The U.S. Supreme Court may soon get a chance to consider and review the “Responsible Corporate Officer” Doctrine (also sometimes referred to as the “Park doctrine,” in reference to the 1975 case in which the Court first described the doctrine) in a case in which corporate executives challenge their individual criminal imprisonment sentences for alleged corporate misconduct in which they were not involved and of which they had no knowledge. As discussed here, the executives’ sentences were affirmed by the Eighth Circuit, and the executives have now filed a petition for a writ of certiorari to the Supreme Court, in which they seek to have the Court take up the question of whether the imposition of a sentence of imprisonment for a supervisory liability offense violates constitutional due process requirements. As a May 3, 2017 memo from the Cadwalader law firm put it, the case may be the “most important Park doctrine case in over forty years.”
One of the bedrock principles of our legal system is that criminal liability attaches only to those who act with intent or knowledge – that is, as the legal scholars say, with mens rea (or a guilty mind). The “responsible corporate officer doctrine” sits uneasily with these notions, imposing liability as it does on corporate officers not for their involvement in or even awareness of wrongdoing, but simply for their status as persons responsible for the company involved. The doctrine permits the government to prosecute executives for corporate misconduct when they are in a “position of authority” and fail to prevent or correct a violation of the Food, Drug and Cosmetic Act (FDCA). It is, as the Cadwalader memo notes, “a strict liability offense and a vicarious liability offense.”
The responsible corporate officer doctrine has been absorbed into environmental law as well, and, as discussed here, and has served as the basis of imposing liability in environmental enforcement actions. More recently, it has been expanded to other contexts as well, as discussed here.
The recently filed cert petition involves the prosecution of two officers of Quality Egg. Austin “Jack” DeCoster, the company’s owner, and Peter DeCoster, Jack’s son and the company’s chief operating officer, pled guilty to misdemeanor FDCA violations in connection with Quality Egg’s introduction of eggs into interstate commerce that had caused a salmonella outbreak. The two DeCosters were sentenced to three-month prison terms and $100,000 fines. The DeCosters appealed their sentences, arguing that their prison sentences and the statutory provisions of the FDCA embodying the responsible corporate officer doctrine were unconstitutional and that their sentences were procedurally and substantively unreasonable.
As discussed here, in a July 6, 2016 decision, a divided Eighth Circuit panel upheld the DeCosters’ convictions. Judge Diane E. Murphy wrote the opinion for the 2-1 majority, with Judge Raymond Gruender writing a separate concurring opinion. Judge Clarence Beam wrote separately in dissent.
In her majority opinion, Judge Murphy wrote, in a proposition on which all three judges seemed to agree, that it would violate due process for a prison term to be imposed for vicarious liability crimes, without some proof of some form of personal blameworthiness more than a responsible relationship. But the officer liability under the FDCA, Judge Murphy wrote, is not the equivalent of vicarious liability. Rather, a corporate officer is held accountable under the FDCA not for the acts or omission of others, but rather for “his own failure to prevent or remedy the conditions which gave rise to the charges against him.” The defendants, Judge Murphy wrote, “knew or should have known” of the risks posed by the insanitary conditions at Quality Egg.
The Cert Petition
On January 10, 2017, the DeCosters filed their cert petition with the Supreme Court. In their petition, the Decosters ask the Court to consider “whether the Due Process Clause prohibits the imposition of a term of imprisonment as punishment for a supervisory liability offense.” Their petition also presents a second question, which is whether Park and its predecessors should be overruled.
In their petition, the DeCosters argue that while they pled guilty because they possessed sufficient corporate authority to prevent eggs from being shipped if they had known of the contamination – which, the government concedes, they did not. But while their authority is sufficient under Park for them to be held criminally liable, such a “crime” — they argue — may not lawfully be punished by deprivation of the liberty of the defendant.
