Forum 1 . Address question 1 or 2 in your post: 1) What ethical rules were violated and how were they violated? What are the consequences of violating these ethical rules? 2) If you were the manager how would you have avoided these problems? Please provide a specific plan. Make two substantive comments regarding another student's post on these topics. A suspended walkway in a hotel collapsed killing 114 people. The two walkways were suspended from a set of 1.25 in (32 mm) diameter steel (Links to an external site.) tie rods ( (Links to an external site.)with the second floor walkway hanging directly under the fourth floor walkway. The fourth floor walkway platform was supported on three cross-beams suspended by steel rods retained by nuts. (Links to an external site.) The cross-beams were box girders (Links to an external site.) made from C-channel strips welded together lengthwise, with a hollow space between them. The original design by Jack D. Gillum and Associates specified three pairs of rods running from the second floor to the ceiling. Investigators determined eventually that this design supported only 60% of the minimum load required by Kansas City building codes. (Links to an external site.) Havens Steel Company, the contractor responsible for manufacturing the rods, objected to the original plan, since it required the whole of the rod below the fourth floor to be screw threaded . (Links to an external site.) in order to screw on the nuts to hold the fourth floor walkway in place. Indeed, these threads would probably have been damaged and rendered unusable as the structure for the fourth floor was hoisted into position with the rods in place. Havens therefore proposed an alternative plan in which two separate -- and offset -- sets of tie rods would be used: one connecting the fourth floor walkway to the ceiling, and the other connecting the second floor walkway to the fourth floor walkway. This design change proved fatal. In the original design, the beams of the fourth floor walkway had to support only the weight of the fourth floor walkway, with the weight of the second floor walkway supported completely by the rods. In the revised design, however, the fourth floor beams were required to support both the fourth floor walkway and the second floor walkway hanging from it. The serious flaws of the revised design were compounded by the fact that both designs placed the bolts directly through a welded joint ) (Links to an external site.) (Links to an external site.) connecting two C-channels, the weakest structural point in the box beams. Photographs of the wreckage show excessive deformations of the crosssection. During the failure, the box beams split along the weld and the nut supporting them slipped through the resulting gap between the two C-channels which had been welded together, which contributed to the survivors' reports of the upper walkway falling several inches as the nut was held only by the upper side of the box beams, before it too failed, allowing the entire walkway to fall. Investigators concluded that the basic problem was a lack of proper communication between Jack D. Gillum and Associates and Havens Steel. In particular, the drawings prepared by Jack D. Gillum and Associates were only preliminary sketches but were interpreted by Havens as finalized drawings. Jack D. Gillum and Associates failed to review the initial design thoroughly, and accepted Havens' proposed plan without performing basic calculations that would have revealed its serious intrinsic flaws in particular, the doubling of the load on the fourth-floor beams. It was later revealed that when Havens called and Associates to propose the new design but Jack D. Gillum denied receiving this call. Here is a more information on this disaster. https://interestingengineering.com/understanding-hyatt-regency-walkway-collapse Surname 1 Engineering Question 1 The major ethical rule that was violated was negligence, which ultimately undermined the public trust, professional judgment, and responsibility. The engineers did not notify their partners Havens Steel Company that their design was not the final version but a sketch. Furthermore, Havens Steel should have notified the designers Jack D. Gillum and Associates of the design changes and incorporated their ideas, thoughts, and expertise to ensure and uphold safety. Question 2 The Administrative Agency particularly the Federal Highway Administration (FHWA) is responsible for ensuring compliance from construction companies. The consequences of breaching an ethical rule are suspension or probable termination of engineering license. Furthermore, in such extreme cases, the responsible parties face trial for their actions, which may have a jail time or compensation fee for the victims or both. In addition, the FHWA should have its agents act as a last line of safety by scrutinizing the designs before construction began. Question 3 As a manager, I would ensure that the team understands the importance of Communication skills, people management, ability to focus on the bottom line, and knowledge of the law. By doing so, the team members would remember to communicate with each other especially considering the magnitude and responsibility of their actions. Executives and managers must have strong leadership skills, effective delegation, accurate decision-making, and discipline. All the above-mentioned were absent in the construction process. There was no clear communication between the manufacturers and the designers. Furthermore, the manager did not ensure proper communication existed during the project. As a manager, I would ensure the team Surname 2 works on a specific hierarchy that ensures effective communication flow and discipline. By doing so, the disaster would be effectively averted. This was a result of miscommunication and negligence to follow through. First Reply I do agree with you but I believe the employees who were working under the manager were more responsible for reporting and validating any abnormality they observed in the new design purposed by Havens steel company. I am not saying the manager was not at fault, but the thing missing in this case was proper co-ordination between the manager and his employees. To extent manager was responsible for this tragedy because he didn’t make an efficient team that could observe and verify the design by doing all necessary analysis. Under manager, there is a whole team working which consists of economists, safety inspectors etc. The manager in this could have guided them to perform some basic tests to authenticate the design and give report to him if there is anything in the original design changed. Second Reply You are right about it, because negligence of such magnitude isn’t acceptable at any cost. Minimum punishment in such cases should be revoking the license of the firm as a whole responsible for drawing the design. Then, the specific person assigned with drawing the design should be punished. Because National Society of Professional Engineers and American Society of Civil Engineers clearly states that the engineers should only approve the design when it follows the basic standards provided by these societies and any change in the design should be duly tested before implementation. Third Reply Good post you have clearly mentioned and explained the main code of ethics validated. The first and foremost violation of ethical rules was undermining the health and safety of public, because they didn’t check their design before final implementation. The mega project like this requires engineers to perform some basic tests either on some simulation software or on paper. The testing is a good way to conclude that the design is safe for final implementation, which was violated in this case. The other ethical rule violated was service with competence, because the company didn’t consider reviewing the change the made means that either they lack training or they were completely unaware of performing safety analysis in such circumstances. LEGAL ASPECTS OF ENGINEERING ADMINISTRATIVE LAW 44 - 1 Administrative Agency • a governmental unit charged with responsibility to implement and administer statutes adopted by a legislative body Congress at the federal level. Most “legal” issues of an organization or a person are based on an interaction with an administrative agency. 