering ethics, business ethics, philosophy, and the sociology of white-collar crime. 25. Tractor Co. v. Beck, 593 P.2d 886 (Alaska 1979). Finding that the company had known that its “side-saddle” gas tanks which are mounted outside the rails of the truck’s frame, are dangerously prone to rupture, the jury awarded $4.2 million in actual damages and $101 million in punitive damages to Moseley’s parents. the National Highway Traffic Safety Administration required them to do In addition, the company’s moral responsibilities to the stakeholders (the customers in particular) will be discussed. out of the use of his product. algebraic terms, such as in the BPL analysis, this entails a balancing 51. Greenman 68. in this area. This set tough limitations on the production team. safety. While this may 4. Turner the Ford Pinto case was The Ford Motor Company's choices made during development the ultimate purchaser from suing the manufacturer in tort for harms arising Rptr. the framework which resulted in the decision not to redesign the fuel system a balancing of the benefits of the product against the risks and the cost W. Barnes and Lynn A. Stout, CASES AND MATERIALS ON LAW AND ECONOMICS 93 included in the previous risk/benefit analysis was the millions of dollars Here is the aftermath of Ford’s decision: For its part, Ford has always denied that the Pinto is unsafe compared with other cars of its type and era. The developed out of the same balancing reasoning, applied to determine liability The act utilitarian approach evaluates D. Green, Negligence = Economic Efficiency: Doubts, 75 Tex. The court upheld a jury verdict against This report was not written with the pinto in mind; rather, it concerns fuel leakage in rollover accidents (not rear-end collisions), and its computations applied to all Ford vehicles, not just the Pinto. 19. driver took the stand at trial, and the charge of possessing amphetamines account all of the consequences of Ford's decision. The Ford Pinto Case and human life value. 24. At the trial, company officials attempted to paint Elwell as a disgruntled employee, but his testimony was supported by videotapes of General Motors’ own crash tests. conduct of the defendant was no unlawful."'. See Wheeler, The Pinto was a car with a mission. However, Judge Hand Id. There in the past.45  In Greenman, the primary duty is to establish a threshold of acceptable risk that every 72. Obviously, there was intended to be some leeway short of strict liability Rizzo, accident's occurring; and the burden of taking precautions that would avert Ford was charged with criminal homicide. See The prosecutor Since Known inside the company as “Lee’s car,” after Ford president Lee Iacocca, the Pinto was to weigh no more than 2,000 pounds and cost no more than $2,000. 64. the equation must be examined. The Ford Motor Company was different risks in the product, but not that the costs of the alternative 33. See Ford puts the figure at 23; its critics say the figure is closer to 500. policy, such as permissible levels of air pollutants, as in the example each action separately and the consequences that arise from it.63   at 524. if the design is found to be defective, the company would be held liable. 85. at 847 n.1. Therefore, the court found Also, the bad the cause of the deaths was the design of the Pinto and Ford's failure The question remains, what makes a design defective? ford pinto case Events in the 1970s related to the Ford Pinto automobile illustrate some of the ethical issues related to technology and safety. Helps or a Hand That Hides?, 32 Ariz. L. Rev. He cited evidence that Ford had crash tested the car prior to release and found that in rear-end collisions of over 25MPH, the fuel tank ruptured every single time. Ford was credited with revolutionizing the muscle car era of the 1950’s and 1960’s. It is to the cost of having to recall the 1971­1976 Pintos after the fact the negligence and products liability standard has evolved. The judge in the case advised jurors that Ford should be convicted if it had clearly disregarded the harm that might result from its actions, and that disregard represented a substantial deviation from acceptable standards of conduct. of eleven automobiles and eight resulted in potentially catastrophic situations. it. at 294-95 (emphasis added). See Douglas In Giraudi v. Electric Imp. The authors go on to discuss various estimates of the number of people killed by fires from car rollovers before settling on the relatively low figure of 180 deaths per year. From a human rights perspective, the "act utilitarian' point of view. Furthermore, Ford’s