Jones vs. Halliburton, Case Study Example

Introduction

The prior history of the case is an appeal from the United States District Court for the Southern District of Texas, 2008, and subsequent history is where the United States Supreme Court certiorari was dismissed by KBR Technical Services v Jones on March 11, 2010. The appellant employer sought review of a decision from the United States District Court for the Southern District of Texas, which partially refused to compel arbitration of some appellee employee’s claims against the employer, which stemmed from the alleged gang rape of the employee by coworkers whilst working in the international country of Iraq. The appellate court decided the claims were not related to the scope of employment because the barracks that Jones resided in were located away from the workplace and Jones’s was off-duty at the time of the rape, hence the claims were not arbitral as the employer would have wanted them to be. The key stakeholders in this case are KBR/Halliburton and its subsidiary companies and the Plaintiffs which are suing for recovery of damages. The Plaintiff’s husband was removed from the original petition from recovering any damages leaving only Jones to make claim for recovery.

Legal Issues: (IRAC Method)

The issues to be considered are both legal and ethical relating to criminal sanction and civil sanction as well as human rights issues.

1. The second issue to be considered is whether domestic (Texas law) of arbitration related to employment will apply?
2. If arbitration laws do not apply will there be any criminal and civil sanctions that apply to the employer?
3. What moral and ethical issues will apply?
4. What are the State of Texas codes that will apply?
5. What is the federal employment law as related to this issue criminally and civilly for the State of Texas? Is arbitration required under the scope of the law?
6. What is the Consumer Protection Law for the State of Texas relating to criminal sanction and civil rights for Americans working abroad?
7. Were the alleged claims of assault and battery, emotional distress, negligent hiring, retention and supervision and false imprisonment covered under the employee’s arbitration agreement?
8. Will the ‘doctrine of unclean hands’ be applicable in this case for the Plaintiff’s defense?
9. Why is KBR/Halliburton non-compliant and what issues or factors have contributed to their non-compliance?

Rule of Law: The rule of law is explained in more detail as applied to precedent and statutes.

• Sexual assault was not within the scope and course of employment therefore cannot be arbitrated under the Texas Arbitration Act. The assault is criminal in nature and is not bound by arbitration.
• The employee received worker’s compensation benefits for the alleged wrongful acts but the ‘course and scope of employment’ were more narrowly defined in such compensation laws such as the Defense Base Act.
• According to the Federal Arbitration Act, a circuit court has jurisdiction over a district court’s refusal to compel arbitration 9 U.S.C.S. & 16(a)(1). The denial of a motion to compel arbitration is reviewed de novo. There is a two prong test to determine if a party is required to arbitrate:

1. First the court will decide if the parties have agreed to arbitrate a dispute and if there is a valid dispute to arbitrate
2. Does the dispute in question fall within the scope of the agreement of the two parties? Finally the court will ask if both answers are in the affirmative, is there any ‘federal statute’ or policy that would render the claim non-arbitratable.