44 - 2 Examples of Administrative Agencies Federal • FAA-Federal Aviation Administration • FHWA-Federal Highway Administration • USCIS-US Citizenship and Immigration Sevices • USPTO-United States Patent and Trademark Office • IRS-Internal Revenue Department • FDA-Food and Drug Administration 44 - 3 Examples of Administrative Agencies State • DOT-Department of Transportation • PWD-Parks and Wildlife Department • DI-Department of Insurance 44 - 4 Examples of Administrative Agencies • • • • Local PD-Police Department FD-Fire Department Waste and Water Department 44 - 5 Administrative Agencies • Why have them? • The reality is that these agencies provide services directly to the public, such as dealing with public health needs. • The agency has specialized knowledge, eg, the Center for Disease Control– “CDC” • Most federal admin agencies are under the control of the executive branch. 44 - 6 Department of Homeland Security • The USCIS is responsible for the administration of immigration and naturalization adjudication functions and establishing immigration services policies and priorities. It is the agency that many immigration lawyers deal with the most. 44 - 7 Treasury Department The IRS is organized to carry out the responsibilities of the secretary of the Treasury under section 7801 of the Internal Revenue Code. The secretary has full authority to administer and enforce the internal revenue laws and has the power to create an agency to enforce these laws. The IRS was created based on this legislative grant 44 - 8 IRS • the Congress passes tax laws and requires taxpayers to comply. • The taxpayer’s role is to understand and meet his or her tax obligations. • The IRS role is to help the large majority of compliant taxpayers with the tax law, while ensuring that the minority who are unwilling to comply pay their fair share. 44 - 9 Internal Revenue Code • The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code (USC) 44 - 10 Treasury Regulations • Treasury Regulations are the tax regulations issued by the United States Internal Revenue Service (IRS), a bureau of the United States Department of the Treasury. These regulations are the Treasury Department's official interpretations of theInternal Revenue Code and are one source of U.S. federal income tax law. 44 - 11 Independent Contractor Defined • People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors 44 - 12 Independent Contractor • The earnings of a person who is working as an independent contractor are subject to SelfEmployment Tax. 44 - 13 Employee • You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done) • Another way that the IRS looks at this is questions is does the business provide you with taxable benefits? If so you are an employee. 44 - 14 Tax based on Status • an employer-employee relationship exists (regardless of what the relationship is called), you are not an independent contractor and your earnings are generally not subject to SelfEmployment Tax. • However, your earnings as an employee may be subject to FICA (Social Security tax and Medicare) and income tax withholding. 44 - 15 What is administrative law? • Legal rules that define the authority and structure of administrative agencies 44 - 16 • What powers do administrative agencies possess? • Legislative, executive and judicial. 44 - 17 Powers of an Administrative Agency • Investigation: • If an agency is authorized to compel persons to turn over information - it is authorized to engage in investigation. • For example--a federal agency may obtain information through a summons, a subpoena, or a warrant. 44 - 18 Rulemaking • If an agency is authorized to create regulations or supplement or to clarify its statutory mandate - it is authorized to engage in rulemaking. 44 - 19 Adjudication • If an agency is authorized to determine - judge - whether a party is in compliance with the agency's statutory mandate or with its regulations, it is authorized to engage in adjudication. 44 - 20 Legislative Powers of Administrative Agencies Substantive Rule Making Interpretive Rule Making Licensing Statement of Policy 44 - 21 Judicial Oversight • Judicial review to determine the validity of agency action under the Constitution, statutes, and agency's own regulations. • Judicial review is based on the record made of the proceeding. 44 - 22 Appeal of a Federal Administrative Agency Rule, Order, or Decision Administrative Law Judge (ALJ) Federal Administrative Agency U.S. District Court U.S. Court of Appeals U.S. Supreme Court Whether the appeal from the Federal Administrative Agency is to the U.S. District Court or the U.S. Court of Appeals is determined by the federal law in question. 44 - 23 Standards of Judicial Review of Administrative Agency Decisions Questions of Law Questions of Fact 44 - 24 Questions of Law • If the administrative agency has decided a question of law the reviewing court is free to substitute its own judgment for that of the administrative agency. – e.g., interpretation of statutory language 44 - 25 Questions of Fact • Questions of fact are not easily overturned. • Reviewing court usually defers to the agency’s fact-finding. • However, there must be: reliable, probative or substantial evidence 44 - 26 Administrative law review • https://www.youtube.com/watch?v=ow5hZm U7Yfw 44 - 27 Question: • Review of agency decision by appellate courts is based upon the record made at the administrative hearing? • True or false? 44 - 28 Question • A federal agency may obtain information through a summons, a subpoena, or a warrant? • True or false? 44 - 29 Question • Independent agencies typically possess both quasi-legislative and quasi-judicial functions? • True or false? 44 - 30 Question • Administrative agency decisions must be supported by: • A. clear and convincing evidence • B. probable cause • C. reliable, probative or substantial evidence. • D. Beyond a reasonable doubt? 