Question

In: Accounting

Case Study In 1997, the Saudi Black Cement Co began operating a cement plant outside of...

Case Study In 1997, the Saudi Black Cement Co began operating a cement plant outside of Riyadh, KSA. The Company employed over 100 local residents and by 2000 had invested SAR 60 million in this plant. The plant, however emitted large amounts of pollution as well as causing constant vibrations and loud noise. Local residents filed suit against the Company claiming that the air pollution, the noise, and the vibrations were harming their health and property. The suit asked that the court issue an injunction that would close down the plant until the pollutions and vibrations could be eliminated. The Company was already using the best available technology, which meant that the suit was asking that the pant be closed down indefinitely. The court refused to issue the injunction. It reasoned that the costs of closing the plant far outweighed the benefits to be gained by the residents. Instead, the court ruled that the cement company should pay residents a one-time fee for damages that could be proven to exist already, and then pay them a monthly fee to compensate them for ongoing harms. This fee was calculated to be a fair market price for what the residents would receive if they were inclined and able to rent their property. Questions: Was the decision of the court in this case fair. If so, why? If not, why not?

Solutions

Expert Solution

The issue here is
the local residents filing suit against the Company claiming that the air pollution, the noise, and the vibrations were harming their health and property,requesting the court to issue stop operation of the plant until a solution is found out.
and the court itself taking a stand against the residents' welfare.
The decision of the court in this case in certainly not fair for the following reasons:
1. As is seen from the description, the court itself is well aware/acknowledges that the issues quoted by the residents are ,in fact existing and also genuine ,when it awards continuing ,ie. monthly damages.
2. It indirectly accepts that the harm is going to be continuous and may not end , till the plant functions.
3. Even ,if it compensates the current occupants,the future occupants will be affected , if they happen to live near-by.
4. Not renting means that the entire near-by area ,will become un-inhabitable & the permanent residents of that area need to look-out for alternative location.
But the court seems to have refused to issue injunction on the basis of the following:
1. The current employees who may be disadvantaged of not getting salaries , when the plant is kept closed.
2. The court being aware that , as already the company has been adopting the best available standards , there is nothing more that can be done to obviate the above issues & that the problem may not be resolved at all.
3. Benefits that the surrounding society is getting presently, like employment of the local population & other social and infrastructural development of the area , is really hard to ignore --even when compared to the above issues.
In the light of the above,
the court can take a long-term view of the situation and should issue an injunction to the company ,to stop operations, till such time , a solution is found out on the lines of:
1. either shifting the plant or
2.help shifting the residents to new locations , by giving adequate compensations
The court should understand the fact that both the operation of this plant(that too after adopting the best available technology) & residents' welfare cannot go together.
But both need to be addressed for their share of benefits to the society at large--by geographically separating them.
And this is bound to take the required time.
Hence,the suit asking that the court issue an injunction to close down the plant until the pollutions and vibrations are eliminated, is justified.
And the court refusing to issue the injunction IS NOT FAIR, when so much is pending to be negotiated.