• A person cannot make a claim for personal injury under the Texas Arbitration Act unless each party to the claim agrees in writing to arbitrate by the advice of their counsel and the agreement is signed by counsel and each party. There is strong federal policy that favors arbitration. Texas Civil Practice and Remedy Code Annotated & 171.002.
• The United States Supreme Court held if there is any dispute whether a situation should be arbitratable the issues should be resolved in favor of arbitration. Unless there is positive assurance there is no arbitration clause then it is susceptible of an interpretation to assume there is to be arbitration to resolve an issue at hand.
• Case law is divided on arbitration of sexual assault arbitration cases related to clauses any and all claims against the employer that are related to the employment must be arbitrated.
• The Defense Base Act provides workers compensation for workers outside the United States, which employs the terminology for the course and scope of employment. This is the basis of the law for any workers who are employed by U.S. companies working abroad.
• The proximity to the danger requirement for recovery is not extended simply because the injured party is employed out of the country as expressed by the Defense Base Act. Social and recreational nature must be considered as incident to the overseas employment natured relationship. As with proximity to the incident in tort law, the existence of working outside the country does not preclude the proximate cause of the existence of the incident for claim because this is a U.S. employment based company and those U.S. rules and regulations will apply, henceforth.
• All claims were arbitratable except for assault and battery, intentional infliction of emotional distress from assault, negligent hiring, retention, supervision of employees involved in assault and false imprisonment.
• According to the appellate court, the doctrine of unclean hands applied with some alleged issues and the decision was affirmed and remanded back to the district trial court of Texas. The fact that Halliburton and Co. did not come to the plate with unclean hands states those who come to equity must come with clean hands to make a full claim.
• As distinguished in Republic Insurance Co. vs. PAICO Receivables LLC (2004) it was distinguished pursuant to the Federal Arbitration Act (FFA) the appellate court has jurisdiction over lower court’s refusal to compel arbitration. The denial of a motion to compel arbitration is reviewed de no as distinguished in Sherer vs. Green Tree Servicing, LLC (2008).
• As distinguished in Smith ex rel. Smith v Captain D’s, LLC, 963 S. 2d 1116 (Mississippi, 2007) it was held that the Plaintiff’s claim against her employer for negligent hiring, retention of the manger, who allegedly sexually assaulted her was unquestionably beyond the scope of the arbitration clause at issue. Therefore, this case applied directly to the case of Jones vs. Halliburton because the issue was which torts could be applied under the Texas Arbitration Act.
• In Hill vs. Hillard 945 S.W. 2d 948. 43 7 Ky. L. Summary 3 (Kentucky Court Appeal, 1996). Halliburton contends worker’s compensation contends support for the purposes of a provision for an arbitration agreement. This does not preclude the company from any future tort or negligence claims. They are separate entities.
• Halliburton Co. /KBR, et al was non-compliant with the rules of arbitration agreement because they failed their duty of care to protect the safety and welfare of the Plaintiff whilst under the scope of employment. The company was further non-compliant in the fact that they allowed a negligently criminal acts to transpire as of their result of negligence under the Texas Arbitration Act. As a result they were convicted of criminal acts not related to the Texas Arbitration act because these acts were considered non-arbitratable because they were not in the scope of employment they were criminal.

Application of the Law: This is how the rules of law apply to the issues of the law.

The District Court of Texas found after reviewing the case that some allegations were arbitratable but with well-reason some were not and denied Halliburton’s/KBR’s motion for some claims of assault and battery, intentional infliction of emotional distress arising out of the alleged assault, negligent hiring, retention an supervision of employees involved in the alleged assault and false imprisonment.

With relation to the Smith vs. Captain D’s case the assault and battery against the supervisor in and alleged sexual assault were ‘not directly or indirectly related to the Plaintiff, restaurant employee’s course of employment for the purposes of the company’s arbitration agreement because the ‘provision limited the employment related claims and a claim for assault and battery in no way touches upon matters covered by the agreement as such.

Hill vs. Hillard (1996) contended the claims of assault and battery; false imprisonment and sexual assault should be within the scope of employment because the supervisor and employee were on a business trip together. It was found in most cases what a supervisor does is independent of an employment relationship.

The Longshoremen’s and Harbor Worker’s Compensation Act has established compensation for workers overseas and to avoid harsh and incongruous results but not to establish arbitration for sexual assault. See: O’Leary vs. Brown-Pacific-Maxon, Inc. 340 U.S. 504, 506, 71 S. Ct. 470, 95 L. Ed. 483 (1951) where payment of compensation for accidental death and injury is authorized from the course of employment and this includes the test of recovery for the casual relationship between the nature of employment of the injured person and the accident.  There should be a significant relationship to the contract.  Interpreting O’ Leary, we find the buck stops at the bedroom door of Jones for it is not contradictory for Jones to receive compensation because she worked in a danger zone which led to her injuries yet claim in the context of arbitration that her allegations in the district court be deemed non-arbitratable because there was not a significant relationship to her employment contract.

The factors that contributed to Halliburton’s non-compliance are that they thought the complaints could be covered under the arbitration agreement, they did not care about protecting the Plaintiff’s rights to work in a safe environment and overlooked her numerous complaints against the harassment by the men workers. This was an environment dominated by men.