44 - 31 INTRODUCTION TO CORPORATE LAW Overview of Business Entities • Proprietorships • Partnerships • General • Limited • Corporations • Limited Liability Companies • Owners vs. entity Statutory Authorities • State law • Business entities • Business regulation • State taxes • Secretary of State • State regulatory agencies • Department of Revenue Statutory Authorities • Federal law • Securities regulation • Business regulation • Federal taxes • Federal agencies • Securities and Exchange Commission • Employment, environmental, other regulatory agencies • Internal Revenue Service Proprietorships • Sole proprietorships: No formal actions required to start a business. Most states require proprietor to register name if business is operating under business name or trade name rather than owner name. Owner must comply with applicable licensing requirements and state and federal tax requirements. Sole proprietorships • Personal liability for • 1) contractual and • 2) tort liability. • How to mitigate: insurance Sole proprietorships Self employed- Self-employed individuals generally must pay self-employment tax(SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. Partnership A business entity where parties agree to share the rewards, expenses and risk. Partnership agreement— Does it need to be in writing? Partnership • Profit Sharing or the right to receive profits; • Intent or expression to be partners; • Participation in control of the business; • Contributing money or property to the business; Partnership? • Clinical psychologist Joe D asked Dr. Max to participate in a new pain management clinic. Dr Max’s ability to write prescriptions is a necessary part of the business. Dr Max is paid at an hourly rate for this work. The clinic is a success and Dr Max asks for an accounting of his share of the profits based on the partnership. Joe D refuses—Dr Max files suit. Partnership? • What if Dr Max provided $200,000 in start up capital to Joe? General Partnership • • • • 2 or more persons, for profit No state registration required Partnership agreement TN Revised Uniform Partnership Act is default, if no partnership agreement. • Unlimited personal liability for business debts. • Any Partner may bind the partnership. Partnership • Creditors can come after your personal assets (such as your house or car) to make sure any partnership debts get paid. • You are legally bound to any business transactions made by you or any of your partners, and you can be held personally liable for those actions. Limited Partnership • At least one general partner with unlimited liability • Limited partners • • • • Not active in conduct of partnership business Usually nonvoting Personal liability limited to investment in the partnership Exceptions – guarantors, other • Certificate of Limited Partnership required • Limited Partnership Agreement • TN Revised Uniform Limited Partnership Act is default, if no partnership agreement. • General partner(s) manage business and bind the partnership. Partnership • In most cases at least one partner has unlimited liability. One does this mean? • Business and Personal assets can be attached. • How to solve– insurance for the exposure. • Taxation– income taxed as self employed. Corporation • Formation • • • • Business name Charter filed with Sec. of State by Incorporator Registered Agent in state Initial Bylaws adopted • Stock • • • • • Common stock Preferred Stock Certificates Registration and transfer of shares Securities regulation may apply Corporations • Entity created by state law • TCA §48-11-101 et seq. • Maintain formalities required by law • • • • Limited personal liability Perpetual existence Purpose Powers • Own property, borrow money, lease property, etc. • Any lawful business Corporations • Bylaws • Shareholders • Meetings and voting • Elect Directors • Dividends • Board of Directors • • • • • Duty to shareholders Appoint officers Declare dividends Executive management & Committees Conflicts of Interest Corporations • Officers • Day-to-day management • President and Secretary required • Duties specified by Bylaws and Directors • Records • • • • Minute book - Directors and Shareholders meetings and actions Stock register Corporate organizational documents Annual filings with Sec. of State • Special agreements • Restrictions on transfer of stock • Buy-sell • Stock redemption with insurance Corporations • Income Taxation • Taxed as separate entity at corporate level before dividend distributions • Shareholders pay income tax on dividends • “S” corporation is federal tax election to pay income tax on corporate profits at shareholder level • TN franchise and excise tax – does not recognize pass-through for “S” corporations Limited Liability Companies • Created under state law • TN Revised Limited Liability Company Act • TCA §48-249-101 et seq. • • • • • Articles of Organization filed with Sec. of State Operating Agreement executed by members Flexibility similar to Partnership Fewer formalities to maintain than corporations Limited liability for debts and claims against businessCreated under state law • Created under state law • Managed by members, board or managers • “Pass-through entity” for federal income tax • TN franchise & excise tax at the LLC level Limited Liability Corp. • owners of limited liability companies (LLCs) and corporations are not personally liable for business debts. • Taxation– income taxed as self employed Partnership v. LLC • Aside from formation requirements, the main difference between a partnership and an LLC is that partners are personally liable for any business debts of the partnership -- meaning that creditors of the partnership can go after the partners' personal assets -- while members (owners) of an LLC are not personally liable for the company's debts and liabilities. Summary • https://www.youtube.com/watch?v=FbH2H VWzHMs LEGAL ASPECTS OF ENGINEERING Management and Ethics THE ENGINEER IN MANAGEMENT Engineering Management depends on four factors: 1. Communication skills; 2. People Management; 3. Ability to focus on the bottom line; and 4. Knowledge of the law. THE ENGINEER IN MANAGEMENT (CONT.) • As a manager, it is necessary to develop what may be called “executive qualities” which are comprised of the following attributes: • Strong leadership; • Effective delegation; • Accurate decision making; and • Discipline. Management Qualities • Accurate decision making is based in part: • on knowledge of the law. Management Qualities • Accurate decision making is based in part: adhering to the rules of ethics. WHY IS ETHICS AN INTEGRAL PART OF PROFESSIONAL LIFE? • Public Trust • Professional Judgment • Responsibility 6 ETHICS AND THE ENGINEER • A professional--has specialized skills and knowledge; • has acquired such knowledge and skills through a long period of training and study, and continues to maintain and update them through professional life; • has, as a result of this specialized expertise, significant power to affect individual clients and wider society; • belongs to a professional body which regulates their practice; and as part of that self regulation, adheres to ethical principles which the professional body oversees. 7 FUNDAMENTAL CANONS OF THE NSPE CODE OF ETHICS FOR ENGINEERS • • • • • • Hold paramount the safety, health, and welfare of the public. Perform services only in areas of their competence. Issue public statements only in an objective and truthful manner. Act for each employer or client as faithful agents or trustees. Avoid deceptive acts. Conduct themselves honorably, responsibly, ethically, and lawfully so as to enhance the honor, reputation, and usefulness of the profession. 8 Rules of Practice • Engineers shall hold paramount the safety, health, and welfare of the public. – If engineers' judgment is overruled under circumstances that endanger life or property, they shall notify their employer or client and such other authority as may be appropriate. – Engineers shall approve only those engineering documents that are in conformity with applicable standards. – Engineers shall not reveal facts, data, or information without the prior consent of the client or employer except as authorized or required by law or this Code. – Engineers shall not permit the use of their name or associate in business ventures with any person or firm that they believe is engaged in fraudulent or dishonest enterprise. – Engineers shall not aid or abet the unlawful practice of engineering by a person or firm. – Engineers having knowledge of any alleged violation of this Code shall report thereon to appropriate professional bodies and, when relevant, also to public authorities, and cooperate with the proper authorities in furnishing such information or assistance as may be required. Rules of Practice • Engineers shall perform services only in the areas of their competence. Engineers shall undertake assignments only when qualified by education or experience in the specific technical fields involved. • Engineers shall not affix their signatures to any plans or documents dealing with subject matter in which they lack competence, nor to any plan or document not prepared under their direction and control. • Engineers may accept assignments and assume responsibility for coordination of an entire project and sign and seal the engineering documents for the entire project, provided that each technical segment is signed and sealed only by the qualified engineers who prepared the segment. Rules of Practice • Engineers shall issue public statements only in an objective and truthful manner. Engineers shall be objective and truthful in professional reports, statements, or testimony. They shall include all relevant and pertinent information in such reports, statements, or testimony, which should bear the date indicating when it was current. • Engineers may express publicly technical opinions that are founded upon knowledge of the facts and competence in the subject matter. • Engineers shall issue no statements, criticisms, or arguments on technical matters that are inspired or paid for by interested parties, unless they have prefaced their comments by explicitly identifying the interested parties on whose behalf they are speaking, and by revealing the existence of any interest the engineers may have in the matters. Rules of Practice • • • • • Engineers shall act for each employer or client as faithful agents or trustees.Engineers shall disclose all known or potential conflicts of interest that could influence or appear to influence their judgment or the quality of their services. Engineers shall not accept compensation, financial or otherwise, from more than one party for services on the same project, or for services pertaining to the same project, unless the circumstances are fully disclosed and agreed to by all interested parties. Engineers shall not solicit or accept financial or other valuable consideration, directly or indirectly, from outside agents in connection with the work for which they are responsible. Engineers in public service as members, advisors, or employees of a governmental or quasigovernmental body or department shall not participate in decisions with respect to services solicited or provided by them or their organizations in private or public engineering practice. Engineers shall not solicit or accept a contract from a governmental body on which a principal or officer of their organization serves as a member. Rules of Practice • • Engineers shall avoid deceptive acts. Engineers shall not falsify their qualifications or permit misrepresentation of their or their associates' qualifications. They shall not misrepresent or exaggerate their responsibility in or for the subject matter of prior assignments. Brochures or other presentations incident to the solicitation of employment shall not misrepresent pertinent facts concerning employers, employees, associates, joint venturers, or past accomplishments. Engineers shall not offer, give, solicit, or receive, either directly or indirectly, any contribution to influence the award of a contract by public authority, or which may be reasonably construed by the public as having the effect or intent of influencing the awarding of a contract. They shall not offer any gift or other valuable consideration in order to secure work. They shall not pay a commission, percentage, or brokerage fee in order to secure work, except to a bona fide employee or bona fide established commercial or marketing agencies retained by them. Ethics Resources • https://www.nspe.org/resources/ethics/ethics -resources/board-ethical-reviewcases?field_year_value%5Bvalue%5D%5Byear %5D=&combine=competence&page=1 Ethics • A process engineer was about to recommend the purchase of equipment for new manufacturing process for his employer. A vendor calling upon him told him of a new and apparently cheaper means of accomplishing the same result. The engineer was familiar with the type of work in question but had never heard of the new process. The vendor invited him to go (at the vendor’s expense) to several sites where the new process was being used. Ethics • Should the engineer go to see the new process? • Which canons or rule have a bearing on the situation? • At the vendor’s expense? • What if a side trip to ski lodge is offered as a bonus for visiting? Ethics • Engineers of Company "A" prepared plans and specifications for machinery to be used in a manufacturing process and Company "A" turned them over to Company "B" for production. The engineers of Company "B" in reviewing the plans and specifications came to the conclusion that they included certain miscalculations and technical deficiencies of a nature that the final product might be unsuitable for the purposes of the ultimate users, and that the equipment, if built according to the original plans and specifications, might endanger the lives of persons in proximity to it. The engineers of Company "B" called the matter to the attention of appropriate officials of their employer who, in turn, advised Company "A" of the concern expressed by the engineers of Company "B". Company "A" replied that its engineers felt that the design and specifications for the equipment were adequate and safe and that Company "B" should proceed to build the equipment as designed and specified. The officials of Company "B" instructed its engineers to proceed with the work. • What are the ethical obligations of the engineers of Company "B" under the stated circumstances? Ethics examples • The engineers of Company "B" fulfilled their obligation under Section l(c) of the Code by notifying their employer that they did not believe the project would be successful as designed by the engineers of Company "A". They also met the requirements by pointing out the consequences to be expected from proceeding under the original plans and specifications. By their actions the engineers of Company "B" regarded their "duty to the public welfare as paramount," as required by Section 2(a). Disagreement? • • • The last sentence of Section 2(c) is likewise clear in requiring that the engineers not only notify proper authority of the dangers which they believe to exist, but that they also "withdraw from further service on the project." This mandate applies to engineers serving clients or employers. Where, as in this case, there is an apparent honest difference of opinion as to the safety features of the machinery between the engineers of Company "A" and the engineers of Company "B" it would be appropriate for the question to be referred to an impartial body of experts, such as a technical engineering society in the particular field of practice, for an independent determination. So long as the engineers of Company "B" hold to their opinion that the machinery as originally designed and specified would be unsafe to the public they should refuse to participate in its processing or production under the mandate of Section 2(c). While such refusal to comply with the instruction of their employer may cause a most difficult situation, or even lead to the loss of employment, we must conclude that these considerations are subordinate to the requirements