Updated: Jan 12
Like everyone, we hope that the new year is one of optimism, of progress and goodness. We do not wish to damper our hopes at the start of this bright new year, however we do want to take a minute to highlight some of the most infamous instances of corporate corruption from 2018 (lest we forget). There is much to be learned from these mistakes and missteps.
Which corporations should we NOT try to emulate in 2019 and which companies made their mark this past year by mucking it all up?
Here’s our list of the 7 companies with the worst corporate conduct in 2018.
We'll explain more in depth about each one, below.
General Motors / Takata
Oil Companies: BP, Chevron, Conoco Phillips, Exxon Mobil and Royal Dutch Shell
State Farm Insurance
Larry Nassar - helped by USA Gymnastics and MSU
In the age of massive corporations, companies consistently show that they are not willing to protect people’s interests and safety unless they are forced to do so by some external body.
Oftentimes, this outside pressure comes from lawyers taking legal action.
A Note On the Corporate “Apology”
As corporations make ever more egregious mistakes and insult or injure more people in their bottomless thirst for profits, they have added the “apology” to the playbook. Far too often, corporations use a public apology to cover up their corruption and missteps instead of getting to the root of the problem and changing their habits. And while the apology never solves the problem, it does often minimize the consequences to the company. Corporations spend major cash figuring out how best to apologize. In June of 2018, Forbes posted an article entitled, "Eight Ways to Effectively Issue a Public Apology."
In fact, other business magazines including the Harvard Business Review, Chief Executive and Ad Week (AAJ) have published similar articles within the past year that offer advice about how to “craft” the best apology letter.
The bottom line, though, is this: issuing an apology is not the same as taking responsibility. Lawyers like those at Meub Gallivan & Larson work to force companies to take the additional step of fixing what can be fixed and paying for what can’t.
The 7 Worst Corporate Conduct Offenders of 2018
Each year, the American Association for Justice (AAJ) reports on the worst corporate conduct of the year. It highlights companies that consistently injure vulnerable Americans, while enriching supporting some of the wealthiest people in America. Of course, it often takes years for such corruption to come to light. When greed seems acceptable, the AAJ points an accusatory finger at these companies and—hopefully—serves as a deterrent to other companies who might think twice before choosing similarly nefarious practices.
1. Avoidable Airbag Malfunctions at General Motors/Takata
In recent years, hundreds of thousands of Americans around the United States have had their vehicles recalled because of faulty airbags produced by Takata corporation. Takata’s faulty airbags have killed at least 24 people and injured 266 more so far. Although many motor vehicle companies have recalled cars with these airbags in them, General Motors is refusing to recall theirs. The company admitted that if they were to recall and replace all the cars that have been impacted by this malfunction, they would lose about $1 billion dollars. Apparently they are not willing to lose that money for the safety of their consumers.
GM is refusing to pay, claiming that the airbags are, "not likely to pose an unreasonable risk to safety." Along with being one of the few companies that will not recall these faulty airbags, General Motors was one of the few automakers that were aware of the safety issues of Takata’s airbags before the information was disclosed to the public. They did nothing about it then and they are doing nothing about it now. As of now, there is no larger case against Takata, but many who have been impacted by these faulty airbags are suing the company.
If you or someone you know has been killed or injured by an airbag malfunction in a GM vehicle, please call us. We have an experience team of personal injury lawyers who can help.
2. Navient and the College Debt Crisis
In the United States, college can feel like a necessity to anyone who wants to find a decent job and earn a good living. Sadly, it has also left the American people with $1.5 trillion in debt. For perspective, that’s more than the GDP of Russia. The debt crisis doesn’t only impact individuals. It ripples out and affects the entire national economy and many financial experts say it could lead to the next financial crisis.
Navient was created in 2014 as a for-profit company. Although it is the smallest of the three major student loan companies in the United States, it has received three times more complaints than the other two lending companies. There is a long list of the things that
Navient has done to wrong its clients, so we’ll just share a few:
It has led clients into bad deals with high interest rates, making it harder for people to make their payments and earning the company more money.
