The 'person' at federal law: a framework and a RICO test suite.

• Author: Gerardi, Michael J.

INTRODUCTION

Who does this statute address? Usually, the answer at federal law is that the statute addresses things known as "persons." Lawyers typically only go this far when doing statutory analysis. They fail to ask a second, more penetrating, question: What, exactly, is a "person"? The word "person" describes the entities to which the law assigns rights and duties. Theories of culpability connect these entities to legally prescribed behavior, and serve as a restraint on the size of the class of persons that are potentially liable for a violation of law.

The forces that shape the meaning of the term "person" place considerable strain upon it. Attempts by the courts and Congress to wrestle with the problems of statutory construction presented by personhood created a body of interpretive rules surrounding the term "person" that fail to provide the necessary certainty and consistency expected from basic legal definitions. This Note aims to describe federal law's use of the term "person" to define those with legal duties and rights, show how the current framework fails to adequately achieve these goals through its application to a typical "personhood" problem, and outline some simple proposals that will give the framework a far greater degree of coherence.

Part I describes a theoretical framework for answering personhood questions at federal law. It begins with a general discussion of the concept of the legal person, and of the theories of criminal and civil liability entrenched in federal law that connect legal "persons" to rights and obligations Congress creates by statute. It then describes Congress' attempts to elaborate on these concepts through the Dictionary Act's (1) definition of the term "person" and individual definitions of the term in various statutory provisions. Part II employs a "test suite" (2)--the problem of whether municipalities are subject to civil liability under the Racketeering Influenced and Corrupt Organizations Act (RICO) (3)--to illustrate the inadequacies of the current framework. Part III uses the descriptive analysis of Part I and the applied analysis of Part II as a springboard for proposing improvements to the current framework for resolving personhood questions at federal law.

1. THE TERM "PERSON" AT FEDERAL LAW

   The person is a fundamental unit of legal analysis. Despite its centrality, personhood is difficult to describe succinctly because it cuts across legal concepts that appear unrelated at first glance. This is especially true in federal law because Congress' approach to defining the term "person" has never been systematic. This Part of the Note will first lay out the framework for understanding legal personhood questions as a general matter, and then discuss the basic protocol courts should follow when dealing with a question of whether or not a particular individual or entity is a person under a federal statute.

   1. The Concept of Legal Personhood

      1. Entities to Which Rights and Duties Are Assigned

         Few words enshrine as many important values and ideas as the word "person." In common usage, it can be used to refer to one's sense of self; one's role in life; or one's spiritual, psychological, and emotional identity. (4) Personhood is also a seminal idea of the law; "persons" are the "units" to which the law attaches rights and duties. (5) Scholarly opinion on the nature of legal personhood is wide-ranging. (6) Categorizing something as a "person" is not meaningful solely in the abstract. The classification has real significance in terms of how the legal system will interact with a particular entity or group of entities. (7)

         Popular and legal concepts of personhood intersect insofar as all natural persons are usually legal persons. One convenient way of discerning whether something is a legal person is to ask whether or not it is "treated more or less as a human being" by the law. (8) Occasionally, theorists attempt to merge the popular and legal concepts of personhood by applying "[p]hilosophical and psychological theories of personality" to the problem of legal personhood. (9) Such accounts do not describe legal personhood in practice. (10) The law considers abstract entities like corporations and governments to be persons in many contexts, and even inanimate objects can obtain the status of persons. (11) In practice, legal personhood is best thought of as reflecting a legal system's policy choices behind the enforcement of statutory rights and responsibilities, making an accurate description of the "lineup" of legal persons a statute addresses vital to proper interpretation of the law.