Conclusion to the Case: Includes a short synopsis of the final outcome of the case.

The appellate court concluded there were a valid agreement to arbitrate, rejecting, and Jones’s contentions that there was ‘no meeting of the minds’ on the arbitration agreement and that it was fraudulently induced and contrary to public policy. Jones’s contended enforcement of the arbitration agreement would be contrary to the doctrine of unclean hands. The court disagreed. The court further disagreed that enforcing part of the arbitration agreement would be unconscious able.

The appellate court found those four claims fell out the scope of employment, though as expressed in the Texas Arbitration Act, hence were not related to Mrs. Jones’s scope of employment therefore could not be arbitrated under the said agreement. Even though her housing was provided by her employer and the arbitration provision extended to personal-injury claims, Jones’s bedroom did not apply. The court ordered litigation of the non-arbitratable claims. Arbitration was to take place before litigation was to commence. An interlocutory appeal was filed in June 2008.

Federal statute does not bar arbitration nor does the scope of the Texas Arbitration Act govern the arbitration provision with respect to this case. There is a strong federal policy in favor of arbitration but the language of the agreement must fall within the scope of the agreement of the parties and the TAA. Penzoil, 139 F. 3d at 1067 realized the significance of broad clauses having their limits within arbitration clauses. They further recognized that a dispute need only touch matters covered by the arbitration clause to be arbitratable.

Cultural Behavioral Effects with Relation to Ethics/Morals

Cultural factors influencing the courts may have been the idea Jones was stationed with a predominantly faceted male platoon. The court may have been pre-empted to rule most of the harsher crimes were non-arbitratable because she was forced to room with all men against her will which was not a traditional custom in America or in Iraq.

Halliburton Company did not have any formal policies set in stone for female workers to deviate themselves apart from male workers in this abroad situation. They further inspired the females and the males to bunk together. They did not seem at all interested in keeping the ethical and moral interest of the female employee at heart despite her concerns and despite her previous harassment issues whilst in the states.

Halliburton appeared to be a male dominated company very raw in nature with low standards of moral ethics. For this reason, they had to pay the price of a large lawsuit and a violation of ethical codes. Another contributing factor to their lack of candor may have been the typical way that men treat their women in Iraq which is by looking down on women with low standards and demise. Women have virtually no legal rights in Iraq and many young girls and women and wives are often raped in that country and it goes without spoken words.

Theories of Ethical Thought

Key factors that should be addressed to minimize legal and ethical issues identified in this case are as follows:

Consequential Theories

These are the inflictions of assault and battery, sexual assault, false imprisonment, etc. (criminal and tort inflictions not covered under the arbitration agreement with Halliburton Co. and KBR). With every choice a person makes in life according to the consequential theory he/she must pay a penalty for his/her crime according to the rules of justice. We are able to make choices in life according to how we think, behave and act according to what we are taught and our moral and value system. If this value system is flawed then we will make poor choices that are not congruent to what society dictates as conformant to society and as a result we will have to suffer criminal penalties. As such in the Jones v Halliburton case, the Defendants had to suffer criminal penalty for the rape or sexual assault charges along with the other charge of false imprisonment. Fortunately our democratic society is set by a premise of moral and ethical codes that all have to follow though people with mental disabilities and minors follow a lesser code due to their inability to decipher right from wrong as adults are able to decide.

Deontological Theories

These are the divine acts of God for the good of mankind. They are those that are self-evident which represent what is just and fair. Particularly to the case they represent justice for Mrs. Jones in respect to her alleged rape, assault and battery, false imprisonment and any punitive and compensatory damages awarded by the court. Often when people make bad choices in life that are not in line with spiritual choices they try to force the hand of God or go against what a higher power would teach us to live by. God often steps in and makes decisions to let good things happen for the fortune of the better person and the good of society as a whole. God enables us to make choices and we have the ability to make wise choices if we live a Godly or spiritual life. With reference to this case, God stepped in and allowed the Plaintiff to be vindicated for the wrongdoing’s that had been afflicted upon her. Halliburton and Co were found guilty on criminal charges and the case was not arbitratable under the Texas Law which meant the Company was not able to strike a deal under the contract provisions for the criminal sanctions.

