Too Easy to Prosecute Corporations? – by David Franklin

This may be a bad time to say that Corporate America needs even more help. Nevertheless, a former federal prosecutor argued on Friday that the standard for bringing criminal charges against corporations is too low.

Specifically, Andrew Weissmann wrote in an amicus brief to the 2nd Circuit that the “federal courts’ erroneous approach to vicarious liability [should] be revisited.” Weismann, who once prosecuted Arthur Anderson during the famous Enron scandal, is now taking the side of corporations. Currently, Weismann is representing Iona Management S.A. – a shipping company that was recently convicted after one of its employees dumped oil at sea.

The doctrine of respondeat superior provides that in many cases, an employer can be held liable for the acts of its employees. This doctrine is commonly applied in civil law, but do the principles of respondeat superior align with the goals of our criminal justice system? When considering the main goals of criminal law – deterrence and punishment – it seems that generally, a corporation should not be liable for its employees’ acts when the corporation is not morally culpable. However, Weismann argues that the district court’s standard makes corporations accountable for “almost all criminal acts of any low level employees – even those acting against explicit instructions.” Additionally, Weismann points out that this standard, combined with the fact that corporations are pressured to avoid stigmatizing criminal prosecutions, could actually make it easier to find companies liable through vicarious liability in criminal cases than in civil ones.

It seems that the former head of the Enron Task Force has a point. But who wants to give corporations any more help at this point?

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2 responses to “Too Easy to Prosecute Corporations? – by David Franklin

  1. I do. This, to me, sounds right. Especially in criminal law, we do not want a system where potential liability will provide a disincentive for our managers and directors to act. However, I do believe that some of the firewalls that protect directors and managers need to reevaluated. To me, one of the most important duties for a company official (and perhaps the reason why our economy is the way it is today) is the duty to act on an informed basis.

  2. I enjoyed your blog. It was interesting and thought provoking.

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