Related Solutions

In 1997, the Saudi Black Cement Co began operating a cement plant outside of Riyadh, KSA....
In 1997, the Saudi Black Cement Co began operating a cement plant outside of Riyadh, KSA. The Company employed over 100 local residents and by 2000 had invested SAR 60 million in this plant. The plant, however emitted large amounts of pollution as well as causing constant vibrations and loud noise. Local residents filed suit against the Company claiming that the air pollution, the noise, and the vibrations were harming their health and property. The suit asked that the court...
In 1962 the Atlantic Cement Company began operating a cement plant outside of Albany, New York.
Case StudyIn 1962 the Atlantic Cement Company began operating a cement plant outside of Albany, New York. The Company employed over 300 local residents and by 1970 had invested $45 million in the plant. The plant was insured but plant insurance will not cover any damage which is related with environmental and health problem. The insurance company made an agreement with the Cement Company that, if anything goes wrong, insurance company will pay the losses. The plant emitted large amounts...
In 1962 the Atlantic Cement Company began operating a cement plant outside of Albany, New York....
In 1962 the Atlantic Cement Company began operating a cement plant outside of Albany, New York. The Company employed over 300 local residents and by 1970 had invested $45 million in the plant. The plant was insured but plant insurance will not cover any damage which is related with environmental and health problem. The insurance company made an agreement with the Cement Company that, if anything goes wrong, insurance company will pay the losses. The plant emitted large amounts of...
Black & Decker, Inc. – A Case Study Black & Decker operates globally and is divided...
Black & Decker, Inc. – A Case Study Black & Decker operates globally and is divided into four operating regions: North America, South America, Europe and Asia. Black & Decker is in the power tool business supplying these products to large retailers around the world and is one of the top suppliers in its industry. It holds different supplier positions in each of its regions but is strongest in North America and Europe. Black & Decker measures its customers on...
Case Study From a small kiosk in a shopping mall established in 1997, Dr Cafe has...
Case Study From a small kiosk in a shopping mall established in 1997, Dr Cafe has become one of the leading coffee-shop chain in the Middle East with over 600 branches in the world. Dr Café’s success has built upon its popularity among young and trendy people and its unique approach of selecting the "best beans" in the world. Between 2008 and 2010, it has continued its aggressive expansion to Malaysia and Singapore with more branches in sight. In fact,...
Question: CASE STUDY 2: CALEDONIA PLAIN CHOCOLATE Introduction In late 1997 the marketing audit conducted by...
Question: CASE STUDY 2: CALEDONIA PLAIN CHOCOLATE Introduction In late 1997 the marketing audit conducted by Booker-Greer Limited's confectionary division highlighted a number of weaknesses in their marketing position. The two main weaknesses were: 1.    Their strength in milk chocolate lines was matched by poor performance in plain chocolate. This situation was made more serious because of the growing importance of plain chocolate in the market. 2.    In a number of parts in the UK their market share was significantly worse than...
Case Study (Questions at the Bottom) In a suburban county outside a large city, the Parks...
Case Study (Questions at the Bottom) In a suburban county outside a large city, the Parks and Recreation Department has been run for decades by a friendly, popular director who has run the volunteer program for the department by himself. He had a network of friends throughout the county that served as volunteer coaches, as teachers in recreational programs (art, music, dance, exercise), and in other roles. In turn, these volunteers drew in other volunteers to serve as timers, scorers,...
Ginvold Co. began operating a subsidiary in a foreign country on January 1, 2008 by acquiring...
Ginvold Co. began operating a subsidiary in a foreign country on January 1, 2008 by acquiring all of the common stock for §50,000. This subsidiary immediately borrowed §120,000 on a five-year note with ten percent interest payable annually beginning on January 1, 2008. A building was then purchased for §170,000. This property had a ten-year anticipated life and no salvage value and was to be depreciated using the straight-line method. The building was immediately rented for three years to a...
Short Essay 7 Case Study: Baby Kelly’s Parents The case of Baby Kelly began in our...
Short Essay 7 Case Study: Baby Kelly’s Parents The case of Baby Kelly began in our Infancy discussions. Baby Kelly was born prematurely to Paige and Jacob. Paige’s maternity leave was up when Kelly was four weeks old. At that time, she made the decision to take a one year of absence from her career in human services. She was apprehensive and fearful that her position would no longer be available at the end of one year, but felt that...
Case Study 1 The management in Unilever plant in Ontario is preparing for a change. The...
Case Study 1 The management in Unilever plant in Ontario is preparing for a change. The company plans to improve energy efficiency to help manage the rising and unpredictable energy prices. The plant produces margarine and other vegetable oil products. The cost of energy represents 15% of all production costs. The company expects that the cost will increase further in the coming years, as the energy price are expected to increase further. To meet an aggressive goal of reducing energy...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT