The State's Responsibility for Corporate Criminal Justice.

• Author: de Sousa, Susana Aires

1. INTRODUCTION 1109 II. COMMON REFRAINS FOR ABOLITION 1111 III. UNCOMMON REFRAINS 1115 A. The Missing Victim Problem 1115 B. De-statehood: Conceding Public Law Functions to Private Law 1116 C. The Unequal Sharing/Distribution of Responsibility for Corporate Harms 1120 IV. PERENNIAL QUESTIONS 1123 I. INTRODUCTION

   There are many good reasons to contemplate an end to our century-old experiment with corporate criminal liability. The most obvious reasons generally fall into three categories: challenges to personhood and moral agency, nagging concerns over the conception of the general part of the corporate criminal law, and perennial problems with the fair administration of corporate criminal justice. (1) After briefly considering the individual and collective weight of these reasons, this Article explores two less obvious reasons, the "missing victim" problem and our tolerance for the waning power and suasion of the state. The former considers the consequences of blindness to the kind, quality, and effects of corporate wrongdoing. There is no fair accounting of the wrongdoing committed against collective interests and goods to determine culpability, liability, and punishment. Any marginal recognition is already quite limited given the "dark figure" of corporate accountability. (2) The latter reflects the failure of a robust public law and an enabled public sector, one that is responsive to the inequities in the administration of rules and procedures. The authority, power, and suasion of the state were wrestled away long ago, unfortunately without considering incentives of corporations to exploit failures of public enforcement of laws; failures to require the necessary measures and metrics to ensure the effectiveness of complex self-regulatory regimes.

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   These two more nuanced reasons, coupled with those most obvious, are grounds for thinking about a world without corporate criminal law--a world where we prize the administrative state and private law remedies for justice. This thinking about a very different world, no matter how seductive and attractive, is countered by our musings over an imperative that comes from a narrow construction of the idea and ideal of equality. (3) Our defense to abolition is grounded in an equality principle that recognizes the frailty and, yet, the primacy of substantive criminal law. Simply stated, the state is compelled to publicly condemn known criminal wrongs with processes and rules consistent with the equal application of law. Failure to adhere to the equal and thus fair treatment of corporations in the administration of justice should prompt long ago promised law reforms and remediation, not abolition. (4)

   Our position rejecting abolition remains firm no matter how damning the descriptive account of corporate criminal justice, no matter how little is known about the impact of corporate wrongdoing, and no matter how imperfect, forgiving, or impotent the state's response. Corporate criminal law survives because harm to society from this and all kinds of criminal wrongdoing must be publicly acknowledged and validated in ways consistent with the ideals of justice. Criminal wrongdoing--whether human or corporate--is harm committed against the moral consensus of the community. The state responds, as Henry M. Hart, Jr. so forcefully writes, with "a formal and solemn pronouncement of the moral condemnation of the community." (5) The conviction has also "a communicative function that civil judgments do not." (6) It is not much to ask--indeed, it is the state's burden--that the pursuit of corporate criminal justice be guided by rules and procedures that ensure reasonable measures of equality. (7) Thus, in the end, we need not imagine a world without corporate criminal law for all the obvious and more nuanced reasons stated above. Rather, those still committed to the prominent place and mandate of the state in the administration of justice need only re-imagine a world with it.

   Imagine, for example, reasonably constructed liability rules and standards of culpability that reflect the idea of organizational fault rather than an abused fiction of corporate criminal liability. Imagine the co-regulation of the private sector by an active and engaged public sector that recognizes, understands, and prizes effective compliance with the law rather than an empty office of a compliance counsel. Imagine the crimes of small, medium, and large firms being pursued earnestly and fairly--all without discretionary agreements, diversion, and exemptions for the most powerful, important, and protected. Contrast this with a long history of prosecuting small, privately-held businesses to conviction. Imagine a regime of corporate punishment that reaffirms to society the values and victims denied by a criminal offense. And finally, as one's imagination goes wild, consider how the very idea of abolition would be received by those genuinely concerned with how state domination supports the overcriminalization and mass processing of the disaffiliated, marginalized poor. Pursuing an abolitionist brand of decriminalization would be repugnant to anyone concerned with the many consequences of discretionary state power, status, and domination in the conventional criminal justice system (8) How could it be explained that the bluntest of all instruments of state social control applies only to the poorest of the poor; to those most disenfranchised and discriminated against?