of the Code. Ethics Case Study • Engineer "A" has a degree in mechanical engineering and is registered as a professional engineer under the state engineering .registration law. He has had 15 years of experience in mechanical engineering work, including 714 years of mechanical and electrical design of all types of buildings. He has designed the electrical systems for several buildings. • Engineer "B," holder of a degree in electrical engineering and registered as a professional engineer under the state law, filed a complaint with the state professional engineering society, alleging that Engineer "A" had acted unethically in designing electrical systems in view of his education and registration based on his proficiency as a mechanical engineer. The complaint does not question the competency of Engineer "A," nor were any plans submitted by Engineer "B" to sustain a charge of lack of quality of the design work of Engineer "A," even though such plans were requested by the state society Ethical Questions • Question(s): • Is Engineer "A" unethical in practicing electrical engineering when his major field was mechanical engineering? • Is Engineer "A" unethical in practicing any branch of engineering other than his major field, provided he is competent to do so? • Is Engineer "B" required to show by exhibits that Engineer "A" is incompetent? Conclusion: • Engineer "A" did not act unethically per se in practicing electrical engineering if he was technically qualified to perform such services. • Engineer "A" may practice any type of engineering in which he is competent. Q.3Engineer "B" is required to present exhibits or such other evidence as he may have to substantiate his charges. CASE STUDY DESIGN-BUILD ENGINEER HELD LIABLE FOR NEGLIGENCE • Hydro Investors, Inc. v. Trafalgar Power, Inc., 227 F3d 8 (2nd Cir 2000) • A developer purchased land and constructed hydroelectric facilities in reliance on an engineer’s analysis of the financial viability of proposed hydroelectric projects (including an assessment of the energy to be generated by each project as well as the costs of construction), it was entitled to recover its losses for the financially disastrous projects from the design-builder that employed the engineer and constructed the projects. Neal Dunlevy approached TPI with the suggestion that hydroelectric plants could be profitably developed in upstate New York. Dunlevy also suggested that TPI provide the capital to develop the plants, and that he, Dunleavy, would contribute the hydroelectric expertise either through Stetson-Harza or HII. As a result of these discussions, TPI retained Stetson-Harza and HII to perform work associated with TPI’s licensing and possible development of six plants. • 23 Case Study (cont.) Hydro Investors, Inc. v. Trafalgar Power, Inc., 227 F3d 8 (2nd Cir 2000) •As part of its effort to obtain project financing, TPI asked Stetson-Harza to prepare an analysis that could be used by potential lenders to evaluate whether to invest in the projects. Included in this analysis was an assessment of projected energy output. •The plants were constructed and, as stated by the Court, “have proven to be financial disasters,” the primary problems being costs overruns and inadequate energy production. At trial, a jury found Stetson-harza and Dunlevy jointly and severally liable in the amount of $7.6 million for damages arising out of engineering malpractice. •The legal cause of TPI’s injury was Dunlevy’s failure to adequately convey the realities of Ogdensburg and Forestport with a level of professional care that would have allowed TPI to make its business decisions with respect to those sites based on reasonably reliable technical information.” 24 Case Study (cont.) Hydro Investors, Inc. v. Trafalgar Power, Inc., 227 F3d 8 (2nd Cir 2000) •There are several things to learn from this complex case. •A design professional may be subject to claims for consequential damages, including lost profits, even in the absence of property damages or personal injury. 25 Case Study (cont.) •Engineer A, an unlicensed engineer, interviews for a position at a university to serve as Director of Plant Operations. On Engineer A's resume, he lists his membership in several professional and technical organizations and notes that he is a "Member of the National Society of Professional Engineers (NSPE)," and also includes his membership number. He is, in fact, an "Associate Member" of the NSPE. •Sometimes a misrepresentation of credentials can occur intentionally; other times, such a misrepresentation may be the result of negligence or oversight by the engineer. Only through an evaluation of the facts and circumstances involved can a reasonable conclusion be drawn as to the nature of the misrepresentation. •Engineer A's reference that he is a "Member of the National Society of Professional Engineers" violates the Code of Ethics in that the prospective employer may be misled as to his status and qualifications. •Engineer A's reference could imply that he is a licensed professional engineer. It violates the Code of Ethics in this sense, as well. 26 ETHICAL ISSUE • ISSUE PUBLIC STATEMENTS ONLY IN AN OBJECTIVE AND TRUTHFUL MANNER NEGLIGENCE-AND ETHICS (cont.) Table 1 – Causes of Structural Failure* • • • • • • • • • Insufficient knowledge .................................... 36% Underestimation of influence ......................... 16% Ignorance, carelessness, negligence .............. 14% Forgetfulness, error ................................. 13% Relying upon others without sufficient control ..... Objectively unknown situation ........................ 7% Imprecise definition of responsibilities ............. 1% Choice of bad quality ................................ Other ............................................. 9% 1% 3% *Source: Swiss Federal Institute of Technology in Zurich 28 NEGLIGENCE-AND ETHICS • If engineers’ judgment is overruled under circumstances that endanger life or property, they shall notify their employer or client or such other authority as may be appropriate. The result of gross negligence by engineers can be catastrophic. A study conducted at the Swiss federal Institute of technology in Zurich analyzed 800 cases of structural failure in which 504 people were killed, 592 people injured, and millions of dollars of damage incurred. 29 LEGAL LIABILITY • Negligence is the failure to fulfill obligations that give rise to responsibilities for damages as a result; • In order to establish negligence, the claimant needs to show: – The existence of a duty; – Breach of that duty; – An injury caused by the breach of duty; and – Recoverable damages. 30 STANDARD OF CARE AND THE STRUCTURAL ENGINEER • Engineer required to exercise the skill and knowledge normally possessed by member of a trade or profession • Professional malpractice-Judge or Jury determines if conduct fell below the standard. 31 Standard of Care • A recommended negligence-based standard of care provides the following: Professional services shall be performed in a matter consistent with that degree of skill and care ordinarily exercised by practicing design professionals performing similar services in the same locality at the same site and under the same or similar circumstances and conditions. 