Clockwork Corporations: A Character Theory of Corporate Punishment

Author:Mihailis E. Diamantis
Position::Associate Professor, University of Iowa, College of Law
Pages:507-569
SUMMARY

Retribution and deterrence currently drive the politics and scholarship of corporate criminal law. Since the potential harms and private gains of corporate crime are so large, corporate punishment under these theories must be exacting . . . too exacting. In fact, it is difficult under current law to punish many corporations formally without killing them. Ironically, this fact leads to the under-pu... (see full summary)

 
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Clockwork Corporations:
A Character Theory of Corporate
Punishment
Mihailis E. Diamantis*
ABSTRACT: Retribution and deterrence currently drive the politics and
scholarship of corporate criminal law. Since the potential harms and private
gains of corporate crime are so large, corporate punishment under these
theories must be exacting . . . too exacting. In fact, it is difficult under current
law to punish many corporations formally without killing them. Ironically,
this fact leads to the under-punishment of corporations. Prosecutors—
understandably hesitant to shutter some of the country’s largest economic
engines—increasingly offer corporations deferred prosecution agreements in
lieu of charges and trial.
This Article considers corporate punishment for the first time from the
framework of a third major theory of punishment—character theory.
Character theories of punishment focus first and foremost on instilling good
character and civic virtue. Criminal law scholars have largely marginalized
character theory because it struggles as a suitable framework for individual
punishment. But the practical and moral problems character theory faces in
the individual context do not arise with the same force for corporations. In
fact, character theory offers the possibility of punishing corporations in a way
that preserves and enhances the social value they create while removing the
structural defects that lead to criminal conduct. Along the way, the Article
*
Associate Professor, University of Iowa, College of Law. For invaluable feedback at
various stages, I owe special thanks to Miriam Baer, Rachel Barkow, Lisa Bernstein, Stephanos
Bibas, Michael Cahill, Anthony Deardurff, Anne Estin, Tom Gallanis, Brandon Garrett, John
Hasnas, Josh Kleinfeld, David Kwok, Bill Laufer, James Nelson, Mark Osiel, Lee Otis, Todd Pettys,
Elizabeth Pollman, Daniel Richman, Sarah Seo, Amy Sepinwall, Lynn Stout, Will Thomas, and
participants at the following conferences and workshops: Brooklyn Law School’s Markelloquium,
Cornell University’s Workshop on Corporations as Legal Persons, CrimFest 2016, Georgetown
University’s Institute for the Study of Markets and Ethics, Indiana University’s Big 10 Junior
Scholars Conference, the National Business Law Scholar’s Conference, University of Chicago’s
Legal Scholarship Workshop, University of Kentucky’s faculty speaker series, and Wharton’s
Zicklin Center for Normative Business Ethics Workshop. I am also grateful to my research
assistant, Nathan Golden.
508 IOWA LAW REVIEW [Vol. 103:507
defends some heterodox proposals, including abolishing the corporate fine and
allowing sentencing judges to balance the need to punish against non-
criminal aspects of a corporate defendants’ “character.”
I.INTRODUCTION ............................................................................. 509
II.THE RETRIBUTION RATCHET ........................................................ 516
III.THE DISTORTIONS OF DETERRENCE ............................................. 518
A.DETERRENCE THEORY DEFINED ................................................ 518
B.THEORETICAL PROBLEMS WITH DETERRENCE ........................... 520
1.Punishing the Innocent ................................................ 520
2.Pricing Crime ................................................................ 524
3.Inevitability of Over-Punishment ................................. 525
IV. PROBLEMS IN PRACTICE: DPAS AND NPAS ................................... 527
V.CORPORATE CHARACTER .............................................................. 533
A.DESCRIPTIVELY INADEQUATE? .................................................. 536
B.PROBLEMATIC FOR INDIVIDUALS ............................................... 538
C.CHARACTER THEORY FOR CORPORATIONS ................................ 539