2. COMMON REFRAINS FOR ABOLITION

   It has long been said that what best characterizes corporate criminal law is, quite simply, ambivalence. This is fair, given the bluntness of this instrument. Indeed, there is so much ambivalence over corporate criminal enforcement that it is often difficult to find any stakeholder support for its application. No doubt there is much fanfare with its occasional use. There is no shortage of "faux" indignation by state representatives accompanying the rare announcements of aggressive enforcement actions. (9) There is also a smug sense of exceptionalism from criminal justice functionaries in assuaging markets and a wide swath of stakeholders that fairness, accountability, and integrity prevail. (10) But there is scant evidence of much that approximates genuine support for corporate criminal justice. It is, thus, not unreasonable to imagine a world without corporate criminal liability. In some sense, and at some moments, it is not wrong to think that we are a mere stone's throw away. At first glance, ambivalence with corporate criminal law seems to reflect a hesitancy to inhibit or constrain the most powerful institutions sustaining economic development. (11) It is admittedly a challenge to control the costs of the criminal law, with externalities that are, at times, a challenge to justify. Some costs directed at culpable firms may just be direct consequences. We should add, though, that most critics of corporate criminal law are taken with the idea of costs due to collateral consequences. (12) Imagine, they say, all of the innocent stakeholders adversely affected by the loss in share price or, worse, the loss of a job. Shareholders, employees, debtholders, and third parties are all suffering from the consequences of this blunt instrument of social control--an instrument that should be deployed against culpable agents, not earnest, diligent organizations. (13)

   The roots of ambivalence and seeds of abolitionism, however, are not exclusively economic. Rather, abolitionist sentiments are also traceable to a long history of legal and moral consternation over corporate personhood and agency. The individualistic nature of criminal offenses made the idea of liability to a persona ficta seem wrong and, when applied, no more or less than a variant of strict liability. For many years, methodological individualism also constrained any reasonable consideration of social and group phenomena. Corporate wrongdoing, following New York Central & Hudson River Railroad Co. v. United States, (14) was derivative of the acts and intents of agents, no matter where situated in the corporate hierarchy. This did not sit well with those courts that recognized that features of biological and corporate persons differed in critically important ways. Without a soul and a will, attributing a guilty state of mind to a corporation is too far-fetched. Perhaps a corporation is a ''mere creature of law.'' (15) And without a body, the act requirement of the criminal law also could not be realized. The power to commit crimes and any attribution of illegality are well outside the scope of their authority, or ultra vires. The capacity of a corporation, some scholars reasoned, is simply no greater than the power conferred by its corporate seal or charter. (16)

   This metaphysical and conceptual muddle contributed to a doctrinal one. In the absence of any significant law reform and scant decisional law, the general part of corporate criminal law never matured. As a result, we live with normative categories and principles of penal theory designed for agents, but entirely ill-suited for corporate persons. This is reflected in the neglect of any reasonably constructed liability rules and standards of culpability. So, too, was there neglect of genuine fault models, such as corporate culture, corporate decisions, and constructive corporate fault. (17) And there are good reasons why; with vicarious liability as blackletter law, there was a substitution of committed compliance expenditures for evidence of organizational due diligence. Add to these notable systems failures, including the fact that so few cases of corporate criminal wrongdoing are criminally investigated and prosecuted--resulting in a robust "dark" figure; different tracks of justice depending on firm size; a diversion of small numbers of large firms to NPAs and DPAs; and a hesitancy to criminally prosecute, take to trial, convict, and punish those firms whose criminalization would create...