Two ways to think about the punishment of corporations.

• Author: Alschuler, Albert W.
• Position: Achieving the Right Balance: The Role of Corporate Criminal Law in Ensuring Corporate Compliance

INTRODUCTION

This article compares the criminal punishment of corporations in the twenty-first century with two ancient legal practices--deodand (the punishment of animals and objects that have produced harm) and frankpledge (the punishment of all members of a group when one member of the group has avoided apprehension for a crime). (1) It argues that corporate criminal punishment is a mistake but that viewing it as frankpledge is less ridiculous than viewing it as deodand. The article Considers the implications of the choice between these concepts for standards of corporate guilt and for the sentencing of corporate offenders.

After a brief historical description of deodand and frankpledge, the article traces the history of corporate criminal liability from William Blackstone through Arthur Andersen. It emphasizes that this liability punishes the innocent, and it argues that the punishment of innocent shareholders and employees should not be regarded as "collateral" or "secondary."

The article notes that subjecting corporations and their officers to punishment for the same crimes creates sharp conflicts of interest, It reviews the history of the Justice Department's efforts to exploit these conflicts--initially by encouraging corporate officers to deliver corporate guilty pleas to gain leniency for themselves and more recently by pressing corporations to gather and deliver information about their employees.

The article suggests that defenses of corporate criminal liability fall into two categories. Arguments in the first category are expressive and match those that once might have defended deodand. Arguments in the second category are instrumental and match those that once might have supported frankpledge.

"Expressive retributivists" champion the deodand perspective. They blame mindless legal entities for crimes committed by their employees. This article considers the implications of their arguments.

Other defenders of corporate criminal liability view it as frankpledge--a device for persuading everyone in an organization to monitor everyone else. This article questions the propriety of declaring some people guilty of other people's crimes simply to encourage them to police one another. On the assumption that corporate liability is here to stay, however, the article argues that it is better regarded as a means to induce internal monitoring than as bona fide criminal punishment.

This article then considers the implications of the deodand and frankpledge positions. Neither of these positions justifies the federal rule of respondeat superior that authorizes the conviction of a corporation whenever an employee acting within the scope of his employment has committed a crime. The champions of both the deodand and frankpledge positions have in fact sought revision of this rule.

Expressive retributivists propose replacing the rule with a "corporate ethos" standard. The article argues, however, that this standard is incoherent and unworkable. The reform advocated by the frankpledge proponents is more sensible. If the goal of corporate criminal liability is to induce appropriate monitoring, the creation and maintenance Of an appropriate corporate compliance program should provide a defense to liability.

Proposals for such a defense have not fared well, and this article considers their prospects. It suggests that, although the respondeat superior standard is truly indefensible, it survives because it affords broad powers to prosecutors. The article examines how prosecutors have used and misused their extraordinary powers.

A final section of this article considers the implications of the frankpledge perspective for sentencing corporate offenders. A judge's goal in punishing a corporation should be to induce a level of monitoring that will prevent more criminal harm than the monitoring will cost.

1. DEODAND

   The term deodand refers to the punishment of an animal or inanimate object that has killed a person. (2) The Book of Exodus endorsed the practice: "If an ox gore a man or a woman, that they die: then the ox shall be surely stoned, and his flesh shall not be eaten...." (3) A standard reference is Criminal Prosecution and Capital Punishment of Animals by E. P. Evans, published in 1906. (4) As one alphabetically minded reader of this work noted, it chronicled 191 actions against "asses, beeries, bloodsuckers, bulls, caterpillars, cockchafers, cocks, cows, dogs, dolphins, eels, field mice, flies, goats, grasshoppers, horses, locusts, mice, moles, rats, serpents, sheep, slugs, snails, swine, termites, turtledoves, weevils, wolves, [and] worms...." (5)

   Under English law, any chattel found by a jury to have caused death was forfeit to the Crown. (6) In the Case of the Lord of the Manor of Hampstead, (7) "[a] cart met a wagon loaded upon the road, and the cart endeavouring to pass by ... overturned, and threw the person that was in the cart just before the wheels of the waggon." (8) The jury found that the cart, wagon, loadings, and horses were all deodands because they had "moved [unto death]." (9)