VI. CULTIVATING CORPORATE CHARACTER THROUGH
PUNISHMENT ................................................................................. 544
A.FACTORS TO CONSIDER IN WEIGHING THE NEED FOR
PUNISHMENT .......................................................................... 545
B.PUNISHMENTS CHARACTER THEORY WOULD NOT
SUPPORT ................................................................................. 548
1.Fines ............................................................................... 549
2.License Revocation and Debarment ............................ 549
3.Reputational Penalties .................................................. 550
C.TECHNIQUES FOR REFORM ....................................................... 551
D.SOME LIMITING PRINCIPLES .................................................... 557
E.ENTER THE JUDGES: BENEFITS OVER PROSECUTION-LED
REFORM .................................................................................. 559
F.POTENTIAL CONCERNS ............................................................ 562
1.Cost to Innocent Third Parties ..................................... 562
2.Expertise of the Judiciary ............................................. 563
VII. CONCLUSION: SOMETHING FOR EVERYONE .................................. 565
A.DETERRENCE AND PREVENTION ................................................ 565
B.RETRIBUTION AND EXPRESSION ................................................ 568
2018] CLOCKWORK CORPORATIONS 509
“[H]ow about this new thing they’re talking about? How about this new like
treatment that gets you out of prison in no time at all and makes sure that
you never get back in again?”1
I. INTRODUCTION
It is actually not so new. Though unpopular for the last few decades,
punishing criminals by reforming them was once the predominant approach.2
Anthony Burgess poignantly described one prominent concern that led to its
demise: Coerced reform risks turning people into “clockwork toy[s] to be
wound up by . . . the Almighty State.”3 Forcefully changing character and
personality is an affront to the self-defining freedom that is the root of human
dignity.
While generally marginalized today, punitive reform is undergoing a
resurgence for a different kind of “person”—the large, publicly traded
corporate criminal. Prosecutors are at the forefront of the movement. In the
deals they cut with corporate suspects, prosecutors often require programs of
reform.4 Implicit in how prosecutors now treat corporate defendants is the
recognition that their fundamentally different nature allows for a different
approach to punishment. Burgess’s complaint loses all its force in the
corporate context. Corporations are not, and cannot be, free, self-defining
loci of dignity.
Scholars and lawmakers are still behind the curve. While prosecutors
have been experimenting with reform-as-punishment, the dominant
academic and political discourses on corporate crime still focus on deterrence
and retribution.5 There is the seed of a third path in what prosecutors are
doing. This Article seeks to uncover the implicit logic behind corporate
prosecutors’ decisions. In its present form, prosecutorial practice is focused
on reform and rehabilitation. Were the logic of the practice pushed and
perfected as an approach the entire criminal justice system could take toward
corporate punishment, an organizing theory that is different from deterrence
and retribution emerges—character theory. As argued below, character
theory opens new conceptual space for solving some of the most persistent
problems in corporate criminal law.
1. ANTHONY BURGESS, A CLOCKWORK ORANGE 69 (2012).
2. See infra Part V.B.
3. BURGESS, supra note 1, at 2.
4. See Anthony S. Barkow & Rachel E. Barkow, Introduction to PROSECUTORS IN THE
BOARDROOM: USING CRIMINAL LAW TO REGULATE CORPORATE CONDUCT 1, 3 (Anthony S. Barkow
& Rachel E. Barkow eds., 2011) (Using deferred prosecution agreements, “prosecutors impose
affirmative obligations on companies to change personnel, revamp their business practices, and
adopt new models of corporate governance.”). Some scholars, though, question whether
prosecutors really care about reform. BRANDON L. GARRETT, TOO BIG TO JAIL: HOW PROSECUTORS
COMPROMISE WITH CORPORATIONS 75 (2014) (“These data suggest that prosecutors are not tak ing
structural reform seriously.”).
5. See infra Parts II–III.

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