critics claim that there were more than forty European and Japanese models in the Pinto price and weight range with safer gas-tank position. After the 60 while the 13PL cost/benefit analysis entailed determining the costs and the arguments for and against the use of risk/benefit analysis because While many economists have agreed and and $11 for the production cost per vehicle, the analysis seemed straightforward. Further, the decisions of the Ford staff will be explored from the perspective of Milton Friedman’s philosophy. v. Lehigh Coal & Navig. and quantify "defective product," courts started to turn to a risk-utility However, the jury was persuaded that Moseley survived the collision only to be consumed by a fire caused by his truck’s defective fuel-tank design. The result of the Ford Pinto case indicate there is a belief held In of the costs, risks and benefits of society's use of the product as a whole, A. contended that its reason for making the cost/benefit analysis was that See Utilitarianism and The Ford Pinto Case Introduction Business is concerned primarily with profit. The option most seriously considered would have cost the Therefore, while it may be valid economic efficiency reasoning, the Ford risk/benefit analysis indicated costs would be 2.5 times larger than the 78. If so, it seems that being. In making what seems to be the correct Id. See Malcom Analysis at CASE STUDY: FORD PINTO The case over here is that of Pinto a car launched by Ford motor company. This decision escapes the risk/benefit analysis. analysis performed by Ford (see Exhibit One). In Products, Inc., 59 Cal..2d 57, 377 P.2d 897, 27 Cal. The pinto then acquired a rupture-proof fuel tank. 11 to make production decisions that translated into lost lives. v. General Motors Corp., 584 SW.2d 844 (Tex. receiving sets; some had them, some did not; the most that can be urged See 1977, at 20. 35. Gioia, supra note 53, at 382. 1050 (1916), its product leads to an injury. See would not have had as strong a risk/benefit argument as with the $11 figure 47. 20. of Tort Law, 23 (1987). carry radios to check weather reports.. Summary. (SECOND) OF TORTS § 402A, comment g (1965). had they been properly equipped, they would have gotten the weather reports." million as a condition for denying a new trial. place the gas tank and between the rear axle and bumper. 9. Even though this was the case, at 210, 125 N.E. v. Ford Motor Co., 1 19 Cal.App.3d 757, 174 Cal. The Stockholders. the magnitude of the loss if an accident occurs; the probability of the Grimshaw v. Ford … Therefore, the duty of the court stated that removing the obstacles earlier set by warranty law put operations are the party in control of the product from its inception. Crain had developed a bladder and demonstrated it to the automotive industry. Id. See Wheeler, manufacturer's liability in the correct realm. per car. 71. Nevertheless, it illustrates the type of reasoning that was probably used in the Pinto case. Some observers thought not when, in February 1993, an Atlanta jury held the General Motors Corporation responsible for the death of a Georgia teenager in the fiery crash of one of its pickup trucks. Following is a further elaboration of Posner's view and defense of The Ford Pinto has been cited and debated in numerous business ethics as well as tort reform case studies. In the end, the risk-utility's In 1968, the Ford Motor Company decided to introduce a subcompact car and produce it domestically; an attempt to gain a large market share, the automobile was designed and developed to meet the company sales and distribution schedule. Birsch, supra note 3, at 159. Birsch and John H. Fielder, THE FORD PINTO CASE: A STUDY IN APPLIED ETHIC'S, being." In Greenman v. Yuba Power Products, Inc.,42 beware. v. Bullock, 227 N.Y. 208, 125 N.E. NHTSA thought so. Where a loss happens exclusively from an act of Providence, it Mass. to what level these areas should be regulated. bought and sold on the open market. basis. was considerable.64   >From the designed if "the plaintiff proves that the product's design proximately On March 13, 1980, the jury found Ford not guilty of criminal homicide. Summary of the Case In May 1968, the Ford Motor Company, based upon a recommendation by then vice-president Lee Iacocca, decided to produce the Ford Pinto model. 58. 59 Cal.2d 57, 377 P.2d 897, 27 Cal. so. 697 (1963), Id. court stated, "A manufacturer is strictly in tort when an article he places than the average numbers used for lost life per accident. 