CASE STUDY- 3

Naveen Xavier
Business Ethics BUS 570
Professor Larry D. Barnes J.D.
University of the Potomac

Case Study -3

2
The Flight Over the red woods

Dense forests of coastal redwood trees once covered 2.2 million acres of southern Oregon and
northern California. Today, only about 86,000 acres of virgin redwood forest remain. Most of this
is in public parks and preserves, but about 6,000 acres of old-growth forest are privately owned
nearly all of it by the Pacific Lumber Company, headquartered in San Francisco. Founded in
1869, Pacific Lumber owns 220,000 acres of the worlds most productive timberland, including
the old-growth redwoods. For years, the family- run company was a model of social
responsibility and environmental awareness. Pacific Lumber paid its employees well, supported
them in bad times, funded their pensions, and provided college schol-arships for their children.
Evolving this old forest took million of years and this forest is complex ecosystem which is a
web of animals, plants, microorganisms and abiotic factors. As described in the case, cutting the
redwoods not only cause the extinction of marbled murrelet birds and other species existence
depending on this forest but also disturbs the forest irreplaceably. Additionally, forests provides a
protection from greenhouse gases which cause global warming. They maintain a sustainable and
continuous carbon flow between biosphere and atmosphere. Thus, forests are the lungs of the
world. Besides, while once coastal redwood trees covered 2.2 million acres of Oregon and
northern California, it remains only 86,000 acres of virgin redwood forest remain. If human
being persists on it. This case study explain the controversial things happened with the Hurtiz
and the environmentalist and government .This also giving the answers for the questions

Case Study -3

Does an ancient redwood forest have value other than its economic one as potential
lumber? If so, what is this value, and how is it to be weighed against the interests of a company like Maxxam? Are redwoods more important than jobs?
Evolving this old forest took million of years and this forest is complex ecosystem which is a
web of animals, plants, microorganisms and abiotic factors. As described in the case, cutting the
redwoods not only cause the extinction of marbled murrelet birds and other species existence
depending on this forest but also disturbs the forest irreplaceably. Additionally, forests provides a
protection from greenhouse gases which cause global warming. They maintain a sustainable and
continuous carbon flow between biosphere and atmosphere. Thus, forests are the lungs of the
world. Besides, while once coastal redwood trees covered 2.2 million acres of Oregon and
northern California, it remains only 86,000 acres of virgin redwood forest remain. If human
being persists on destroying the forests in the same way, we will have no forest inherited to the
next generation.
The Usal Redwood Forest is home to several threatened or endangered species, including Coho
and Chinook salmon and Northern Spotted Owl. Noss emphasizes that the ability for species to
survive and evolve, "requires populations large enough to avoid rapid extinction." He points out
that, "some processes . . . may result in changes on a large watershed scale," and therefore, "the
more intact (less fragmented), larger sites have higher conservation value than small, fragmented
sites" (Noss, 205).
The conservation easements that are leveraged over the entire forest guarantee that the Usal
Redwood Forest can never be fragmented into smaller plots for development. This gives
threatened species a vast landscape to maximize chances of survival.
Entire watersheds, such as the Standley Creek watershed, seen in the aerial photo below, are
contained within the Usal Redwood Forest. Healthy salmon populations depend on watersheds
that maintain their natural attributes such as low water temperature and turbidity levels. Forest
management practices affect the quality of watersheds. RFFI has the ability and will to restore
damaged areas and to alter historically harmful harvest practices for the benefit of salmon
populations and other wildlife.
Currently, the Usal Redwood Forest contains over 50,000 acres of "depleted forestland."
Through proper forest management that emphasizes the health of the forest and watersheds,

Case Study -3

RFFI hopes to restore endangered populations and create a vast expanse of healthy habitat for the
long term resilience and survivability of our coastal redwood ecosystems.

Is it morally permissible for private owners to do as they wish with the timberland they
own? Explain why or why not. Whats your assessment of Hurwitz? Is he a robber baron or
a socially responsible businessperson, or some-thing in between?
Depends on where they own it, and how you are defining "timberland". legally speaking all
wildlife is state or federal property, so destroying open space on your own land *might* get you
into legal troubles.
Charles Hurwitz was the very model of the modern corporate raider, a real life Gordon Gecko
but without the charisma. A slick salesman he would in due course tell the victims of his hostile
takeover "There's a story about the golden rule. He who has the gold rules."
Hurwitz started off selling mutual funds before embarking on the predatory career that would
eventually make him a billionaire by taking over United Savings of Texas, the largest savings
and loans company in the state, in 1982. More acquisitions funded by junk bonds followed until
in

1985

his

Maxxam

Inc

had

Pacific

Lumber

in

his

sights.

