Friday, February 21, 2014

5-Hour Energy: Ongoing Lawsuit (2004-Present)

Original flavor 5-hour Energy bottle
5-Hour Energy is the world’s largest energy shot company. Since their establishment in 2004, they have been dominating the competition with a 90% market share while selling around 470 million bottles each year. Five hour energy is manufactured by Manoj Bhargava’s company Living Essentials. Since his start in the business world, Bhargava has faced over 90 law suits, many of them concerning his most recent venture in the energy shot market. The company targets middle aged individuals who need a quick boost of energy without the hassle of making coffee or drinking an entire 16 ounces a standard energy drink such as Red Bull. Their slogan is that  people can get the energy they need without the “crash” later that previously mentioned alternatives are known to bring. As it turns out, there may be a more serious crash longer down the road.

In 2012, the Food and Drug Administration (FDA) confirmed that they have received thirteen reports of deaths potentially linked to the high-energy drink over the span of four years. Since 2009, there have also been 92 filings against the company including 33 hospitalizations that were considered life threatening. Some of the more serious injuries included heart attacks, convulsions, brain hemorrhages, and one case of spontaneous abortion. Reports dating back to 2005 include less severe symptoms of dizziness, anxiety, nausea, and seizures. The company is still under investigation from the FDA and if the administration feels obliged, they can pull the item off the market if it is deemed unsafe for use according to the instructions detailed on the labeling. This is not the first time energy drinks have been under scrutiny from the FDA. There are reports dating back to 2004 that the organization investigated five deaths and one heart attack pertaining to Monster Energy drinks. So what is in these drinks that potentially causes such fatal side effects? 

The first ingredient that has to be examined is caffeine. This drug can be very addictive and have serious side effects if not consumed in proper amounts. Most health nutritionists agree that 500mg is a sufficient amount for individuals to see the benefits of the substance and not the unwanted side effects which include insomnia, irritability, increased heartbeat, tremors, and vomiting. Companies that sell soft drinks such as Coca Cola or Mountain Dew are required under FDA laws to put the amount of caffeine in each serving on their products. The discrepancy with energy drinks and one of the main reasons that so many law suits have emerged over these products is that they are regulated as a dietary supplement. There are much less restrictions in place on supplements of this nature and therefore Five Hour Energy is not required to report caffeine levels. There have been studies done that reveal the regular two ounce shot has about 215mg of caffeine while the extra strength has 242mg. The companies recommendation is that people take no more than two per day. If an individual follows this cycle, they have already consumed, depending on the product, either 430mg or 484mg out of the recommended 500mg. In comparison, the average energy drink or standard cup of coffee contains around 80mg of caffeine, more than two and a half times less than a concentrated shot of Five Hour Energy. Another ingredient under review is phenylamanine, an amino acid that cannot be broken down adequately by people with a genetic disorder called phenylketonuria. The disorder occurs in about 1 in 15,000 people in the United States and is as much as five times more likely to occur in other countries including Turkey and Scotland. Instead of breaking down the amino acid, the phenylamanine gets converted to a chemical that causes seizures and possible mental retardation in children and infants. In order to understand whether Five Hour Energy is an ethical company, it can be helpful to consider and apply four core ethical theories. These include the theory of individualism, utilitarianism, Kantianism, and lastly the virtue theory.
Health effects of caffeine diagram

Milton Friedman’s theory of individualism states that the only goal of a business is to profit, so the only obligation that a business person has is to maximize profit for the owner or the stockholders. Under this theory, Five Hour Energy as of late would be considered unethical. Because of the class action lawsuit they are facing and the surrounding controversy, sales have been falling drastically. The CEO, Manoj Bhargava, has fallen off of Forbes wealthiest 400 Americans with his net worth decreasing from $1.5 billion to $800 million. The company is now looked at negatively through the public eye which is hard to recover from unless drastic measures are taken. Unless Five Hour Energy decides to disclose all of their ingredients, it is likely that they will continue to lose money for their owner.  

