Too Big to Jail: How Prosecutors Compromise with Corporations.

Author:Baer, Miriam H.
Position:Book review
 
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Too Big to Jail: How Prosecutors Compromise with Corporations. By Brandon L. Garrett. Cambridge and London: Harvard University Press. 2014. Pp. ix, 365. $29.95.

INTRODUCTION

If sunlight is, in Justice Brandeis's words, "the best of disinfectants," (1) then Brandon Garrett's (2) latest book, Too Big to Jail: How Prosecutors Compromise with Corporations might best be conceptualized as a heroic attempt to apply judicious amounts of Lysol to the murky world of federal corporate prosecutions.

"How Prosecutors Compromise with Corporations" is the book's neutral-sounding secondary title, but even casual readers will quickly realize that Garrett means that prosecutors compromise too much with corporations, in part because they fear the collateral consequences of a corporation's criminal indictment. (3) Through an innovation known as the Deferred Prosecution Agreement, or DPA, (4) prosecutors reach extrajudicial contractual agreements with corporations. Although prosecutors have long touted the transformative potential of these agreements, Garrett concludes that their benefits are often superficial and short-lived (pp. 149-50). Moreover, prosecutors negotiate these compromises with little oversight or accountability (p. 2). Even worse, this overly soft approach toward entities has infected prosecutorial resolve to prosecute individual offenders (pp. 83-84), thereby enabling corporate managers to escape liability for their criminal wrongdoing (Chapter Four). No wonder, then, that Garrett perceives a grievous accountability gap in the corporate crime landscape.

One can hardly fault Garrett for questioning the substance and procedures underlying the corporate DPA. The name itself is a bit of a misnomer. (5) The typical agreement neither portends a true "deferral" of criminal charges, nor reflects any intention on the part of the government to prosecute its signatory. To the contrary, in most if not all cases, it represents an agreement not to prosecute the entity ever, provided the entity fulfills a number of conditions, including the payment of fines, provision of cooperation in subsequent investigations, and the implementation of a variety of internal governance reforms. (6)

As Garrett observes, DPAs are highly variable; their contents differ, often with little explanation or justification (p. 48). Some agreements extract significant concessions from the corporate offender regarding its governance structure and daily business activities, while others do not (p. 48). Some require external monitoring and verification, while others rely on disclosures generated internally by the corporation (p. 48). Moreover, nothing within the DPA process itself measures, much less guarantees, the efficacy of these reforms (p. 279). Although the federal government likes to take credit for transforming corporate America, (7) it has, as Garrett points out, offered fairly little evidence substantiating its rosy claims. (8)

To prove his points, Garrett vividly retells numerous corporate criminal scandals--from Arthur Andersen's shredding of documents (pp. 19-20) to Siemens's bribing of numerous foreign officials (pp. 1-3)--and intersperses these anecdotal accounts with data culled from his review of over 255 DPA agreements he and the University of Virginia Law School library have collected and maintained (pp. 295-301).

At first glance, one might mistake this book as yet another attack on corporate and government elites, but embedded in Garrett's book is a more sophisticated reform argument, portions of which Garrett and others have previewed elsewhere. (9) Troubled by what he perceives as a federal reluctance to come down hard enough on corporate offenders, Garrett seeks to upend the DPA process altogether. In lieu of DPAs and similar compromise agreements, corporate indictments should become the norm (p. 274). Following the entity's indictment, judges should supervise corporate plea agreements and articulate lengthier and more demanding internal governance reforms (pp. 282-84), overseen by court-supervised third-party monitors selected through a competitive bidding process (pp. 191, 284).

Garrett's reform proposal features several moves, the primary and most important of which is to wrest power from the federal prosecutor and place it with the Article III judge, whose supposed mission is to erect more far-reaching reforms that serve the "the public interest" and thereby reduce the incidence of corporate crime (pp. 282-84). Garrett's secondary goal echoes the theme of Judge Rakoff's popular New York Review of Books essay, (10) which is to focus greater effort on the prosecution of the individual corporate officers and managers who have propagated serious harms (Chapter Four).