32 Standard of Care (cont.) • The negligence-based standard of care provision insulates a design professional from being liable for every error or omission on a given project. • A key issue in every professional malpractice claims is: at what point do the total number of errors or omissions constitute a breach of the standard of care? 33 A question of Safety ? • Engineer A, a professional engineer, worked for many years as a quality control engineer for Boilco, a boiler manufacturer. In recent years, Boilco began using a more economical international supplier of boiler valves and electric switches to reduce costs, but Engineer A’s product testing demonstrated that the new boiler valves and electric switches were inferior and could be unsafe. Engineer A rejected the first shipment, but Engineer A’s supervisor, also a professional engineer, overruled Engineer A. When Engineer A brought his product concerns to senior management, Engineer A’s supervisor abruptly fired Engineer A for insubordination. After termination, Engineer A contacted a federal agency, detailing the threat to public safety posed by Engineer A’s former employer. Question(s): • Were Engineer A’s actions in contacting the federal agency ethical under the facts and circumstances? • Was it ethical for Engineer A’s supervisor to fire Engineer A for insubordination? RULING • Engineer A’s actions were consistent with the NSPE Code of Ethics for Engineers. Engineer A’s action in first alerting his immediate supervisor and then contacting higher management when his immediate supervisor was not responsive demonstrates that he made a good faith effort to exhaust internal mechanisms within the company in order to address what he reasonably viewed as a serious public safety concern. • The decision to terminate Engineer A, a long-tenured quality control engineer, immediately after he reported concerns about meeting safety standards first to an immediate supervisor and then to higher management indicates that Engineer A’s actions in contacting the federal agency and detailing the threat to public safety posed by his former employer were justified and were consistent with NSPE Code of Ethics Section liability • What if someone was injured by a defective boiler? • Negligence is the failure to fulfill obligations that give rise to responsibilities for damages as a result; • In order to establish negligence, the claimant needs to show: – The existence of a duty; – Breach of that duty; – An injury caused by the breach of duty; and – Recoverable damages. Ethics • Key point: • Recognize the nexus between a failure to adhere to the rules of ethics and a finding of negligence against you or your employer. LEGAL ASPECTS OF ENGINEERING History of the Law and Civics Civics • Civics is the study of government and politics. • Civic responsibilities include paying taxes, voting, registering for military service, serving on a jury, and obeying the law. What is the rule of law? • The rule of law means everyone must obey the law, including citizens, non-citizens, and government leaders. • The police and the courts enforce the laws. • The police and the courts must also obey the laws. HISTORY OF LAW • The U.S. legal system evolved from the English Common Law and Roman Civil Code. – Sources of law include: Constitutional Law, Statutory Law and Case Law. – Stare Decisis is the method by which Courts abide by previous decisions. HISTORY OF LAW (CONT.) • I. History and development • A. Single individual, living by himself, needs no man-made laws • B. Code of Hammurabi • C. Ten Commandments • D. Roman (Civil) Law • E. Feudal system and Law Merchant • F. Constitution and Bill of Rights US Constitution • The words of the U.S. Constitution are the foundations of the US and establish the federal government's structures and branches. Six Big Ideas • • • • • • limited government republicanism checks and balances federalism separation of powers popular sovereignty limited government • A limited government is a system in which the primary leaders have very little governing powers over the decisions and laws that are created without approval from other branches or leaders within the government. Democracy • Democracy is the root of a limited government. Within this system of government, powers are delegated or distributed so that one leader or group of leaders does not have too much influence or power. This type of government is in place to provide residents of the country individual freedoms and protection of private property. separation of powers • separation of powers is the distribution of political authority that provides a system of checks and balances to ensure that no single branch becomes too powerful or infringes on the rights of the citizens. • Separation of Power Between Central and State Governments • Separation of Power Within the Central Government checks and balances republicanism • Republicanism is one possible ideology of governing a society or state as a republic. The key point is that the people hold popular sovereignty, rather than the people being subjects of a monarch. federalism • Federalism is a method of government that allows two or more entities to share control over the same geographic region. Each person in the United States is subject to the laws of that city, county, state and our federal government. Supremacy Clause • This clause is the section of the Constitution stating that the Constitution and federal laws are the 'Supreme Law of the Land.‘ • The Supremacy Clause is a guarantee that no laws will interfere with the goals of the Constitution. popular sovereignty • is the principle that the authority of a state and its government is created and sustained by the consent of its people, through their elected representatives (Rule by the People), who are the source of all political power. Business Law • Business law consists of enforceable rules of conduct that govern commercial relationships. • For example a business is required to comply with: anti-trust laws. • Source of business laws: • Constitution, legislature ( statutes) regulatory bodies ( administrative law), common law and rules of ethics. Sources of Business law • Constitutional-fundamental rules and regulations as concerning the power of the federal government to act. • Commerce Clause. Article I, Section 8, Clause 3 provides that Congress has the power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” This is called the Commerce Clause. Commerce Clause • “the power of Congress to promote interstate commerce also includes the power to regulate the local incidents thereof, including local activities in both the States of origin and destination, which might have a substantial and harmful effect upon that commerce.” Commerce Clause • The issue of the outer limits of the Commerce Clause reached the Supreme Court again in 2012. • Twenty six states (led by Florida), several individuals, and the National Federation of Independent Business challenged the constitutionality of the Patient Protection and Affordable Care Act of 2010 (PPACA), often referred to as “Obamacare.” Commerce Clause • The states’ chief claim was that the Minimum Essential Coverage Provision (commonly referred to as the “individual mandate”) requiring a citizen to purchase health insurance from a private vendor—or pay a “penalty”—was beyond the outer limits of the Commerce Clause. Taxing and Spending Clause • In June 2012, the Court issued an extremely controversial decision in which the majority (joined, to the surprise of many, by Chief Justice Roberts) ruled that the individual mandate was not a valid exercise of federal commerce power, but that the penalty associated with the individual mandate was a valid tax under the federal taxing power Due Process Clause • The Fifth Amendment provides that “No person shall . . . be deprived of life, liberty, or property without due process of law . . . ”; and the Fourteenth Amendment provides “. . . nor shall any State deprive any person of life, liberty, or property, without due process of law . . . Due Process Clause • Procedural due process requires that deprivations of life, liberty, or property must be consistent with fundamental fairness. • In practice, the minimum requirement is a fair hearing before a neutral decision maker. Due Process • EXAMPLE: Joey Ramone is a student at High School High, a public school. After being caught smoking in the boys’ room by a hidden camera for the third time in a month the Principal decides to suspend him by sending a letter to that effect his parents who then bring a due process claim against the school. Due Process • The Ramones argue that, at the very least, Joey should have been given notice of the charge against him and provided an opportunity to explain. Due Process • 1) The nature of the private interest here is important. (2) Giving notice and providing an opportunity to explain is likely to lead to the discovery of some facts not already known in many cases. (3) The burden imposed by requiring notice and an opportunity to explain is minimal. • The balancing, therefore, seems in favor of the Ramones. Due Process • Substantive due process considers the content of a statute, not the procedure involved. • Is the government’s deprivation of a person’s. liberty or property justified by a sufficient purpose? • Used to protect liberty. Cases • Laws require interpretations • Common law-- past law called precedent means that similar case provide guidance to a subsequent court in making a decision. • When courts rely on prior decisions by a higher court this is called stare decisis. Statute • A statute is a law is written law set down by a body of legislature • Statues can originate from: • National ( congress), state legislature or local municipalities. • A statue can over-ride common law or a judicial decision in some circumstances Executive Orders • An executive such as the president can issue an executive order to an executive administrative agency. • Executive agencies and department: • Department of: agriculture, commerce, defense, education, energy, home land security, Interior, Navy, State, Treasury, Urban development. • FDIC, OSHA, GSA, NASA, SBA, USAID, NSF, VA AND OPM Executive Order --Obama era • Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is finalizing a rule to require background checks for people trying to buy some of the most dangerous weapons and other items through a trust, corporation, or other legal entity. President Obama • Signed more than 200 executive orders: • Here are some: Obama era • The Attorney General convened a call with U.S. Attorneys around the country to direct federal prosecutors to continue to focus on smart and effective enforcement of our gun laws. Obama era • The Social Security Administration has indicated that it will begin the rulemaking process to include information in the background check system about beneficiaries who are prohibited from possessing a firearm for mental health reasons. Obama era • The President has directed the Departments of Defense, Justice, and Homeland Security to conduct or sponsor research into gun safety technology. Executive Order • It is unlikely that the president would move to confiscate or prohibit handguns through executive action. • The U.S. Supreme Court has reaffirmed the right of individuals to possess firearms for selfdefense and other traditionally lawful purposes twice in the past five years based on the second amendment to the constitution, Executive Order • Presidents acting by executive order have been challenged in court, most notably in Youngstown Sheet & Tube Co. v. Sawyer (1952). In Youngstown Sheet & Tube, the Court held that President Truman had exceeded his authority by directing the seizure of steel mills to avert a strike during the Korean War, stating that “the president’s power to see that laws are faithfully executed refutes the idea that he is to be a lawmaker.” Trump Executive orders • 14 to-date: • 1) Imposing Sanctions With Respect to Additional Sectors of Iran • 2) Ensuring Safe and Lawful E-Commerce for United States Consumers, Businesses, Government Supply Chains, and Intellectual Property Rights Holders • 3) Preventing Hoarding of Health and Medical Resources To Respond to the Spread of COVID-19 Classification of Law • • • • National v international Federal v state law Public v private law Private law- regulates disputes between individual– Party A sues Party B re failure to pay rent. • Public law—disputes between an individual and the government. If a store dumps waste. Classification of Law • Criminal v civil: • Criminal is an act against public as a whole such as: violations of securities laws or the Food and Drug rules. Criminal law • 1. Wrongful behavior • 2. Wrongful intent. • 3rd grades places a magnet on a computer terminal to see the pretty lines– not vandalism – as there is no intent. Criminal law • Common crimes: • Robbery—forceful and unlawful taking • Burglary—unlawful entry into a building w/ intent to commit a felony. • Larceny—wrongful taking of personal property– employee takes office supplies. • Arson—intentional burning of a dwelling. White Collar Crimes • Bribery– offering of value for the purpose of influence: • 1) something of value was offered to a • 2) federal public official; • 3) intent to influence the judgment of the official. White Collar Crimes • Forgery: the action of forging or producing a copy of a document, signature, banknote, or work of art with the intent to defraud. • Federal Anti-Forgery Laws • Identity theft White Collar Crimes • Forgery is considered a felony in all fifty states, and is punishable by a range of penalties including jail or prison time, significant fines, probation, and restitution (compensating the victim for money or goods stolen as a result of the forgery). Computer Crimes • The Computer Fraud and Abuse Act is a law passed by the United States Congress in 1986 intended to reduce "hacking" of computer systems. It was amended in 1994, 1996 and in 2001 by the USA PATRIOT Act. Computer Crimes • The USA PATRIOT Act increased the scope and penalties of this act by: • Raising the maximum penalty for violations to 10 years (from 5) for a first offense and 20 years (from 10) for a second offense; • Ensuring that violators only need to intend to cause damage generally, not intend to cause damage or other specified harm over the $5,000 statutory damage threshold; Computer Crimes • Allowing aggregation of damages to different computers over a year to reach the $5,000 threshold; • Enhancing punishment for violations involving any (not just $5,000) damage to a government computer involved in criminal justice or the military; Computer Crimes • United States v. Morris (1991), 928 F.2d 504, decided March 7, 1991. After the release of the Morris worm, an early computer worm, its creator was convicted under the Act for causing damage and gaining unauthorized access to "federal interest" computers. The Act was amended in 1996, in part, to clarify language whose meaning was disputed in the case. Computer Crimes • United States v. Lori Drew, 2008. The cyberbullying case involving the suicide of a girl harassed on myspace. Charges were under 18 USC 1030(a)(2)(c) and (b)(2)(c). Judge Wu decided that using 18 U.S.C. § 1030(a)(2)(C) against someone violating a terms of service agreement would make the law overly broad. 