Plant Services - June 2008 - (Page 53)

Acme terminated Al, arguing that he put the company at risk of being accused of harboring an employee who infringed on various copyrights for personal gain. How could this situation have been avoided? When is salvaging trash a crime? Should Acme have had a clear policy in place? Was Acme wise to terminate Al for this offense? Does either Acme or Al owe compensation to the media companies and software developers for lost profit on sales of undeliverable CDs headed for a landfill? Is it likely that eBay and resale shop purchases of CDs would reduce sales at traditional outlets? Now that’s a real problem for Joe, the intern, to work on: How can Acme restock the CDs at a cost lower than producing a new disc? If Joe really wants to impress his bosses and his professors, as well as help Acme and the environment, that’s the problem to solve. Professor Homer H. Johnson, Ph.D. Loyola University Chicago (312) 915-6682 hjohnso@luc.edu An attorney says: An academician says: This is an interesting, tricky situation. Let’s start with Economics 101. If Acme is producing discs in large volume, unit cost of production is probably pennies (remember economies of scale?). Thus, it might cost less to produce a new disc than it does to open and restock the returned discs. So, turning the returns into trash makes good economic sense. But, why not sell the returns at a deep discount to someone who will resell them so the CD producer or media company can make some money on the deal? Let’s assume the media company can sell a new CD for $20, and let’s assume it costs $1 to produce - that’s a $19 markup. Assume a reseller would buy the returns for $2 per unit. That means the media company will make $1 on each return sold to the reseller. That’s better than turning them into trash, isn’t it? Suppose the reseller sells the returned CDs at $10. Customers will buy from the reseller at the cheaper price, thus depriving the media company of many sales and nice profits. In this case, the media company made $1 per unit when it could have made $19. So the media company is cutting its own throat by selling the returns to a reseller. And further, the artists are deprived of their royalties. The bottom line is that the media company is better off trashing these returns. Where are we going with this economics lesson? Well, the media company needs to have (and probably does have) a contract with Acme that says the CDs are the property of the media company, and any returns absolutely and positively will be turned into trash, and won’t be given, taken or sold to anyone. That should be made clear to Acme, its employees, the waste hauler and the landfill. That would resolve the legal aspects of the problem in this case. The lack of such contract is also interesting. If the Dumpster is on Acme property and there’s no such contract, is taking the CDs considered theft? What if the Dumpster is on public property? Are the CDs now public property and anyone has a right to take them? It makes economic sense to dump the returns, but I’m sympathetic to the environmental concerns. Here one has to look at the short-term economics as well as the long-term. June 2008 As in many legal disputes, everyone involved in this scenario is at fault to some degree. Let’s start with Acme. Legally, the CDs that the janitorial staff tossed in the Dumpster were abandoned property. This is no different than a man walking down the street who tosses his broken umbrella into a trash bin. Anyone who retrieves the umbrella from the trash isn’t a thief and hasn’t committed the crime of theft. Some employers have policies prohibiting employees from removing even discarded or defective items from company premises without permission, but it doesn’t appear that Acme had such a policy. Given the fact that Al was saving the company money by reducing the number of Dumpsters it needed, Acme’s firing of him makes little business sense. On the other hand, Al could have avoided any problems altogether had he approached his supervisor and informed him that he was rescuing the homeless CDs. At that point, An employee’s duty of loyalty lies toward the company, not himself. Acme could have determined whether there was a copyright problem or whether, as a matter of policy, the company wanted to prohibit Al from “recycling” the CDs. On the other hand, Acme could have opened up the opportunity to take the discarded CDs to the rest of the workforce as well. I’m no expert on copyright law, but it seems to me that no one was illegally copying the CDs and consumers had already paid for them, thus providing income to the artists, but were merely unable to take delivery of the merchandise. Finally, we come to Joe Jobah’s less-than-stellar performance. “In spite of knowing that a smaller bill from the scavenger service is good for Acme’s bottom line,” Joe nevertheless blew the whistle on Al in hopes of furthering his own standing in the company. An employee’s duty of loyalty lies toward the company, not himself. One other issue rears its head in this scenario. Videotaping the activity at the Dumpster with small, wireless 53 www.PLANTSERVICES.com http://www.PLANTSERVICES.com

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Plant Services - June 2008

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