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Article Excerpt
The authors of many of the articles in this symposium are specialists in corporate and white collar crime. Since I am not, I hope to bring an outsider's perspective to some key issues and common assumptions. My thesis is that many of the criticisms leveled against corporate criminal liability are not unique. (1) Rather, they are examples of problems that are common in the federal criminal justice system. These issues should be taken very seriously, but in analyzing them and considering solutions it is important not to focus exclusively on corporations as defendants, or even white collar defendants in general. When skillful well-funded advocates raise these issues in the context of corporate criminality it provides an important opportunity. The critique of corporate criminality sheds light on issues that are too easily ignored when they affect only individuals and groups that have few advocates and little political or economic power. Broadening the scope of the enquiry reveals that the problems highlighted by the critics of corporate and white collar liability are often most severe in other contexts, so that the case for overall reform is stronger, rather than weaker, than the case for reform limited to corporate or white collar cases and defendants.
The criticisms that fit this mold (2) run as follows. First, it is said that federal criminal law has run amok. The federal code is not a unified code in any meaningful sense, but more of an overstuffed grab bag. Nobody even knows exactly how many federal offenses there are, but it's clear that federal criminal law has expanded to include a plethora of regulatory matters that simply don't belong in the criminal arena. Civil or regulatory treatment is sufficient, and anything more is overkill. Second, the main standard of liability is overbroad; criminal liability can be imposed on corporations when there's no true fault. Arguably, even the Department of Justice recognizes this problem in its prosecutorial guidelines and policies. Third, federal sentences for white collar and regulatory offenses are far too harsh. Heavy collateral costs are imposed on third parties, such as employees and shareholders. Last, federal prosecutors wield too much power. Corporate defendants can't, realistically, fight criminal charges. If prosecution is threatened, they have no choice but to waive all of their rights and comply with the government's demands, which require them to become agents in developing the case against individual corporate officials. The bottom line is that good companies and good people are being tarred as criminals and treated disgracefully. In essence, what's bad for GM--and the rest of corporate America--is bad for the nation.
In assessing these arguments, I will focus on federal criminal law, though some states have also expanded the statutory basis for corporate criminal liability. (3) I agree that federal criminal law is indeed overbroad in two senses: there are too many federal offenses covering too much conduct, and many individual offenses are overbroad and badly drafted. This has many negative consequences, and it should be a cause for concern. But these consequences are felt throughout the system, not merely by corporate and white collar defendants. These problems point to the urgent need for overall reform and revision of the federal criminal laws, including a reduction in the number of federal crimes, and careful--and clear--redrafting of individual offenses across the board. Nor is there anything unique about the fact that the Department does not enforce corporate criminal liability as broadly as many federal statutes would permit, or that as a matter of policy the Department restricts liability. This is the inevitable consequence of the current breadth of the federal criminal code, which now covers, in one way or another, nearly all of the offenses covered by state criminal law.
It is also true that liability can be imposed on corporations for the actions of corporate employees, even in the absence of specific proof of corporate fault. This is not unique. American criminal law imposes liability without fault under other well established doctrines that can, in some cases, lead to sanctions far more severe than any visited on corporations. It's undeniable the federal criminal sanctions that may be imposed on corporations and white collar defendants are very harsh, and--in the eyes of many--disproportionate to the harm caused. But these sanctions are right in line with the federal sentencing policies applicable to other defendants and other crimes. Such long sentences do indeed make it a very high risk strategy to go to trial. Once again, this is typical. Corporate and white collar defendants, like every other group of defendants in the federal system, are under extreme pressure to plead guilty to get sentencing concessions. Only a small fraction of federal criminal cases go to trial, (4) and the prosecution generally requires not only a waiver of trial related rights, but also the waiver of other rights as the price of its agreement to sentencing concessions. And, finally, the pressure to cooperate with the government and incriminate others is a fact of life throughout the federal system. (5)
These issues state an agenda for review and reform. The question is the appropriate scope of the agenda. Should reform efforts focus on the scope of criminal liability and procedural protections applicable to corporate and white collar defendants? That is far too narrow an agenda. Because these problems cut across the board, it's quite misleading to consider them in isolation. Moreover, as a matter of fairness there's little appeal to piecemeal solutions that benefit only a privileged few. Indeed limiting the agenda now would likely be the final step, not the first step, because it would remove the strongest interest group from the political equation and thus significantly decrease the chances of broader reform. More fundamentally, in many ways the case for reform is weaker, not stronger, in the case of corporate criminal liability and individual white collar defendants. The frequency of corporate misconduct, the extraordinarily serious consequences of such conduct, and the difficulty of proving many corporate and white collar offenses (6) should make us cautious about restricting the legal tools that are available to combat corporate misconduct. Criminal liability should not be the only remedy, but the hammer of corporate criminal liability should remain in the toolkit of responses to serious corporate misconduct, particularly since many other tools have been eliminated or restricted. Nor should prosecutors have less leverage than usual in dealing with the best educated, most sophisticated, and most well represented class of defendants. And, finally, it's time to recognize that excessive sanctions have real and terrible costs not only for defendants, but equally serious collateral costs. This is just as true in the case of drug offenses as it is in the case of the criminal conviction of a corporation. It's time to count the costs of the unprecedented severity of the current federal sentencing laws, and ask whether they are too high. And it's time to reassess the use of criminal liability to address problems that could more efficiently, effectively, and humanely be dealt with by civil and regulatory means.
