Sunday, June 8, 2008

Re-evaluating Corporate Criminal Liability - Ionia

The briefs in the case of United States v. Ionia Management, S.A. are now starting to appear in the Second Circuit, where the case will be heard on appeal.  And although the case has worthwhile arguments related to statutory construction, sentencing, and procedure, the focus here is on the issue of whether there was sufficient evidence "to establish vicarious criminal liability for a corporate defendant under respondeat superior" and whether there was error in the "trial court's instructions on corporate liability." This case forcefully takes on corporate criminal liability both from a policy perspective and in its application.  This is clearly a case that needs to be watched.

The company, "a ship management company headquartered in Piraeus, Greece," was convicted of conspiracy, pollution (Act to Prevent Pollution from Ships), and obstruction of justice, following a jury trial.  The company was fined $4.9 million in addition to probation and assessments.

The amicus brief is written by Andrew Weissman (remember him from Enron), now at Jenner & Block, for a group consisting of the Association of Corporate Counsel, Chamber of Commerce, National Association of Criminal Defense Lawyers, National Association of Manufacturers, New York Association of Criminal Defense Lawyers, and the Washington Legal Foundation. This amicus brief examines the initial New York Central case that serves as the bedrock for corporate criminal liability.  But it places this decision in the real world of today where a corporation may be facing scrutiny, despite the utmost care, because of a lower-level employee's alleged failure to follow the law. The brief calls for the court to "adopt a standard for vacarious corporate criminal liability" . . . that limits "the application of respondeat superior."

There are many options available to the court to limit a doctrine that needs to be examined in the real world of today, a world with international dimensions resulting from corporations that have employees on more than one continent, where statutes omit mens rea terms, and where the trial penalties can destroy a company. My personal preference here is for the establishment of a "good faith defense" for a corporation being charged criminally for the acts of a rogue employee (see here). It is good enough in the civil context, so clearly this approach should be allowed here.

Appellant's Brief -Download ionia_mgmt.Appellant Open Brief.pdf

Amicus Brief - Download Ionia_Amicus_Brief.pdf


Addendum - See Tom Kirkendall's Houston's ClearThinkers here.

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