Hurwitz is a businessman pure and simple, a money-motivated capitalist like Warren Buffet and
T. Boone Pickens. He bought PALCO because it was priced low and the cost of borrowing
money for the purchase price would be offset by undervalued property's true worth. It was simple
mathematics, not old-growth forest preservation. The buyout was done for profit, not to save
"The People's Land." Like it or not, that's how business is conducted here in America.
Those who know Hurwitz on a personal level respect the man. Margret Campbell, wife of late
PALCO president John Campbell, is one of those people.
"Charles was a southern gentleman," said Margret. "His humanitarianism was top notch." When
the Campbell home was under attack from angry environmentalists, it was Hurwitz who came to

Case Study -3

their rescue. "He had a 24-hour camera and a surveillance system installed on the premises. He
also bought the family a guard dog."
According to Margret, Hurwitz is also frugal. Despite his incredible wealth, he has no need for
ego-based extravagances. He and his family have lived for many years in the same house and
neighborhood where they raised their sons. "Charles lived in a condo with his wife and two
boys," she said. "He was competitively, not monetarily, motivated."
Some call Hurwitz a hero. Stockholders loved him. When he took control of PALCO, not one
employee was fired. This was in an area of high unemployment. Hurwitz also continued a Pacific
Lumber practice of giving a college scholarship to every employee's child who finished high
school. According to John Campbell, people came down way too hard on Hurwitz, particularly
regarding the logging of old-growth redwood.
"It was all going to be cut anyway," Campbell stated in an interview. "PL was simply asserting its
legal right as a private property owner to use its property economically. Our position has always
been that if the federal and state government wanted to preserve Headwaters that was fine with
us."
Charles Hurwitz did not single-handedly destroy PALCO. Much of the blame falls squarely on
the shoulders of ex-President Gene Elam and the board of directors for listing the company on
the New York Stock Exchange, having no "friendly" shareholders to step in, and for failing to
anticipate the threat of a stock raid.
In retrospect, Charles Hurwitz considers the leveraged buyout of Pacific Lumber a mistake.
"This (PALCO) is the root of all evil for us," he said in an interview with Texas Monthly
Magazine. "Everything that's bad in my business life has come out of this."

Were mainstream environmentalists right to try to thwart Hurwitz, or were they simply
trying to impose their values on others? Does a radical group like Earth First! that engages
in sabotage go too far, or do its ends justify its means?

Case Study -3

These environmentalists werent just members of grass-roots groups. Californias green

movement is big and sophisticated and holds great sway with politicians and the mediamore
than in any other state. And they werent just fighting for the forest; they were
fighting against Hurwitz. They need an enemy, somebody they can accuse of pillaging of the
environment, whether its an oil company or a timber company, Boggs says. Environmental
activists have been very smart in the way theyve positioned themselves, says California
attorney Jared Carter, who worked on the trans-Alaska pipeline agreement as a deputy
undersecretary of the Interior in the Nixon and Ford administrations and advised Pacific Lumber
on the Headwaters deal: They know that if you want to be effective in a public relations
campaign, youve got to fight evil. Its not adequate just to go do good things. Youve got to be
against things.
Headwaters became a cause clbre. Earth First!, the nations most radical environmental group,
staged colorful protests. At one, actor Woody Harrelson (who used to live in Texas) scaled the
tower of the Golden Gate Bridge, and demonstrators hung a banner that read Hurwitz, arent
redwoods more precious than gold? At another, singers Don Henley (a Texas native) and Bonnie
Raitt put on benefit concerts; Raitt was later one of several hundred people arrested for
trespassing at a Pacific Lumber mill. In addition, virtual protests were in vogue, with several
Internet sites attacking Hurwitz personally. One still up and running, jailhurwitz.com, offers
$50,000 to anyone who can provide information that would result in his criminal indictment.
Predictably, the national media pounced on the story of the corporate raider from Texas versus
the redwoods. The liberal political magazineMother Joneswhich is based in San Francisco, a
few hours south of Headwaterscame right out and referred to Hurwitz as the devil. Even
mainstream publications like the Wall Street Journal and the New York Times portrayed him, in
essence, as a wily financier wielding a chain saw. Hurwitz shook it all off. Ive got some pretty
thick hide, he said. When you think youre doing something thats right, its not so bad. Some
people have to be leaders and stand up for what they believe in. We cant please everybody.
But while Hurwitz is a villain to some, hes a hero to others for saving timber jobs in Northern
California and enduring years of frustrating negotiations with the government to resolve a
conflict that pitted neighbor against neighbor for decades. Pacific Lumbers longtime president,
John Campbell, notes that the companys previous owners had planned to harvest trees in
Headwaters too. It was all going to be cut anyway, he says. Hurwitz told me Pacific Lumber

