Summary
The FBI investigation of the St. Louis Cardinals emphasizes the need for strong business ethics at a time when data is central to professional sports, according to a Stanford law expert.
This week it was disclosed that the Cardinals, one of the most successful teams in Major League Baseball, are the subject of a federal investigation for allegedly stealing information from the Houston Astros.
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Stanford News Service recently interviewed Pitts about the allegations against the Cardinals:
How does this case highlight the need for domestic corporate accountability?
It demonstrates the need for companies to not merely “talk the talk” but “walk the walk.” Despite rhetorical commitment to values-based leadership through the so-called “Cardinal Way,” which hearkens back to similar inspirational business ethics programs at many companies, the Cardinals’ culture is thrown into doubt by these allegations of trade secret theft through hacking – even if the hackers might have been motivated in turn by fears that a former Cardinals employee [now the Astros general manager], Jeff Luhnow, had himself taken proprietary information from the Cardinals. Cardinals Chairman and CEO Bill DeWitt has pledged to hold accountable anyone involved [and the Cardinals’ law firm conducting an internal investigation says that neither DeWitt nor the Cardinals’ general manager were involved].
But if true, these are serious breaches of both law – such as the Computer Fraud and Abuse Act and trade secret theft laws – as well as ethics, raising issues not only of legal but social/reputational liability, which could seriously harm the franchise, its brand and bottom line. In addition to criminal prosecution of the Cardinals franchise, prison time is a real possibility for the perpetrators.
This is thus qualitatively different from, say, the NFL’s spygate scandal involving the Patriots videotaping the New York Jets’ hand signals or baseball’s own hand-signal scandals. A more apt comparison is to Formula 1’s own spygate a few years back. Although distinguishable on various grounds – it was in Europe and didn’t turn on hacking – McLaren paid a $100 million fine to the World Motor Sport Council for stealing Ferrari’s technical information. In addition to fines, the reputational and other costs of this scandal could also spiral: Stakeholders affected include not only business partners but also players, fans, young aspiring players and the sport itself.
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