         The term "person" lumps together two arguably distinct groups: those liable under a statute, and those capable of asserting claims under it. (12) This merger is immaterial in most instances; those who can violate a law typically have the ability to assert their rights under it. Nevertheless, there are situations where policy considerations or overriding legal rules, such as sovereign immunity, dictate that the class of persons with the capacity to bring claims may be broader than the class of potentially liable persons. In spite of their usual counsels against constructions giving statutory terms inconsistent meanings, (13) courts will interpret the word "person" flexibly to comport with the policy considerations behind the statute. (14)

      2. Can "Person" Mean More than the Principal?

         Statutes typically describe the behavior required to be guilty as a principal; nevertheless, one should not assume that a statute is limited to principals. The term "person" also describes the set of parties that are responsible alongside the principal for violations of legal rights. (15) The two most important forms of such liability for purposes of this Note are secondary liability (including conspiracy and aiding and abetting) and vicarious liability. The potentially wide-ranging consequences of the existence of non-primary liability in a given statute make a proper grasp of its dimensions on both the civil and criminal sides of the law crucial to deciphering personhood questions.

         a. Civil Law

         i. Vicarious Liability

         At common law, those who stood as "masters" over their "servants" were responsible civilly for the servant's torts, independent of fault. (16) That rule, known today as vicarious liability, was frequently the subject of pointed scholarly criticism during the late nineteenth and early twentieth centuries. (17) Today, the most widely accepted rationale for the rule is that it places liability on those best suited to absorb the costs of accidents, an economically optimal outcome. (18)

         When Congress creates a civil cause of action, it often does not mention the presence, or absence, of vicarious liability. One could interpret this silence as an indication that such principles are inapplicable to federal rights sounding in tort, but, as a general matter, courts do not interpret the law so narrowly. The Supreme Court frequently views statutory silence on vicarious liability principles as an indication that Congress intended the courts to apply "traditional" or "ordinary" principles of tort law in their interpretation. (19) In securities law, some courts supplement the explicit statutory provisions providing for a form of vicarious liability with the traditional theory, even as an explicit alternative provision strengthens the case for exclusion of the traditional theory. (20)

         ii. Secondary Liability

         The civil law theories of secondary responsibility most relevant to a discussion of personhood at federal law also emerge from tort law. There are two varieties of secondary liability in tort: conspiracy and aiding and abetting. Conspiracy is an agreement between two or more persons to act unlawfully, resulting in an injury caused by an overt act made pursuant to, and in furtherance of, the unlawful scheme. (21) Aiding and abetting is knowing and substantial assistance of a party that commits an unlawful, injury-causing act, with awareness of the principal's unlawful scheme. (22) These theories seek to reconcile tort law's competing goals by increasing a tort victim's chances of compensation, while restraining the scope of tort liability to only those parties with the necessary quantum of responsibility. (23)

         As is the case with vicarious liability principles, Congress is not consistent about writing aiding and abetting or conspiracy provisions into statutes explicitly. As the Supreme Court's treatment of vicarious liability suggests, this does not necessarily mean that theories of secondary liability are inapplicable to civil causes of action arising under federal law. As was the case with vicarious liability, there is a substantial line of precedent establishing the principle that courts should interpret statutes as incorporating generally accepted principles of tort law whenever such incorporation serves the overall goals of the statutory scheme. (24) This is in keeping with an older strain of thought in federal law that courts could go so far as to read causes of action, much less tort principles, into federal statutes, to effectuate statutory intent under certain conditions. (25) The question of whether particular principles are "traditional" or "ordinary"--colloquial ways of saying the principles are so entrenched in the legal landscape that it would be reasonable to believe Congress presumed their inclusion--can be a difficult one, often, reasonable answers on both sides are possible. (26) Despite this uncertainty, application of secondary liability principles in the absence of explicit statutory authorization under federal law is not an unreasonable proposition. (27)

         The Supreme Court brought this line of reasoning into question with its decision in Central Bank of Denver v. First Interstate Bank of Denver. (28) It held that aiding and abetting liability did not apply to civil actions under section 10(b) of the Securities Act of 1934 (29) because Congress failed to indicate explicitly...