Case Study -3

was simply asserting its legal right as a private property owner to use its property economically.
After all, those tens of thousands of acres were zoned for commercial timber production. The
Constitution is very clear that somebody should get just compensation for his land, he said.
Our position has always been that if the federal and state government wanted to preserve
Headwaters, that was fine with us.
Some observers didnt think Hurwitz would settle. They expected him to take his chances in
court with the so-called takings suit that Pacific Lumber had filed seeking hundreds of millions
of dollars from the government for interfering with its right to harvest the redwoods; the
companys sales were falling, and its mills were shut down part of the time because of an
inadequate flow of logs. In reality, though, the feds probably never would have let the case go to
court. If Pacific Lumber had won, federal regulators would have been hard-pressed to stop
environmentally harmful activity on private land anywhere, not just in Headwaters. Hurwitz
knows he had them, as it were, up a tree. I feel very comfortable that we would have won, and it
would have been a huge amount of money, he said. Doug Wheeler, who was the secretary of
Californias Resources Agency under Governor Pete Wilson, agrees. If Hurwitz had won in
court, he says, the governments bill for Headwaters
Do we have a moral obligation to save old redwood forests? Can a forest have either moral
or legal rights? Does an old- growth forest have value in and of itself, or is its value only a
function of human interests? How valuable is a small but endangered species such as the
murrelet?
An ancient redwood forest has value other than its economic one as potential lumber. Old-growth
forests provide the life-sustaining habitat for many species of wildlife, like bats, small and large
mammals, and birds. The effects of conservation of legacy trees yield important benefits to
vertebrate wildlife associated with biological species. The destruction of old-growth forests will
also mean the extinction of wildlife, most of them already endangered today. Aside from the
economic value for potential lumber, large tracts of old-growth forests may also be used to
address climate change by sequestration of greenhouse gas emissions which makes conservation
a key to the overall strategy of stabilizing atmospheric carbon dioxide concentrations. There was
no union in PL. They didn't need one. They paid better wages than any of the union shops as well

Case Study -3

as providing pensions, health insurance and employee stock plans. PALCO went through the
Great Depression without laying off a single worker whilst their soup kitchens fed anyone who
turned. Once, Murphy had employed a business adviser. On being told of the efficiency savings
he could make he replied "I can't lay off those people. They're all my friends."
Legal protection of the threatened marbled murrelet seabird was upheld this week by a federal
appeals court. Despite a 15-year legal battle led by the timber industry to end the Endangered
Species Act listing, marbled murrelets retain their threatened status and thereby bring continued
regulatory protection to old-growth forests throughout the Pacific Northwest.
Marbled murrelets fly up to 50 miles from the Pacific Ocean onto land to nest in ancient forests
of California, Oregon, and Washington. Ancient coast redwood forests provide critical nesting
habitat for these rare birds at the southern end of their habitat range because old redwood trees
have large and broad branches that serve as excellent nesting platforms. Because marbled
murrelets are a legally threatened species, logging activities are restricted in areas of redwood
forest with known marbled murrelet nesting sites or even potential nest sites. In this way, the
Endangered Species Act has helped protect old-growth redwoods since marbled murrelets were
listed in 1992.

Before its takeover by Hurwitz, did Pacific Lumber neglect its obligations to its
stockholders by not logging at a faster rate? What would be a morally responsible policy
for a timber company to follow? Do we need a new environ-mental resource ethic?
No Pacific Lumber did not neglect its obligations to its stockholders by not logging at a faster
rate.It was protecting the employees and stakeholders also protecting the nature .
From the environmentalists' perspective, the benefits of preserving the northern spotted owl and
its habitat far outweigh any of the costs. First, saving the spotted owl will save an entire
ecosystem on which plants, other animals, and humans depend. The spotted owl is considered an
indicator species -- a gauge of the health of the ecosystem that provides its habitat. The steady
decline of this species signals the demise of other species, such as elk and flying squirrel, that