This Review takes up Too Big to Jail's organizational agenda. The debate over individual offenders continues elsewhere, and has motivated the Department of Justice to announce a new policy encouraging criminal and civil prosecutors to better coordinate their efforts to punish those individuals most responsible for corporate crime. (11) Whatever the merits of this approach, one cannot help but wonder how significantly the government can increase its prosecution and conviction of individual actors, given white-collar crime's technical complexity and the inherent difficulty in proving culpable mens rea among well-insulated officers and directors. (12)

One might harbor just as much skepticism toward an agenda that attempts to rid corporate entities of their criminogenic characteristics. (13) Perhaps the intervention of federal judges and a more aggressive Department of Justice can reduce the corporate entity's propensity to violate certain laws, but it is just as possible that these reforms will backfire, leaving in their wake a mix of failed prosecutions, jailed scapegoats, and expensive but ineffective governance reforms. (14) Corporate crime may present a problem that is too important to ignore, but some remedies are worse than the diseases they seek to cure. Garrett is certainly not alone in his criticism of the DPA, (15) but before we abandon it, we should consider how well its alternative holds up under close examination. (16)

With the foregoing in mind, this Review unfolds as follows: Part I appraises Garrett's assessment of the status quo and offers a few reasons to be wary of his proposal's performance regarding traditional criminal justice goals, such as deterrence and retribution. Part II grapples with Too Big to Jail's weightier implications. At the same time that Garrett attempts to eliminate the DPA's legitimacy and transparency problems, he triggers a new set of anxieties, magnifying corporate crime's vulnerability to criminal law's legality principle, and raising more general concerns about sentencing courts' powers to erect indefinite and largely unconstrained governance reforms. Although these challenges are surmountable, they threaten a sideshow likely to interfere with Garrett's preferred result, the reduction of corporate crime.

Part III concludes by considering alternative ways to reduce the incidence of corporate crime while meeting several of Garrett's objections. My argument is admittedly counterintuitive: to make corporate criminal enforcement more effective, we should ask it to do less, and not more. In that regard, this Part calls for parsimony and clarity, but not lenience. Time will tell which approach is best, but we should keep this alternative in mind, particularly as the Department of Justice embarks on yet another round of prosecutorial chest thumping.

  1. NOT QUITE SO BAD, AND NOT QUITE SO GOOD

    Garrett's argument is fairly straightforward. He begins with the well-known respondeat superior rule, which holds corporations vicariously liable for most employee violations of federal law. (17) Despite this source of liability, prosecutors often choose not to seek indictments of publicly held corporations, in part because they fear the collateral consequences that may ensue if the corporation is indicted and convicted. (18) Instead, prosecutors seek reforms and punishment through settlement; they require the company to agree to a set of fines and compliance-related reforms that are memorialized in a DPA or in a Non-Prosecution Agreement (NPA), and then filed (sometimes) in court before an otherwise dormant judge. (19) The agreements, which Garrett has collected and reviewed at length, are inconsistent, uninformative, too short in duration (p. 75), occasionally secret (or accompanied by undisclosed side deals) (p. 77), and, in Garrett's opinion, collectively unsuccessful in deterring wrongdoing and holding corporate actors accountable for the harm they have caused. (20)

    As noted in the Introduction, the Department of Justice has, since the publication of Garrett's book, announced a change in its corporate-crime policy. (21) Although prosecutors may continue to weigh multiple factors in deciding whether to indict the organizational offender, they will no longer advance the corporation "any credit" for one of those factors, the company's cooperation in the government's investigation, unless the corporation identifies "all individuals involved in or responsible for the misconduct at issue" and discloses "all facts relating to that misconduct." (22) If the corporation declines to provide or even "learn of' such information, it will receive--according to the DOJ's new proclamation--no credit for cooperation whatsoever. (23)

    The tone of the DOJ's newest policy--cooperate fully or else--casts a shadow over the multifaceted approach that has long characterized the DOJ's approach to charging corporations. (24) The corporation that declines to cooperate could, theoretically, still receive a DPA or NPA, but surely few defense attorneys will purposely test this theory. (25) In any event, whether and how the DOJ's new policy affects prosecutors falls outside the scope of this Review. The policy change is notable, however, for the parts of...

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