   Oliver Wendell Holmes devoted the first chapter of his legal classic The Common Law to deodands. (10) Among his many illustrations: When someone was killed by a fall from a tree, "the rude Kukis of Southern Asia" required this person's relatives to cut down the tree and scatter it in chips. (11) Holmes argued that primitive people attributed intentionality and blame to inanimate objects. Noting that proceedings in admiralty were still brought against vessels and that everyone called vessels "she," he observed, "If [following a ship accident] we should say to an uneducated man to-day, 'She did it and she ought to pay for it,' it may be doubted whether he would see the fallacy, or be ready to explain that the ship was only property." (12) In light of Holmes's view of the common man, it is easy to see why someone called him the Yankee from Olympus. (13) And it is easy to see why he declared in this chapter that "[t]he life of the law has not been logic." (14)

2. FRANKPLEDGE

   Frankpledge was an English institution in which ten men were bound together and held responsible for delivering anyone in any of their ten households who had committed a crime. If the criminal escaped, all ten members of the tithing were fined. (15) A precursor of this practice was in existence at least by the time of King Edgar the Peaceful, (16) who died in 975 and whose mistress was named Wulfthryth. (17) A law of Edgar's reign required every man to have a borh (or surety), and it said, "[I]f any one then do wrong and run away, let the borh bear that which he ought to bear." (18) The Normans translated the Anglo-Saxon word frithborh as frankpledge and used the institution effectively. (19) There were no professional police forces, but frankpledge gave everyone the job of capturing wrongdoers. When the members of a tithing allowed a criminal to escape, they were punished collectively for this default. F. W. Maitland speculated that frankpledge led to the jury of presentment or grand jury. (20) Even after the members of a community were freed of the obligation to capture wrongdoers, they were required to tell the sheriffs and justices what they knew.

3. THE COMMON LAW VIEW OF CORPORATE CRIME

   Frankpledge vanished long before Blackstone wrote his Commentaries in the eighteenth century, (21) but deodand persisted. It was abolished in England only in 1846. (22) Yet Blackstone viewed this practice as hopelessly primitive. He attributed it to superstition and claimed that it had arisen "in the blind days of popery." (23)

   For Blackstone, criminal guilt was personal. He wrote, "Punishments are ... only inflicted for that abuse of that free will, which God has given to a man." (24) In accordance with this view, Blackstone declared that "[a] corporation cannot commit treason, or felony, or other crime." (25) He regarded the point as so obvious that it needed no elaboration.

4. THE CURRENT AMERICAN VIEW

   1. Bye, Bye Blackstone: New York Central and Its Progeny

      The year 2009 marks the centennial of a giant step backwards. In 1909, in New York Central & Hudson River Railroad Company v. United States, (26) the Supreme Court muttered something about "public policy" (27) and the power of the corporation in "modern times." (28) It then upheld a federal statute that punished corporations criminally for charging their customers too little--for undercutting government-fixed prices. (29) The Court not only recognized Congress's power to punish corporations (an appropriate mark of judicial restraint) but also praised Congress's exercise of this power. It called the common law rule articulated by Blackstone an "old and exploded doctrine." (30)

      New York Central upheld a statute that expressly punished corporations. It did not suggest that statutes silent on the subject should be read to authorize the prosecution of these entities. The Court wrote in fact, "[T]here are some crimes[] which in their nature cannot be committed by corporations," (31) but no one had any idea what crimes the Court had in mind. After the decision in New York Central, the Supreme Court and other courts generally read criminal statutes to impose corporate criminal liability even in the absence of any indication that Congress or a state legislature favored this outcome. (32)

      The statute upheld in New York Central authorized corporate punishment whenever an "agent or other person acting for or employed by [the corporation] acting within the scope of his employment" violated the statute's prohibitions. (33) The Supreme Court did not consider whether the same rule of respondeat superior would apply when statutes were silent on the subject. Without much reflection, however, later decisions applied the respondeat superior principle of New York Central whenever corporations were prosecuted. (34)

      Many states have approved a less sweeping standard of liability. Following the lead of the Model Penal Code, they...