259 F.R.D. 449 Computer Crimes • The CFAA prohibits access to a computer “without authorization.” The court explains that this: contemplates a view of the internet as divided into at least two realms—public websites (or portions of websites) where no authorization is required and private websites (or portions of websites) where permission must be granted for access. CFAA • The court says “a user should be deemed to have ‘accessed[d] a computer without authorization,’ 18 U.S.C. § 1030(a)(2), only when the user bypasses an authenticating permission requirement, or an ‘authentication gate,’ such as a password restriction that requires a user to demonstrate ‘that the user is the person who has access rights to the information accessed.'” Corporate Criminal Liability • Can a corporation commit a crime? Corporate Criminal Liability • 1) Individual was acting within the scope of his or her employment; • 2) the individual was acting to benefit the corporation; • 3) he act was imputed to the corporation. Liability of a Corporate executive • Responsible Corporate Officer Doctrine-- a court may access criminal liability if an executive fails to ensure compliance with the law. Applied to: FDA, EPA violations (regulatory rules). US Legal System • Federal Court – Supreme Court, Circuit courts and district court. • United States district Court of the Western District of Tennessee, sixth circuit. • State Court • But what court hears a case? Jurisdiction • Original versus Appellate jurisdiction • Original first court to hear a case • Questions of facts are decided by a judge or jury • Questions of law are decided by a judge. • Appellate reviews the decision Jurisdiction • Subject matter jurisdiction is the power of a court to hear particular types of cases. In state court systems, statutes that create different courts generally set boundaries on their subject matter jurisdiction, e.g. children’s court or probate. Federal Jurisdiction • Federal courts have exclusive jurisdiction over • Admiralty, bankruptcy, federal criminal prosecution, patents and copyrights. • Concurrent jurisdiction—both state and federal – the plaintiff can elect the court. Jurisdiction • Personal jurisdiction: • person or corporation involved in the litigation are present in the state or are legal residents of the state in which the lawsuit has been filed, or • if the transaction in question has a substantial connection to the state. Minimum Contacts • Such actions may include, among others, selling goods in the state, being incorporated in the state, visiting the state, or bringing property in the state, if the contact relates to the law suit. Example: Personal Jurisdiction • Jane Smith a resident of Texas buys 2 show cats from Al Bright a resident of Illinois at a cat show in Utah. The cats are neutered and Jane wanted to breed cats. She sues Al Bright in Texas. Is there sufficient contacts to provide personal jurisdiction over Al Bright in Texas? Can Jane sue Al in Illinois? Example: Personal Jurisdiction • ABC co sells elastic bandages, a class 1 medical device over the internet. ABC co contracts with Converter Co (Florida) to make the bandages. • Martin Reek of California buys 10 elastic bandages from an internet website and uses one as a compression aid while running. Martin passes out and injures his head in a race, he sues ABC co in California for negligence and breach of contract. COURTS, TRIAL PROCEDURE AND EVIDENCE • • • Attorney files declaration on petition on complaint in appropriate courts. A. B. The offense claimed Damages requested Venue • Once a case is in the proper court system, venue determines which trial court in the system will hear the case. • If the location that the Plaintiff files in is inconvenient then the Defendant can file a motion to change the venue. Steps in litigation • Defendant’s response • A. Demurrer • B. Motion to dismiss • C. Counterclaim • D. No response; default judgment Steps in litigation • • • • Pretrial stage: Informal negotiations Alternate dispute resolution techniques: Mediation--the attempt to settle a legal dispute through active participation of a third party (mediator) who works to find points of agreement and make those in conflict agree on a fair result. Steps in litigation • Pleadings • The Plaintiff files a complaint with the correct court. • Service of process—to obtain in personam jurisdiction the plaintiff must provide a copy of the complaint to the defendant. • Default judgment- if the defendant does not answer then a default judgment is obtained. Steps in litigation • • • • • Defendant’s Response Answer and counter-claims Motion to dismiss for failure to state a claims Pre-trial motions Discovery Steps in litigation Discovery A. Interrogatories B. Request for Production of Documents and Things Steps in Litigation At the appointed time, trial – – – – – – – – – A. B. C. D. E. F. G. H. I. To have or, not to have a jury Jury selection, swearing in Opening statements Plaintiffs witnesses. Cross examination Defendant’s Summation Jury charge, the law of the case Verdict Judgment. Execution. Levy EVIDENCE Definition: The legal means, exclusive of argument, by which an alleged fact is established or is disproved in a court of law. –Evidence is concerned with fact, not law. Criminal: beyond a reasonable doubt; civil: simple weight on each side. Example: O.J. Simpson trials. EVIDENCE (CONT.) • I. Testimony • A. Proof of real intent • B. Proof of “meeting of the minds” on lack thereof • C. Explanation on interpretation of written documents, but not alienation • II. Physical type; tangible fact EVIDENCE (CONT.) • III. Admissibility of evidence; negative rules – A. Hearsay rule. Exceptions: dying declamations, admissions, confessions, “learned treatise” – B. Opinion evidence. Expert. – C. Best evidence rule; surveyor’s notes, lab test data, daily journals, written agreements. Credit to be given to the evidence rests in the minds of the jurors – D. “Incompetent, irrelevant and immaterial” EVIDENCE (CONT.) • V. • • • • Circumstantial evidence A. Evidence which tends to prove, e.g., presence of a person at the scene B. Inference C. Probability that a number of independent events could not conceivably take place without establishing fact. As the number of facts increases, the force of the evidence is greatly increased D. In essence, all evidence is circumstantial; almost every fact must be considered in relation to the surrounding circumstances Appellate Procedure • Either party can appeal the decision. • The appeal can be based on an error in fact or law. Adversarial System • US adversarial system– the fact finder is neutral and the parties present facts and argue the law. • Inquisitorial system– In China the judge conduct the questions and develop the case. • https://www.youtube.com/watch?v=4eQdz0o p3LU Arbitration • Mediation differs from arbitration, in which the third party (arbitrator) acts much like a judge in an out-of-court, less formal setting but does not actively participate in the discussion. Management: • • • • • • • • International law White-collar crime Contracts Corporate law Anti-trust law Administrative law Agency law Employment law Corporate Management: • • • • • • • Tort law Environmental Law Intellectual Property Law Bankruptcy Real and Personal Property Rights Water rights Cyber-law International and Comparative Law • What is international law? • a body of rules established by custom or treaty and recognized by nations as binding in their relations with one another. International Transactions • How is business transacted in in the international market place? • Export • A foreign sales representative • Distributor • A franchise agreement • A licensing agreement Questions?
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