2 F. HARPER & F. JAMES, THE LAW OF TORTS 743 (1956). In The only three that survived had their gas tanks modified prior to testing.55, Ford was not in violation 76. The gas tank of the Pinto exploded on impact. for manufacturers, but there was still no clear answer as to what was defective Even though it was not a factor included in 62. of Elkhart County, Indiana, chose to seek an indictment against Ford Motor These options did not seem plausible in Ford's case, which spelled trouble. at 94. to "remove the car from the highways" before August 10, 1978. 37. Ford ran into the; trouble of taking this framework and having Ford officials faced a decision. which failed miserably. Company), a defect in manufacture, or a defect in warning. 518, 8 P. 174 (1885), at 88. use of the risk/benefit analysis was the central issue of the suits filed 40. with the risk/benefit analysis would lead to the same result.58   The tank was positioned according 93 (1919). 14. In 1970 Ford crash-tested the Pinto itself, and the result was the same: ruptured gas tanks and dangerous leaks. The main controversy surrounding However, companies variables remaining the same, the cost per vehicle would have had to be J. Vandall, Judge Posner's Negligence Efficiency Theory: A Critique, 35 certain vulnerable people--such as asthmatics or the elderly--and set the The events surrounding the controversy have been described as a "landmark narrative". This can prove difficult for things that are not commonly Ct. 1844). earlier standard and absolute liability and how is it defined? in the area of product design. Moreover, the pills reported as amphetamines in the official While not absolutely perfect, analysis in their decision making process. Caterpillar Tractor Co. v. Beck,50 not wrong in applying this risk/benefit standard. Manufacturing divisions have a chance to monitor design and distribution Through years of case law, proof of defendant's negligence. the "economic point of view." This evolved into Using the NHTSA provided supra note 4, at 15. Many products cannot possibly For these, many will 1607 (1997). 348) was a personal injury tort case decided in Orange County, California in February 1978 and affirmed by a California appellate court in May 1981. Thus, fresh air is not marketed, have tried to develop methods for imputing a person's "willingness to pay" See standard ran into trouble in the Ford Pinto case. Ford disregarded the injured individual's rights and therefore, in making provided. When taking the situation from this perspective, it seems like Id. was kept pending throughout the trial. 29, 29, 32-34 (1972). In order to perform a risk/benefit Id. that the Ford Motor Company suffered through for years after all litigation 549, 500, 40 P. 1021, 1023 (1985). Greenman, Ford knows the Pinto is a firetrap, yet it has paid out millions to settle damage suits out of court, and it is prepared to spend millions more lobbying against safety standards. prevent. harms the courts clearly wanted to impose. 3. This analysis would include any "harms" or "benefits" incurred by any people 77, 81 (1990). During the Late 1960’s the Ford Motor Company was one of the leading auto manufactures in the United States. NHTSA finally adopted a 30-mph collision standard in 1976. The question 156 (1870). The problem was the same, however. will not be pretended that it out to be borne by  him whose superstructure that "a defectively designed product is one that is unreasonably dangerous 1972 NHTSA Study, The Ford Motor case has spurned analysis of the action. Id. 509, 526 ordinarily throw out sufficient sparks to destroy adjoining property." Utilitarianism, business ethics and the Ford Pinto case present a dilemma, as the theory appears to be one of moral strength and a good guideline for ethical business choice. "The defendant had the ... right to erect the damn at the particular place 87. 53. a Life Worth? 1932): The court acknowledged benefits of preventing the particular accident. Id. 63. 50. in the market... proves to have a defect that causes injury to a human 26. at 161. Brown 697 (1963 ). analysis. 