No. 31343 - Forrest A. Younker v. Eastern Associated Coal Corporation, a
corporation, West Virginia Division.
Davis, J., concurring:
I fully join in the majority opinion. I believe the Court
has struck the appropriate balance between the interest of business in adopting
and enforcing Eastern's Code of Business Conduct (hereinafter referred to as the
CBC) and the reasonable expectations of the employees subject to it. I
also observe that while CBCs are not new, this Court has not, until now, had
the opportunity to explore them. Thus, I write to generally review the nature
of CBCs and their potential value in advancing desirable goals for society at large, the
businesses themselves and their employees.
A. What is a Code of Business Conduct?
As early as the 1970s, commentators recognized that the demand for [code of
business conduct] adoption by all public companies is likely to increase. Charles E. Harris,
Structuring a Workable Business Code of Ethics
, 30 U. Fla. L. Rev. 310, 312 (1978). Since
then, corporate codes have become a common corporate document. Harvey L. Pitt & Karl
A. Groskaufmanis, Minimizing Corporate Civil and Criminal Liability: A Second Look at
Corporate Codes of Conduct
, 78 Geo. L. J. 1559, 1602 (1990). Because many businesses
have such codes, it would be useful to identify and discuss the definition of a CBC. The
definition of a CBC can be found in recent Congressional legislation requiring public
corporations to either adopt a CBC for corporate financial officers or explain why such a
code has not been adopted. Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204 § 406(a), 116
Stat. 745, 789 (codified at 15 U.S.C.A § 7264(a) (West. 2002 & Supp. 2003)).
(See footnote 1)
The federal regulations
implementing the Sarbanes-Oxley Act expand the statutory definition of code of
(See footnote 2)
to generally mean
written standards reasonably designed to deter wrongdoing; to promote honest
and ethical conduct and compliance with applicable governmental laws, rules and
regulations; to govern prompt internal reporting to an appropriate person or
persons, identified in the code, of code violations; and to ensure accountability
of those subject to the
code for adherence to it. Disclosure Required by Sections 406 and 407 of the Sarbanes-
Oxley Act of 2002
, 68 Fed. Reg. 5110, 5118 (Jan. 31, 2003) with a benchmark for defining CBCs. I now turn to an examination of the potential utility
of such codes.
B. Why CBCs are Important
The widespread adoption of CBCs reflects an unstated belief by academics,
regulators, and legislators that a written code of conduct is an important vehicle for
promoting corporate self-governance and the development of ethical standards. Id
. at 1600. CBCs have been recognized by commentators and regulators alike as a potentially desirable
means to advance social policy. See, e.g.
, Cristina Baez, et al., Multinational Enterprises and
, 8 U. Miami In't & Comp. L. Rev. 183, 324 (1999-2000) ([T]hese codes
seem to provide an ideal mechanism for creating awareness and respect for human rights
within the structure of a corporation.); Pitt & Groskaufmanis, Corporate Codes of Conduct
,78 Geo. L. Rev. at 1635-36 n.449 (noting that Johnson & Johnson's corporate credo was
contributing factor in the company's exemplary behavior' when the company's
Tylenol drug was poisoned in the early 1980s (citation omitted)); U.S. Dep't of Labor, The
Apparel Industry and Codes of Conduct: A Solution to the Int'l Child Labor Problem?
(noting that CBCs can be an effective tool for fighting child labor exploitation).
the potential benefits of a CBC also extend to a business's bottom line. Research from the
Institute for Business Ethics suggests that companies with a published code of ethics are
consistently more admired, have a better rating in terms of managing non-financial risks and
show better financial performance than companies without ethical codes. Ethics Pays
Ethical Corp. Magazine at 6 (May 2003). Given the important role that CBCs can play in
advancing important social goals, I applaud the majority for striking an appropriate balance
between the impact of CBCs and the expectations of those subject to them.
For the foregoing reasons, I concur. I am authorized to state that Justice Maynard
joins in this concurring opinion.
The Sarbanes-Oxley Act calls such codes code[s] of business ethics. The
regulation implementing Sarbanes-Oxley also requires a code of business ethics to cover the
chief executive officer.