Part I of this essay discusses the overbreadth of the federal criminal code, as it affects all defendants. Part II considers issues related to the respondeat superior standard of criminal liability, and Part III discusses the severity of federal sentences. Part IV discusses the power wielded by federal prosecutors, and Part V considers the question of whether the foregoing states a case for reform, and, if so, how broad that agenda should be. It concludes that it would be a mistake to consider the corporate and white collar issues separately from other types of offenses, and argues that the scholars of white collar and corporate law should take up the cause of comprehensive federal code reform.
I. THE FEDERAL CRIMINAL CODE Is OVERBROAD
When former Attorney Generals Edwin Meese and Richard Thornburgh addressed the Corporate Criminality conference that led to this symposium issue, one of the main themes both sounded was the overbreadth of the federal criminal code. The overfederalization critique is right on target, (7) but the problem goes far beyond corporate and white collar crime. Corporate specialists are just discovering, and publicizing, a central truth about the current federal criminal justice system: the federal criminal code urgently needs a systematic review and revision to pare it down, clarify it, and bring it in line with modern criminal codes.
A. The Overbreadth of Federal Criminal Law
The federal criminal code is a bloated and disorganized hodgepodge. In truth, there is no federal criminal "code." The federal crimes have not been gathered together. Many are found in Title 18, but many others are scattered throughout the remaining rifles of the code. They are found, for example, in Title 26, dealing with the Internal Revenue Code, (8) and Title 21, dealing with food and drugs. (9) They are found, in fact, in virtually every title of the code. How many federal crimes are there? Astonishingly, no one knows for sure. A recent study estimated that the number exceeds 4000. (10) The number of federal crimes (as well as the number of federal prosecutions) has been increasing astronomically. In the past twenty-five years there has been a thirty percent increase in federal offenses carrying criminal penalties. (11)
The proliferation of federal crimes and the resulting overbreadth of federal criminal law have several causes, which have been described at greater length elsewhere. First, Congress has adopted what critics have called the crime du jour approach, adding new crimes to garner publicity and political capital. (12) Second, Congress has not been restrained by the presence of existing laws that deal with the subject at hand. Offenses dealing with the same or similar conduct as existing laws have proliferated. (13) This gives prosecutors the option of choosing among many related offenses whose elements differ slightly, as well as the option of charging multiple offenses for the same conduct. (14) The Supreme Court has given this form of drafting a green light, holding that there is no double jeopardy bar to conviction and punishment for multiple offenses that arise out of a single act or transaction. (15) Third, Congress has enacted offenses that are part of various regulatory schemes. When a new regulatory statute is adopted, it frequently includes an enforcement provision that makes willful violations of certain regulations a crime. (16) Federal law has thus grown by the addition of new regulatory crimes and by the promulgation of new regulations that can be enforced by existing criminal statutes making willful regulatory violations a crime. One commentator estimated that as many as 300,000 federal regulations could be enforced by criminal sanctions. (17) In addition, an American Bar Association Task Force noted that nearly 10,000 regulations mention some sort of sanction, some of which are criminal. (18) And, finally, the real scope of federal criminal law has been greatly expanded by the sweeping interpretations given to some federal offenses, most notably mail (19) and wire fraud, (20) which now encompass a breath-taking range of conduct. (21)
But overfederalization is not limited to offenses aimed at or peculiar to corporations or white collar defendants. The new crime du jour federal offenses, for example, cover a wide array of conduct, including the failure to pay child support, (22) disruptive conduct by animal fights activists, (23) creating, selling or possessing depictions of cruelty to animals, (24) and female genital mutilation. (25) Indeed, one of the most startling results of the expansion of federal criminal law is that it now largely duplicates state criminal law. As I explained in an earlier article:
Dual federal-state criminal jurisdiction is now the rule rather than the exception. Federal law reaches at least some instances of each of the following state offenses: theft, fraud, extortion, bribery, assault, domestic violence, robbery, murder, weapons offenses, and drug offenses. In many instances, federal law overlaps almost completely with state law, as is the case with drug offenses. (26)
Similarly, the problems created by a multiplicity of statutes that cover the same ground, which appeared first in the context of the drug laws, are now a fact of life throughout the federal code.