Humanist Theories

These are the acts created by the good people and the judges/courts. When judges follow Codes of Ethics these codes are derived from theories of humanist codes. Each person has their own code of ethics to follow just as politicians can choose to be clean or dirty. Judges can choose to follow the law or not. All people have the ability to do good or bad and we are judge by the choices we make. The people that wronged Mrs. Jones did bad or immoral acts and the judges did moral acts by making things right for Mrs. Jones. The judges made good legal decisions by making the wrongdoers pay for their illegal acts which were also immoral in the eyes of God (Deontological Theory). We can only be judged by the choices God gives us, the choices we make as humans and the choices we make according to the Humanist Theory, as perceived by society as a whole. The judges in this case were forced to follow the law and make decisions by applying the law through prior court cases as precedent to find that some of the allegations did not fall under the scope of employment which made them non-arbitraitable. This was extremely important for the Plaintiff to find justice for the wrongful torts and criminal acts that had been possessed upon her.

Halliburton portray issues of unethical behavior when they failed their duty of care to protect Jones from a safe and reasonable living environment to live and work in. Further they failed to protect her from a criminal environment. They ethically tried to group criminal acts under an arbitration agreement which had no merits on the face of things. They were more concerned with their appearance and reputation as a company rather than a person’s life and self-dignity. They did not care whether their workers and supervisors had conducted themselves immorally and committed a criminal offense of rape and false imprisonment and failed their duty of care to protect the young woman. Every person has a right to work in a safe and conducive environment and Jones was failed this opportunity despite her complaints and fears to supervisors. Corporate government did not have any policies to protect female employees against such actions of harassment rather they attempted to cover such disregards of protection under an arbitration act which permitted heinous crimes to be negligently grouped with less serious crimes. The court did not permit this in the Jones v. Halliburton (2010) case. It would have been unheard of to do such a thing.

Each and every theory applied played an important role in this case however the most influential of the discussed theories were the humanist theory and the divine theory because God has power over all in life. With total faith in his ability one can overcome any obstacle in life including finding justice. Judges are mandated to follow the rules of law and if they do not their decisions can be appealed to higher courts and further a judge can be brought to Judicial Review if it is found he ‘did not act accordingly’ with the application of the law in the following categories: Illegality, Irrationality or Unreasonableness. Therefore, it is very difficult for a case to not find true justice, though a person may have to fight and suffer a series of lower court injustices to make its way to proper justice. The point is that if a judge makes a bad decision for whatever reason, there is redress to correct the actions and one should have total faith in the Divine Power for he can move all things in life.

Legal and Ethical Issues According to Theories of Ethical Thought:

Consequential, Deontological or Humanist?

• Assault and battery: All three theories apply, however the main theory is consequential for there is consequence for every action. The humanist theory will apply because the judge will make the sentencing for the crime of assault and battery.
• False imprisonment and Sexual assault: All three theories apply, however the main theory is consequential for there is consequence for every action. The humanist theory will apply because the judge will make the sentencing for the crime of assault and battery.
• Emotional distress: Humanist theory will apply because the judge will make the decision in tort law what award in damages will be given.
• Negligent hiring (Jones v Halliburton, 2010): Consequential theory will apply because the company will be cited for negligence and there will be humanist theory applied because the judge will determine if there are any compensatory and punitive damages associated.
• Following code of conduct”: This pertains to a moral/ethical Deontological issue of following the moral and ethical codes set forth by the company.
• Following contract law: This involves the humanist and consequential theory because the judge will find the company in breach of contract and the judge will make the determination according to the laws.
• Application of the law: Application of the law is a humanist theory and deontological theory based on precedence of other cases and any potential conflicts with society’s thinking as a whole.
• Doing what Jesus would do: This is based on the Deontological theory.
• Applying the law in general criminally: This relates to the consequential and humanist theory for judges do not make the law, legislation does through the executive powers, but the judges enforce the laws. If someone does not follow the law, there are consequences as seen in Jones v Halliburton.
• Applying civil law: This is applied through humanist theory for the judges make the decisions in tort law and further upon deontological theory because they are influenced by rules of ethics and discretionary policies dictated by society. Society means the citizens of the world.
• Protection of Jones’ female capacity as a woman (Jones v Halliburton, 2010): Protection for Jones through consequential, deontological and humanist theories because this is a criminal act and the judges have to protect the person against whom a crime is committed by enforcing the consequences dictated by legislation, policies pushed by the society and enforced by the executive.