Case Study -3

inhabit these forests, and the disruption of the productive forces of nature that sustain human life.
The ancient forests and the life they harbor form a complex web of interdependent relationships
that play a critical role in preventing soil erosion, floods, and landslides, providing clean water
for agriculture and cities, enhancing the productivity of salmon fisheries, enriching the soil with
vital nutrients, and ameliorating the greenhouse effect. No amount of reforestation can replace
this highly developed and diverse system which has taken millennia to evolve. Preservationists
also defend their case on the basis of animal rights. Every living creature, they argue, has a right
to life. An owl, like any other animal, is the subject of a life that has intrinsic value. To
deliberately destroy this animal's habitat violates its right to exist. Some environmentalists
counter that we also have an obligation to preserve species. A species represents a vital, nonreproducible combination of genetic processes that has evolved over millions of years. It has an
integrity and potentiality of its own, manifest in its unique stages of development and its
intriguing adaption to the environment around it. The rarity of some species, such as the regal
spotted owl, only increases its value. We have a duty to protect such genetically unique species
and to ensure their continued existence.
Yes we need new environmental resource ethics to protect Global warming, global climate
change, deforestation, pollution, resource degradation, threat of extinctionare few of the issues
from which our planet is suffering. Environmental ethics are a key feature of environmental
studies, that establishes relationship between humans and the earth. With environmental ethics,
you can ensure that you are doing your part to keep the environment safe and protected. Every
time that a tree is cut down to make a home or other resources are used we are using natural
resources that are becoming more and more sparse to find. It is essential that you do your part to
keep the environment protected and free from danger. It is not as difficult to do as you may think
so long as youre willing to make a few simple and easy changes.

How would you respond to the argument that there is no need to try to save the
Headwaters ( or any other private) forest because there are already tens of thousands of
acres of old- growth redwood forest in parks and preserves?

Case Study -3

10

Yes we have to save headwaters forest. The principles underlying the maintenance of a healthy
water cycle tell us to start sinking water into the ground at the top of the watershed. The
management of the forests in the headwaters of Elder Creek is perhaps the most critical issue in
the current water crises we face.
Trees, and plants in general, affect the water cycle significantly. Here a just a few of their
benefits:
their canopies intercept a proportion of precipitation, which is then evaporated back to the
atmosphere (canopy interception)
their litter, stems and trunks slow down surface runoff
their roots create macropores large conduits in the soil that increase infiltration of water
they contribute to terrestrial evaporation and reduce excess soil moisture via transpiration
their litter and other organic residue change soil properties that increase the capacity of soil to
store water
As a result, the presence or absence of trees can change the quantity of water on the surface, in
the soil or groundwater, or in the atmosphere. This in turn changes erosion rates and the
availability

of

water

for

either

ecosystem

functions

or

human

services.

(http://www.ccjcin.org/trees.htm) With very few if any exceptions, the more trees, the denser the
canopy, the more benefits to the hydrologic cycle.
Headwater forests are natures perfect design for creating a balanced and resilient riparian
community of life immediately downstream by minimizing flooding and storing water to be
released slowly during the summer.

Was the deal that the U. S. government and the state of California struck with Pacific
Lumber a fair and reasonable one? Did the taxpayers end up paying too much, as
environmentalists think? Was Pacific Lumber squeezed too hard? What about Scotia and
its laid- off workers?
Yes is fair and reasonable one the U. S. government and the state of California agreed to pay
Pacific Lumber $ 480 million ( half of what Hurwitz originally spent for the entire company with
its 220,000 acres of timberland). The agreement banned logging for fifty years on 8,000 other

Case Study -3

11

acres of company land in order to safeguard the murrelet, and it set up buffer zones to protect the
river habitats of endangered coho salmon and steelhead trout. A Habitat Protection Plan regulated
how and where Pacific Lumber could harvest timber on the rest of its land.No they did not pay as
much as the environmentalist thinks. They pacific Lumber they did not squeezed hard until take
over my Hurwitz .In late 2001 the scotia 100 years old mill closed

Case Study -3

12
References

Shaw, William H. - 2014

http://www.texasmonthly.com/story/charles-hurwitz-greedy-clear-cutter-charles-hurwitz-caringenvironmentalist
Reynolds, G. W. (2015) Ethics in information technology, (5th ed.).
http://www.nytimes.com/1999/03/03/us/lumber-company-approves-us-deal-to-saveredwoods.html
http://loe.org/shows/segments.html?programID=99-P13-00009&segmentID=5\