It has put borrowers into repayment plans that make them ineligible for public service forgiveness programs.
It has reported that permanently disabled people (including veterans) have not repaid their loans when in actuality they have had them forgiven by federal disability programs.
It has taken more money then the borrower has owed when the borrower fell behind on payments.
Fortunately, when over 60,000 complaints were made, the Consumer Financial Protection Bureau (CFPB) took notice and made a move to stop this company, returning over $750 million dollars to wronged borrowers in 2017. Unfortunately, when the Trump administration’s Secretary of Education, Betsy De Vos, took over, the investigation was rolled back and the CFPM lawsuit was derailed. With the CFPB lawsuit against Navient on hold, states such as California, Illinois, Pennsylvania and Washington as well as the American Federation of Teachers have taken up lawsuits to hold Navient accountable. Stay tuned.
3. Global Warming and the Case Against BP, Chevron, Conoco Phillips, Exxon Mobil and Royal Dutch Shell
For years, the evidence of global warming has been mounting and the effects have been increasingly palpable across the globe. In January 2018, the City of New York sued the five largest publicly-traded oil companies—BP, Chevron, Conoco Phillips, Exxon Mobil and Royal Dutch Shell. This suit alleged that the five companies combined made up 11% of the worlds global warming greenhouse gases and that they had been aware of their impact for many years.
The aim of the lawsuit was to get these companies to take responsibility and, more importantly, to get them to take action and start fixing the problem they had created. New York is not alone in suing big oil, many other states including California, Colorado, Maryland, Massachusetts, Rhode Island, Texas and Washington have all filed similar lawsuits.
Recently, internal documents at Shell from the 1980s reveal that the companies researchers predicted that global warming would in fact make changes in sea levels, ocean currents, precipitation patterns, regional temperature and weather and that these changes would be bigger than any event in the past 12,000 years.
Exxon was once a leader doing research about global warming and encouraging its researchers to learn more about the issue. In the 1990s, this changed when the company started a massive disinformation campaign that aimed to sidetrack critical research on climate change. Exxon even helped to create the Global Climate Coalition which strongly lobbied against any act to reduce greenhouse gases spending millions lobbying as well as taking out full page ads denying climate change, while also creating the very thing they were denying. With the change and enhancement of science, lawsuits have become more credible and easier to take to court than in the past. This is vital because global warming and climate change are not stopping, catastrophic weather events happen each year.
4. State Farm Insurance and Bribery in Illinois
This story is a classic case of a company using bribery to try and cover up its illegal practices. In 1999, in the case Avery v. State Farm, the insurance company was sued for instructing auto repair shops to use cheaper and less trustworthy materials when fixing cars. The verdict of this case was that State Farm had to pay $1.6 million in reparations. The verdict was upheld in an appeals court in 2001 and then was appealed to the Illinois Supreme Court.
State Farm then illegally targeted the judges of the Supreme Court, looking for ways to influence the case in its favor. The company secretly paid the election campaign of Lloyd Karmeier millions of dollars, helping him get elected to the very court deciding its case. Predictably, when State Farm’s case was decided in 2005, the court ruled in favor of State Farm, thanks to Karmeier. In 2018, State Farm finally paid a $250 million settlement for its involvement in getting Lloyd Karmeier elected to the Illinois Supreme Court to rule in favor its favor.
5. Theranos: The Startup that Wasn’t
Theranos is a biotech company that offered a revolutionary type of blood test. Headed by Elizabeth Holmes, whom the New Yorker predicted would be the next Steve Jobs, Theranos claimed that it had created a new blood testing method that would require only a few drops of blood to get a diagnosis on diseases ranging from diabetes to various cancers for a cost of just $2.99. Theranos claimed that its technology would make blood tests cheaper, easier and more accessible.
