Many household pets are adopted into families in an effort to save the lives of stray animals and prevent shelters from euthanizing the animals due to measures of population control. Saving the life of the animal can be a rewarding experience as pet owners develop an ongoing companionship with their pet. When allegations that pet food manufacturers were providing the market with tainted pet food arose in the media, pet owners were outraged as the health of their adopted animals were compromised and even died. Approaching this issue using a systematic framework to ethical decision making could have prevented the loss to consumers and saved the lives of their adopted companions.
In early 2007, several pet owners across Canada and the U.S. reported noticing illnesses in their adopted animals. Veterinarians were diagnosing the illnesses as acute kidney failure, but the causes of the illnesses were unknown. As pet owners faced the agonizing decision to euthanize their beloved companions, they were left questioning the catalyst of the sudden health complications. However, on March 19th, 2007, news reports released by the media drove the share price of Menu Foods Income Fund down 59.0% from the previous day’s close2. Menu Foods is an Ontario-based pet food manufacturer specializing in private-label brands for retailers such as Iams, Eukanuba, Sobeys, as well as others. These reports accused Menu Foods of producing contaminated pet food resulting in the health complications seen in pets across North America. In response, Paul Henderson, Chief Executive Officer of Menu Foods, released a statement with the intent to exonerate Menu Foods from accusations of culpability. Within the statement, Henderson cited that a supplier, ChemNutra, deceitfully injected melamine into the wheat gluten sold to Menu Foods. The intent was to artificially boost the nitrogen content and imitate a higher quality wheat gluten which would contain an elevated level of protein. This chemical acted as a toxin, forming lethal crystals inside the animals and caused serious illness, kidney failure, and in some cases death3. To prevent further animals from consuming tainted food, Menu Foods recalled 60 million packages of product, resulting in $53.8 million in financial loss. In addition, the company reported a net loss in earnings of $17.5 million for the period and did not payout dividends to shareholders3.
This introduces two of the active agents in this ethical case. The most transparent active agent is ChemNutra. This agent decided to artificially enhance the quality of the wheat gluten product by using toxic chemicals to deceive food manufacturers and consumers while jeopardizing the health of pets throughout North America. Additionally, Menu Foods is an active agent as they provide products marketed to promote the health of animals making them ethically obligated to conduct proper due diligence on food ingredients and any third party business relationship. Proper and thorough due diligence could have uncovered the actions of ChemNutra and possibly prevented the anguish and suffering experienced by pet owners.
Pet food manufacturers in this industry are loosely regulated and are individually responsible for the quality of their own products as well as the oversight of the operations to produce the pet food4. Due to the lack of regulatory oversight, governing bodies are also considered active agents. The Canadian Food Inspection Agency (CFIA) regulates and establishes guidelines for livestock feed, but pet food manufacturing plants are not regulated by this organization5. In addition, the Pet Food Association of Canada places a voluntary responsibility on manufacturers to comply with safety regulations and claims that the competitiveness of the industry enforces companies to produce high quality animal foods. This inadequate supervision over the industry allowed the production of contaminated pet food to be consumed by animals and resulted in the loss of companionship for many pet owners.
The passive agents are the ones who are directly impacted by the decisions of the active agents. In this case, the passive agents are the consumers who purchased the tainted pet food believing they would be providing proper nutrition for their pets. The consequences to these uninformed consumers resulted in suffering loss of life for their adopted pets. Other passive agents are the retailers who purchased the food product from Menu Foods and labeled their brand name to the packaging. Once the product was recalled from the market, these retailers suffered lost revenues as well as reputation risk due to the fact that their brand name was on the packaging. Using appropriate ethical models to derive business decisions uncovers the ethical dilemma in this case. The Contractarianism framework stresses the contracts or obligations, both implicit and explicit, which the agents are already embedded in and which they willfully entered. The ethical dilemma is whether or not Menu Foods had an obligation to go above and beyond their standard quality controls to ensure that they were providing quality pet food to consumers. According to Contractarianism, when Menu Foods entered the industry as a pet food manufacturer, they also agreed to an implicit contract with consumers. This implicit contract holds Menu Foods ethically responsible to ensure the public that suitable pet food was distributed to consumers and Menu Foods failed to meet this obligation. The Contractarianism framework clarifies that the ethical dilemma rests on the shoulders of Menu Foods and implies that they should have been conducting proper tests on the ingredients for the pet food to ensure quality. In addition, under the Canada Consumer Product Safety Act, manufacturers are legally prohibited from providing products to consumers which danger the health and wellbeing of the consumer1. The business relationship between Menu Foods and ChemNutra also contained contractual agreements which were willfully engaged by both parties. When ChemNutra artificially enhanced the wheat gluten with toxic melamine, they violated their explicit contract to provide Menu Foods with appropriate food ingredients. Reflecting on the conclusion derived from applying the Contractarianism model displays a more transparent role which the agents should have upheld when providing products to consumers. It is clear that the deceitful acts of ChemNutra were inarguably unethical and completely illegal. The level of due diligence Menu Foods should have performed on the supplier would likely have detected the misleading business practices of ChemNutra. During Menu Foods manufacturing, adequate testing of all ingredients and food components should have been held to a higher standard in the process of preparing pet food. Holding the practices of the company above what complies with the minimum legal requirements more accurately fulfills the ethical obligation Menu Foods owes to the public.
Applying models to ethical decision making can assist managers when faced with unclear issues in business. Contractarianism provides a clearer picture of the legal and ethical obligations in place for each agent. This case with Menu Foods is a great example of how companies can be impacted by third party relationships and how management needs to be proactive in protecting their brand as well as the consumer.

Sources:
[1] Consumer Product Health Safety Act, Health Canada. Accessed September 28th, 2015 www.hc-sc.gc.ca
[2] McArthur, Keith. “Menu Foods recall leaves investors cold” in Report on Business, pp. 1-2 Published March 20th, 2007
[3] McCormick, Lisa Wade. “Menu Foods settles pet food class action” in Consumer Affairs pp. 1-3 Published April 2nd, 2008
[4] Moore, Oliver. “Pet food industry unchecked, critics say” in The Globe and Mail, pp. 1 Published March 23rd, 2007
[5] Reinhart, Anthony. “Pet owners flock to their vets” in The Globe and Mail, pp. 1-2 Published March 21st, 2007