B. The Effects of Overbreadth
The overbreadth of the federal criminal code--which affects all defendants, not merely corporations and white collar defendants--has serious consequences. (27) Most important, it gives federal prosecutors too much unchecked discretion to select the few cases that will be prosecuted and which offense or offenses to charge. (28) This virtually limitless discretion is the necessary consequence of a federal criminal code that far exceeds the capacity of federal prosecutors and the federal courts. Because Congress has expanded their jurisdiction so much farther than their resources, federal prosecutors have no option other than the exercise of discretion. Federal criminal law enforcement is necessarily an inch deep because it is a mile wide. So it's quite true that federal prosecutors can't and don't prosecute all of the corporations whose conduct they believe violates a federal criminal law, but the point that corporate and white collar scholars often miss is that this is nothing special. For example, virtually every robbery of a business could be prosecuted under federal law, (29) just as every drug transaction could be prosecuted under federal law. (30) But federal prosecutors bring federal prosecutions for only a very small percentage of robberies and drug cases. (31) The same is true of the new offenses such as animal enterprise terrorism, failure to pay child support, and carjacking. (32) This is the general rule within the federal system, rather than something unique or unusual.
Though the overbreadth of the federal criminal code as it applies to corporations and white collar defendants is not unique or even unusual, the excessive discretion it confers upon federal prosecutors is highly problematic. Unreviewable and unchecked prosecutorial discretion invites improper considerations, such as bias, prejudice, or political considerations. (33) And even assuming that federal prosecutors avoid such improper considerations, the excessive discretion that is built into the current federal system inevitably creates disparity among similarly situated persons (and corporations), (34) and it leads naturally to an erosion of procedural rights for the defense. (35)
C. The Choice to Use Criminal Sanctions
White collar specialists might be tempted to reply that the overbreadth of the federal criminal code poses distinctive problems for corporate and white collar defendants because the question is not which system (federal or state) in which they should be prosecuted, but rather the more fundamental question whether the conduct in question should be subject to any criminal sanctions. (36) Many law and economics scholars have argued, for example, that it is unjust and inefficient to employ the criminal justice system (rather than civil or regulatory approaches) to respond to corporate misconduct. (37) Criminal law theorists have expressed concern that the expansion of criminal law is erasing the critical distinction between tort law and criminal law, undermining the criminal law's moral authority and decreasing respect for and compliance with the law. (38)
These are serious concerns, but they cannot be confined to the corporate or white collar context. Whether grounded in a cost-benefit analysis or concerns regarding the moral basis for criminal law, the arguments advanced against corporate and white collar offenses certainly apply to other common federal offenses, (39) especially those regarding controlled substances. For decades critics have argued that the costs of criminalizing drugs outweigh the benefits, (40) and many economists (including Nobel laureate Milton Friedman) support the decriminalization or legalization of some or all drugs. (41)
A full review of the arguments for and against decriminalization is beyond the scope of this essay, (42) but one of the main elements is the high costs of our present policies. The direct costs include expenditures for police, prosecutors, courts, and prisons, and the restriction of individual liberty of those who are convicted and incarcerated. (43) Imprisonment has a significant impact on the families of those who have been convicted, including many young children (44) and whole neighborhoods. In addition, critics have identified a variety of other indirect effects. Drug prohibition increases two kinds of crime: systemic crimes, which occur because illegal drugs must be sold on black markets, and thus legal means are not available to settle disputes, and economic crimes committed to gain the funds necessary to pay the increased black market prices. (45) A variety of health problems are associated with criminalizing drugs, as a result of uncertain potency and purity as well as the spread of AIDS through the use of dirty needles. (46) The enormous profits generated by drug trafficking also increase the risk of government corruption. (47) Even if these arguments are not persuasive with regard to certain "hard" drugs, they have considerable force when applied to other softer drugs, particularly marijuana, which accounted for more than twenty-five percent of federal drug convictions in 2006. (48) Drug enforcement, including marijuana enforcement, has been and continues to be a major focus of the federal criminal justice system. (49) In terms of sheer numbers, drug enforcement dwarfs the problems of corporate criminality. More than half of federal inmates are serving time for drug offenses, (50) and the 2006 budget for the Federal Bureau of Prisons was $4.98 billion. (51) And, as noted below, (52) the...
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