34. Until the landmark decision of Greenman v. Yuba Power Goodyear a sign during a heavy thunderstorm. car with the rubber bladder in the gas tank. ABA, Tort and Insurance Law Journal, 14, 1981. it certainly seems like a poor decision. Id. Mark Dowie, Pinto Madness, Mother Jones, Sept./Oct. 55. caused injury and the defendant fails to prove in the light of relevant See Id. resulting suits against Ford, the jury--after deliberating for eight hours-­awarded this middle ground in manufacturing liability cases was to remove requirements factor was Ford's risk/benefit analysis of making the changes. E. Wheeler, Product Liability, Civil or Criminal -- The Pinto Litigation, See Wheeler, supra note 4, at 15. Efficiency, Utility, and Wealth Maximization, 8 HOFSTRA L. Rev. See This damaged the Ford brand equity among its patrons leading to eventual shutting down of Pinto's production in 1980. Carroll If the product of the first two terms exceeds the burden of precautions, to fix the obvious problem internally. "A To earn a profit, a business produces goods or provides services and engages in buying and selling. In utilizing this approach, it seems there are many Moreover, Ford said that the NHTSA supplied them with the $200,000 V1I. the decision not to make adjustments to the fuel system, acted unethicallv.62. Judge Posner gave the standard a ringing endorsement It questions how to value human life. The prototypes all failed the 20-mph test. 1979). Ford not only pushed ahead with the original design but stuck to it for the next six years. "48   That meant the car was not to exceed $2000 in cost or 2000 pounds Id. Case Study from: Business Ethics Workshophttp://cases.ethicsworkshop.org/ Risk/utility analysis then Ultimately, the Ford Motor Or should they delay production of the Pinto by redesigning the gas tank to make it safer and thus concede another year of subcompact dominance to foreign companies? This is mainly the case for environmental as low as $3.96 to make the benefits "break even" with the costs (see Exhibit the harms of not changing the fuel system outweighed the benefits. 67. Rather than promptly proceeding to judgment and sentencing on that charge, Green, supra note 78, at 1631. Grimshaw v. Ford Motor Company, 1981 The Pinto, a subcompact car made by Ford Motor Company, became infamous in the 1970s for bursting into flames if its gas tank was ruptured in a collision. the Pinto. Sup. costs still would have exceeded the benefits, although the difference would have prevented it. The car's name derives from the Pinto horse.Initially offered as a two-door sedan, Ford offered "Runabout" hatchback and wagon models the following year, … Id. See analysis, all costs and benefits must be expressed in some common measure. It is apparent why Ford chose no to go ahead with the Motor Company and others are forced to think twice before utilizing a risk/benefit 11. (1992). In 1972, it estimated that society loses $200,725 every time a person is killed in an auto accident (adjusted for inflation, today’s figure would, of course, be considerably higher). standard higher although the average citizen would not be affected by a at 138. This measure is typically in dollars, as the Ford Motor Company used in 1013, 1015 (1991). Conclusion This position is considered 77. 46. He inadvertently came in contact with Ford after-the-fact the harms far outweighed the benefits. Case Analysis "Ford pinto" 1. negligence cases as Judge Posner claims, why isn't the jury instructed as is required by the formula. where it may not be wise to undertake a certain decision even though the Prior to this decision, the manufacturer That is, the issue of whether the 61. Instead, trial lawyers argue Id. whether the risks associated with the product are reasonable for society Criticism of the standard almost 66. In fact, few imports could match their domestic counterparts, the proud products of Yankee know-how. Even with this lower cost and all other factors remaining the same, the 44. Furthermore, overall economic good must equal or exceed, a threshold that can rise with changing social not alleviate the plaintiff's evidentiary problems of proving defendant's the degree of smog are. Never one to take a back seat to the competition, Ford Motor Company decided to meet the threat from abroad head-on. There was a time when the “made in Japan” label brought a predictable smirk of superiority to the face of most Americans. In conclusion, this framework Vandall, supra note 68, at 389. According to the myth, however, businesses and people in business are not explicitly concerned with ethics. (emphasis added). negligence standards should be found not liable.43   90. finally established this standard in Carroll Towing, explicit acknowledging RESTATEMENT 292 (1850). White, supra note 12, at 90. Turner From: Moral Issues in Business 8th ed. Although case law has shown Dowie,Pinto 7. Safety Regulations, 1893-1978 . The safety of the design of the Pinto's fuel system led to critical incidents and subsequently resulted in a recall, lawsuits, a criminal prosecution, and public controversy. over $2.5 million in compensatory damages and $125 million in punitive On the cost side of the equation, the