In anticipation of the government’s argument that the source of their liability is not merely their authority, but rather their own supervisory negligence, the DeCosters argue further that the sole offense of which they have been convicted depends on their roles as responsible corporate officers of Quality Egg, and they admitted guilt on that basis alone. It is, they argue, a “core Park offense,” which does not turn on proof of negligence; conviction of a Park offense, they argue, is a form of criminal liability that, they contend, cannot consistently with the Due Process Clause be used as a basis for incarceration. Finally, the DeCosters also argue that the Park decision and its predecessor cases should be overruled because its “arbitrary and selective enforcement” invites liability where there is none.
In its brief in opposition (here), the government argues that the DeCosters’ criminal sentences were based “not on vicarious liability for others’ conduct, but rather on petitioners’ own blameworthy acts and omissions, as found by the district court at sentencing.” The government argues further that the individuals’ prison terms were proportionate and appropriate because the FDCA not only imposes a duty to seek out and remedy violations but also “a duty to insure that violations will not occur.”
The Washington Legal Foundation filed an amicus brief in support of the DeCosters’ petition, arguing that the organization “opposes the government’s increased use of the ‘responsible corporate officer’ doctrine … to punish business executives for employee misconduct that the company’s officers neither condoned nor even were aware of.” The WLF argues further that the Eighth Circuit’s decision, by “affirming the incarceration of corporate executives on the basis of their supervisory roles in the company, vastly expands the scope of the Park doctrine beyond constitutional limits.” This expansion “offends traditional notions of due process, significantly erodes individual and business civil liberties, and urgently warrants this Court’s review.”
The National Association of Criminal Defense Lawyers, in association with the National Association of Manufacturers, also separately filed an amicus brief in support of the DeCosters’ petition, in which they argued that the time has come for the U.S. Supreme Court to address the question of “whether conviction for a vicarious liability offense alone permits a court to impose a sentence of imprisonment.” They argue further that “vicarious criminal liability, by its very nature, permits criminal convictions for those who lack both a guilty mind and did not engage in a wrongful act.” They urge the Court to take up the case in order to hold that “vicarious liability has no place in criminal law.”
At the time of the Eighth Circuit’s ruling in this case, I noted that this case could well wind up at the U.S. Supreme Court. The appellate court’s three-judge panel’s three separate opinions underscored the difficult and conflicting concerns that the use of the responsible corporate officer doctrine presents, particularly where, as here, a criminal conviction based on the doctrine is used as a basis for imposition of a criminal sentence of incarceration.
While there are aspects of this case that may well lend themselves to full consideration of the issues presented, and therefore provide incentives for the Supreme Court to take up the case, there is one aspect of the case that could lead the Court not to take the case or if it takes it up to provide a ruling that sidesteps the bigger issues involved. That is, the question of whether or not the DeCosters’ convictions were solely based on their vicarious liability, or rather were based, as the government argues in its opposition brief, on the DeCosters’ own negligent misconduct, may suggest a line of analysis that could either militate against the Court taking up the case or could support a narrower ruling that does not address the bigger issues head on.
That said, the case does present important and serious issues for which Supreme Court review would be welcome. In numerous prior posts on this blog (most recently here), I have noted my concern over the growing tendency of regulators and prosecutors to try to hold corporate officials liable not because they were involved in or even aware of corporate wrongdoing, but simply by reason of their status as company officials. My concerns in this regard are amplified by the increasing willingness of Congress and other legislatures to create criminal liability for corporate officials in a broad variety of contexts similarly based on corporate office rather than personal culpability. As I noted here, this growing tendency to try to impose liability without culpability is a “deeply troubling trend.”
As the Cadwalader law firm noted in its memo about the DeCosters’ cert petition, the Supreme Court’s review of this case and subsequent decision “will be a breath of fresh air for industry advocates who have longed for a precise guide to ensure corporate executives are not at the mercy of prosecutors and judges.” The Supreme Court’s review of the case could “limit liability by prohibiting the government for seeking imprisonment for employees who have no knowledge of their company’s illegal conduct.”