There was one problem with this revolutionary claim: the new technology did not exist. After thousands of misdiagnoses and many cases of patients being treated for the wrong illness, Theranos was finally shut down in September of 2018. Civil cases and the SEC fraud charges were settled and Holmes was indicted as well as the company being shut down before the whole scandal was over.
6. The Cocoa Slaves of Nestlé
Nestlé, one of the largest food producers in the world, is as corrupt as they come. The company is a mass producer of food products and is best known for its candy, much of which is made with cocoa. This cocoa is harvested mostly in West Africa where Nestle employs forced slave-labor to get the amounts of cocoa it needs.
In October of 2018, the Ninth Circuit reestablished a lawsuit that accused Nestlé USA and Cargill of, "perpetuating child slavery at cocoa farms in Ivory Coast." (AAJ) In the case, the 6 plaintiffs were kidnapped from their Mali home as children and forced to work 14-hour days without any payment. The court ruled that the companies failed to use their economic position to stop child slave labor from occurring as well as allowing such a system to exist without attempting to stop it.
Nestlé's excuse for the whole debacle was that they cannot keep track of all the plantations where they receive cocoa and therefore have no way of knowing which plantations are using child labor. Along with the lawsuit from the Ninth Circuit, the state of Massachusetts sued the company in February of 2018 with the aim of changing their ways and making them put labels on their products to alert the public that their products may contain cocoa that was harvested with forced labor. This would educate consumers about the company they are supporting and hopefully discourage them from buying these products. The argument that Nestlé provided against this claim was that they have no space on their labels.
7. Larry Nassar and the Coverup at USA Gymnastics and MSU
Larry Nassar was a physician at Michigan State University (MSU) and the official doctor for the USA women’s gymnastic team. While holding these powerful positions, Nassar sexually assaulted and abused hundreds of women. This abuse was brought to the attention of USA Gymnastics and MSU multiple times, with the first incident of complaint occurring in the 1990s, but no action was taken until 2015.
The abuse was brought up to coaches of the USA Gymnastics team who covered up the incident and USA Gymnastics CEO and President Steve Penny, who was arrested on felony charges of tampering with evidence after he destroyed documents relating to the case. Along with USA Gymnastics, 14 MSU employees including coaches, athletic trainers, a police investigator and an employee who became MSU’s assistant general counsel knew about the abuse and did nothing.
As incidents came to light throughout the 1990s, the girls who brought up their abuse were discouraged from sharing the information and employees who tried to help were removed from their positions and told to sign non-disclosure forms to protect the institution. In 2014, after student complaints, MSU conducted an investigation into Nassar. To the public, Nassar was cleared, but the University requested a third person in every doctor's appointment from that point on.
In September of 2015, the U.S. Department of Education’s Office of Civil Rights found that MSU had not properly followed Title IX, so the government kept a closer eye on the University, but somehow Nassar continued to abuse young girls. Nassar was finally brought to justice by attorney Rachael Denhollander, former gymnast and patient and victim of Nassar.
Nassar was sentenced to 60 years in federal prison. He also received two Michigan state prison sentences, one for 40 years and one for 175 years. He also received seven counts of sexual assault of a minor and one sentencing for 40 to 125 years for three additional sexual assault counts. After the lost documents that were destroyed by Penny were suddenly "found" in November 2018 (in the USA Gymnastics headquarters), the U.S. Olympic Committee revoked the non-profit's status as the governing body for the sport.
Want to learn more about these cases?
You can read the full report on each of these companies here.
There might be light at the end of the tunnel!
As we kick off 2019, it's time to look forward to what challenges and new cases will come to light in 2019. Hopefully with more awareness and understanding of how corruption can be stopped, 2019 will be less corrupt than its predecessor.
Here at Meub, Gallivan and Larson, we hope that the corruption across the country and in the little brave State of Vermont stays at bay. If you or a loved one have experienced corruption in Vermont, the office of MGL is ready to review your case and look for positive solutions.