Time for a "Good Faith" Defense to Corporate Liability for Criminal Acts or Omissions of Agents
Criminal prosecutions involving corporations in many cases involve a corporation being exposed to criminal liability for the criminal acts or omissions of its agents which the corporation may not have known of and which were contrary to its express policies or procedures. The Eleventh and former Fifth Circuits have long held that a corporation may be held criminally liable. Steere Tank Lines, Inc. v. United States, 330 F.2d 719, 721-22 (5th Cir. 1963) (citing New York Cent. & H. R.R. Co. v. United States, 212 U.S. 481 (1909); United States v. Illinois Central R. Co., 303 U.S. 239 (1938); United States v. A & P Trucking Company, 358 U.S. 121 (1958)). A corporation may be held criminally liable for the acts or omissions of its agents which were committed within the scope of their employment and which the agent intended to “produce[ ] some benefit to the corporation or some benefit to himself and the corporation second.” United States v. Gold, 743 F.2d 800, 823 (11th Cir. 1984).
Now an array of legal and business organizations are trying to get courts to re-examine the standard for imposing liability on corporations for the acts of their agents, according to an article today in the National Law Journal. The test case is an appeal in the Second Circuit Court of Appeals, United States v. Ionia Management, No. 07-5801, which involved a Greek tanker company which was convicted for the acts of its employees on one of its vessels in dumping oil into international waters and falsifying records. The Association of Corporate Counsel, the United States Chamber of Commerce, the National Association of Criminal Defense Lawyers, the National Association of Manufacturers, the New York State Association of Criminal Defense Lawyers and the Washington Legal Foundation have filed an amicus brief in the case, authored, surprisingly, by Andrew Weissmann, an attorney with the Chicago law firm of Jenner & Block, who was formerly the Director of the Department of Justice’s specially-formed Enron Task Force. The groups argue that courts should modify the now century-old standard of corporate criminal liability of New York Cent. and permit a good faith affirmative defense to liability, based on factors such as whether the corporation had reasonable and effective policies in place to prevent the commission of the crime, citing recent decisions involving employer defenses in employment discrimination cases, the Model Penal Code, and similar provisions in state criminal codes.
Weissmann noted the irony that it is easier to impute liability to a corporation in a criminal case than in some civil cases. As acknowledged by John Hasnas, professor of business and law at Georgetown University, the Department of Justice frequently misuses the standard in order to extract pleas, fines, or deferred-prosecution agreements from corporate defendants, and agreements to cooperate in the prosecution of their officers or employees. In any event, in cases involving rogue agents whose crimes may benefit the corporation but are against its policies, it seems time to give corporations a fighting chance.