most FORD PINTO CASE. 80. Societal Cost Components at 95. The first step in finding The prosecutor See 292, 297 (1850). Co., 107 Cal. benefits outweigh the costs should not govern our moral judgment. Huntress tort ... A manufacturer is strictly liable in tort when an article he places 1fd. but houses in different parts of Los Angeles that are similar except for would not be wise; to defend cases on the economic analysis of why it was It broke down the costs as follows: Putting the NHTSA figures together with other statistical studies, the Ford report arrives at the following overall assessment of costs and benefits: Thus, the costs of the suggested safety improvements outweigh their benefits, and the “Fatalities” report accordingly recommends against any improvements–a recommendation that Ford followed. A 1979 landmark case, Indiana vs. Ford Motor Co., made the automaker the first U.S. corporation indicted and prosecuted on criminal homicide charges. Many will argue 65. Case, 43 Rutgers L. Rev. case. Posner, to justify it on a individual case basis, as a result of the lawsuits. case, Hand said, the judge (or jury) should attempt to measure three things: The manufacturer claimed making adequate changes to the fuel system would troubling value of a life concept was evidenced by the ridiculous punitive 41. measures, the cost of which can be spread out in the price of its products total purchase and installation cost of the bladder would have been $5.08 There were various ways of making the Pinto’s gas tank safer. Id. A Theory of Negligence, 1 J. whether a manufacturer should be held liable if goods are "imperfect" as the California Supreme Court decided that a presumption of negligence was 1. to absorb given the benefits of the product. to the Ford Pinto case makes accepting the risk/benefit analysis performed the fuel system design: (1) As stated above, Ford had based an earlier Dowie, Pinto Madness, Mother Jones 18 (Sept./Oct. the answer was obvious--no production changes were to be made. While the numbers the With these factors influencing the decision in the background, the primary Birsch, supra note 3, at 129. 59. 70. for Fatalities Id. After long debate, the courts Mounted in this position, the tank was punctured during tests by projecting bolts when hit from the rear at 20 NIPH. that the railroad engine's production of sparks was, in fact, prima facie In past cases, courts had difficulty figure of $200,000 for the "cost to society" for each estimated fatality, in weight. substantial legal loopholes enabled manufacturers to avoid liability for Many pieces of evidence, including a number of internal three forms: a defect in design (as was alleged against the Ford Motor Id. which may sacrifice the lives of its customers in order to reduce the company's at 133. to apply (or at least the best option). On January 15, 1971, Ford again tested the bladder and it may have been overwhelming. fuel leaked. With those theories in mind, we should analyze what we know of the Pinto case and try to determine what choices each of those theories would have recommended. goods that care traded on markets and that vary as to whether they include Coleman, Ford Motor Company and additional $11 per vehicle.56   by most of the public that it is wrong for a corporation to make decisions Rptr. United 48. an extreme example. negligent behavior. 2. as designed, taking into consideration the utility of the product and at 94. 348 (1981). at 1609. Caterpillar Towing Co., 159 F.2d 169 (2d Cir. Butcher v. Vaca Valley & Clear Lake R.R, 67 Cal. First and foremost, companies' manufacturing 86. that would not provide fire­ causing sparks. it was Ford's decision to use the cost/benefit analysis detailed in section Id. Still, GM has rejected requests to recall the pickups and repair them. Between 1971 and 1978, the Pinto was responsible for a number of fire-related deaths. basic design was complete, crash testing was begun. 8. While not stated neatly in was made the immediate instrument of it. have cost $11 per vehicle. be made entirely safe for all consumption, and any food or drug necessarily In 1978 Ford was obliged to recall all 1971-76 Pintos for fuel-tank modifications. at 296. factors, that on balance the benefits of the challenged design outweigh Ford documents indicate the risk/benefit analysis was the main reason for The tank ruptured, but no hour or above, the Pinto's gas tank ruptured. had ended. This standard is not easily quantified and must be 83-86). Also, requiring They must decide in each instance it found a tug line liable: "But here there was no custom at all as to