Compliance 101 -- The Organizational Sentencing Guidelines Post-Booker

Here is a question I have received quite a bit over the last year: What effect (if any) does the Supreme Court’s decision striking down the federal individual sentencing guidelines have on the federal organizational sentencing guidelines?  My standard answer is “none,” and this post gives both some background on the issue as well as the explanation for my rather categorical answer.

In United States v. Booker,  the Court held that the federal sentencing guidelines violate an individual criminal defendant's Sixth Amendment right to a jury trial.  The case relied heavily on last term's decision in Blakely v. Washington,  where the Court struck down similar state sentencing guidelines.  Blakely involved a criminal defendant who had plead guilty to kidnapping his estranged wife, a crime that carried a 53-month jail sentence.  During the sentencing phase, the trial court increased the defendant's jail term to 90 months based on its finding that the defendant had acted with "deliberate cruelty."  According to Blakely, however, the Sixth Amendment requires that a jury find any facts used to increase a defendant's sentence.  Thus, the sentence enhancement based on the judge's finding of "deliberate cruelty" was unconstitutional.

Booker held that the federal sentencing guidelines suffer the same fatal flaw, namely requiring federal judges to enhance criminal sentences based on facts neither found by a jury nor admitted by the defendant.   Having held the guidelines unconstitutional as written, the Court had two choices - require that a jury find all sentencing facts necessary to apply the guidelines, or make the guidelines mere suggestions that judges may consider when exercising sentencing discretion.  By a five-to-four vote, the Court kept federal sentencing in judges' hands, making the guidelines merely advisory.

There are three good reasons Booker should not matter for the organizational guidelines.  First, there is serious doubt whether the Sixth Amendment right to a jury trial extends to organizational defendants.   So, the Booker holding is dicta for corporations, partnerships, and the like.

Second, even if the organizational guidelines are unconstitutional, they will continue to influence charging and sentencing decisions.  A Department of Justice Memo on the "Principles of Federal Prosecution of Business Organizations"  (aka, the Thompson Memorandum discussed in prior posts on this blog) directs United States Attorneys to consider whether an organization had an effective compliance program in deciding whether to investigate, charge, or negotiate a plea with the organization.   Further, the Memo specifically refers to the organizational sentencing guidelines for specific criteria in evaluating the effectiveness of such a program.   On the sentencing side, whether an organization has an effective compliance program will surely influence judicial sentencing discretion.  And because the amended guidelines reflect current best practices, they are a logical standard for measuring the effectiveness of such programs.

Third, the sentencing guidelines have had influence far beyond the sentencing arena.  Several federal agencies, including the Department of Health and Human Services, Department of the Treasury, and the Securities and Exchange Commission, have issued compliance regulations or guidance that either incorporate or specifically reference the sentencing guidelines.  (See the left hand menu for a collection of agency compliance links.)  So, even if interred for sentencing convicted organizations, the guidelines will live on in other regulatory guises.