September 17, 2012
Wexler on Corporate Whitewashing
Do class action and other high profile lawsuits change corporate social behavior and create corporate social responsibility? While the answer is decidedly mixed, the litigation literature focuses on measures of legal compliance. Yet compliance is only one piece of the puzzle. In addition to choosing a compliance strategy, corporate actors can also deploy extra-legal behavior to respond to high profile litigation. This extra-legal behavior, by which I mean action taken in the shadow of the law, deserves additional scrutiny. Many have written about how litigation or regulation or the threat thereof can spark self regulation, but corporations manage a large toolbox of extra-legal tools of which self regulation is only one. This article identifies and investigates a different extra-legal response- the white wash.
To take up this challenge of theorizing corporations’ extra-legal toolbox, this paper begins by briefly explaining the interaction of reputation and corporate wrongdoing. I then provide a multi-element definition of an extra-legal white wash. As no uniform definition of “washing” yet exists, this article offers a useful focal point to unite the disparate studies across disciplines and substantive legal areas. In order to explore the underpinnings of a specific type of a white wash, this article highlights Wal-Mart’s response to the Dukes class action litigation as a potential example of an extra-legal white wash. This includes a critical look at some recently undertaken policies and practices in the areas of hiring, promotion, and women’s issues more generally.
Finally, this paper addresses the normative implications of extra-legal white washing. If one believes an underlying grievance is legitimate, then extra-legal white washing seems inherently problematic. When such extra-legal white washing ultimately succeeds in changing the conversation, the hypocrisy may constitute an additional, though non-legally cognizable, harm to the aggrieved. Notwithstanding these very real harms, this paper also identifies some conditions under which normatively desirable extra-legal white washing is possible and may even grow to address the underlying grievances. The paper concludes by noting the role law has to play in not only instigating extra-legal white washes, but in regulating them as well. It speaks to the larger potential of and need for access to robust substantive law to identify and remedy grievances.
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