John Stuart Mills, a main contributor of the utilitarianism theory, believes that happiness and pleasure are the only things of intrinsic value and that people ought to bring about happiness and pleasure in all beings capable of feeling it. With utilitarianism, it can be useful to identify the costs and benefits of each main stakeholder within the ethical issue. The most important stakeholder in this situation in the consumer. The benefit that a consumer can gain from a Five Hour Energy is the feeling of focus and increased energy whether they be at work, school, or engaging in a sporting event. The shot of energy can get people through the day while not feeling groggy afterwards and is slightly less expensive than coffee or a traditional energy drink. The costs of consuming the drink are all of the aforementioned health problems that may come along with it and the bad taste many people associate with the product. Although some people are still choosing to buy Five Hour Energy, in order to maximize happiness, consumers should stay away. There are plenty of alternative choices to this brand that do not have such questionable effects on health and that are better tasting. Consumers should also make the public more aware of the possible side effects of the energy shot because it will help in contributing to others overall happiness in life. The next important stakeholder is the CEO of the company. As mentioned earlier, Bhargava has experienced a drastic decrease in net worth since the investigation of his company began. He is still benefiting from Five Hour Hour in the profits that are being made, regardless if they are down from previous years. That is it though, the developing issue facing the company has cast a poor public image upon him and the future of the company looks grim. The pressure that comes with a class action law suit can also be daunting to anybody. In order for Bhargava to achieve pleasure in life and inspire happiness in others, he should come clean and reveal the nutrition facts in their entirety or change the ingredients to meet healthier standards.  Both of these options would benefit consumers because they would be able to weigh the pros and cons of the drink compared to alternatives and it would benefit Bhargava because he would no longer have to deal with the law suit and would feel more socially responsible, perhaps contributing to a higher state of happiness. The third and final stakeholder in this dilemma are the employees at Five Hour Energy. Similar to the owner, the salaries that the employees receive are the only benefit. The biggest downside is the loss of jobs likely to occur throughout the company. With profits steadily decreasing, it is quite possible that people will be laid off. The feeling of guilt that employees may experience if they know the products they’re selling and manufacturing are unhealthy could also negatively influence a person’s well being. In order to maximize the happiness of themselves and the consumers effected by the product, employees should work to make the energy shots as healthy as possible. After examining each stakeholder, it is clear that actions have to be taken both inside and outside the organization. Consumers have to become aware of the potential health problems while the employees and CEO have to strive to make a better product in order to instill happiness in themselves and their customers.

5-hour Energy CEO, Manoj Bhargava
Kantianism, developed by Immanuel Kant, encourages people to act rationally and to not act inconsistently with their actions while also helping others make rational choices and respecting an individuals needs and differences. Kant also believes that motivation should come from good will, or seeking what is right because it is right. As of right now, Five Hour Energy would not be looked at as an ethical company from a Kantian point of view. One reason relates to Kant’s formula of humanity as well as his formula of universal law. The formula of humanity states that people should act in a way in which they treat others as an end and never simply as a means while the formula of universal law encourages people to identify how their action will influence “everybody” and naturally this forbids all forms of deceit. Even though Five Hour Energy is not required to provide the public their full nutritional facts, people that follow Kantianism would realize that it is unethical. Consumers are not able able to make rational decisions because they are not given all of the information needed to make their choice which is considered wrong under the formula of humanity. The company also violates the formula of universal law in that they claim their drinks only have as much caffeine as a standard cup of coffee while tests have shown that they could have more than two and a half times that amount. They are lying to their customers which is not permissible under this law. Five Hour Energy also is not following the basic principles of Kantianism. In order to aid others in making rational choices, they will need to make the public aware of what exactly they put into each drink. If this information is available, the company could be considered more ethically correct under this theory. Consumers would then be able to make their own rational choice. It is important, however, that Five Hour Energy release their ingredients for the right reasons. If they do it to simply get out of a lawsuit then they would still be acting unethically under Kant. In order to be in accordance with all Kantian laws and principles, they would need to reveal these facts to the public simply because it is the right thing to do.

Virtue Theory
Lastly, the virtue theory asserts that businesses have certain virtues, or characteristics, that make them ethical. These include courage, honesty, trust, and justice. It is clear that Five Hour Energy has not been courageous regarding their current law suit. They were asked for a report detailing whether the company’s claims that the drink gave a person no crash afterwards and that they are suitable for child 12 and older were fully true. According to the attorney that filed the petitions, they received data in which the company left out important bits of information. If Five Hour Energy were a courageous company, they would release all of the necessary information in order to have a fair trial. Winning through deceit is in no way courageous and violates the virtue theory. The failure of Five Hour Energy to be honest has been mentioned numerous times already and because of their continual deceit of customers, they cannot be considered an honest company. A lack of honesty immediately leads to lack of trust. There is a reason that sales have decreased drastically; consumers have lost trust in the product. The law suit has yet to be solved but either way at this point, it will be difficult to gain customer’s trust back. Justice emphasizes hard work, quality products, good ideas, and fair practices. It can argued that Five Hour Energy does work hard and the general idea of the business is not all that bad. While the quality of the product is currently under review, it can be said that the company does not demonstrate fair practices. It is only fair that all of the nutritional information be available to those that desire it. 

After looking at four central theories of ethics, it is evident that Five Hour Energy cannot be considered a company that demonstrates the core principles of each theory. There sales have been decreasing and as a result have not been maximizing profitability for their owner. They also do not allow themselves or their customers to live up to their full potential happiness. Lastly, Five Hour Energy continually disrespects consumers thus not allowing them to make rational decisions while displaying unfavorable characteristics that contradict what a virtuous and ethical company should.


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