Supporting Rationale for Listed Items Above:

• Jail time for defendants would provide support to keep them from committing such acts.
• Jail time for defendants would initiate the desire to avoid future committing of heinous crimes.
• Jail time for defendants would give defendants and other companies with related issues the incentive to keep closer watch on their employees and to protect other employees.
• Compensatory and punitive damages (Jones vs Halliburton, 2010)
• Compensatory damages are awarded to bring a person to the same level they were at the time of the tort action.
• Compensatory and punitive damages are brought to not bring compensation to the same level the Plaintiff was prior to the negligent act but to compensate them for future damages and other awards such as emotional distress and other related factors including loss of income, family residuals, etc.
• Compensatory damages and company fine
• Yes application of law was met legally and ethically
• Jail time for defendants with the hope of promoting less crime in the workplace.
• Jail time for defendants with the hope of promoting less crime in the workplace.
• Compensatory and punitive damages for Plaintiff and her family (Jones v Halliburton, 2010).
• Company failed duty of care hence should be fined, imprisoned and compensatory and punitive damages to Plaintiff and her family (Jones v Halliburton, 2010).

Recommended Corrective Action

Industry recommendations should have been ‘at best practices’ to separate the Plaintiff from the males dormitory workers when she made complaints of harassment especially since she had been moved to Iraq for previous claims of sexual harassment against male workers in the states. Halliburton failed their duty of care to protect her. Now the recommended corrective action is to award her damages for her pain and suffering and to jail the perpetrators to ensure this does not happen again. Halliburton should be fined drastically for allowing criminal negligence to take place in their presence for non-arbitratable matters.

Contribution Factors: Corporate Culture and Corporate Governance Guidelines

The company’s lack of an ethical corporate formal guideline and policy for female workers and an unclear arbitration agreement led to this dreadful situation. The scope of within the scope of employment was too broad and the company simply did not care about protecting the rights of female workers abroad and domestically. They pushed harassed female workers to another location rather than addressing the situation with policy and guidelines. They have a male dominated guideline policy and wish to keep it covered by arbitration agreements.

Conclusion

People use egoism and utilitarianism to make decisions of what is right and wrong in life. As seen in this case the Defendant’s made the wrong choices in not protecting Mrs. Jones despite her numerous requests from separation from the male housing partners which eventually led to the criminal activities against her and the lawsuit. Normally there is moral worth with a decision if one can find a good feeling associated with his/her decision (Ferrell, O., Fraedrich, J., Ferrell, L, 2010).  One should always look to the consequences of his/her choices before making them. Utilitarianism is concerned with seeking the good for all people concerned with a situation and is not self-seeking behavior (Ferrell, O., Fraedrich, J., Ferrell, L, 2010).  On the flip side, egoism is concerned with seeking the best for an individual as seen by the choices made by KBR/Halliburton Company overseas. The court focused on the deontology of Halliburton when considering the Texas Arbitration Act, for they did not consider the consequences of the Act fully. A judge must always rely on his sense of virtue ethics along with application of the law to make a sound decision for the best of the Plaintiff, Defendant and future litigants because of precedent. The Texas Arbitration Act needs to be re-examined and it needs to be made much clearer what circumstances fall under the scope of employment and what specific situations do not in order to cover harassment and other criminal situations. The right of workers needs to be vehemently protected by human rights laws in the courts.