Corporate Citizenship and Corporate Criminal Rights
March 2006
© Copyright 2006. All rights reserved, Emergency Envelopes, Volume 1, Issue 2
“Good corporate citizenship” is a topic of much discussion in today’s legal environment. It seems that every day brings forth new revelations of alleged misconduct by a variety of business entities. But corporations, unlike individuals, do not put their personal liberty at risk by committing crimes. Historically it seemed nonsensical to those “learned in the law” to hold a corporation responsible for the acts of individuals, who could be held personally accountable for their transgressions and punished. In explaining why a corporation could never be guilty of a crime, one famous nineteenth century English chancellor asked “How can you ever expect a corporation to have a conscience, when it has no soul to be damned and no body to be kicked?”[1] Corporate criminal responsibility and liability in the United States has clearly evolved. Although still without a soul or a body, today’s corporations do have their own special rights, protections, and vulnerabilities.
This article examines the uniquely precarious position corporations are placed in during a government investigation of alleged criminal misconduct. The issues involved center around two dynamics—(1) a corporation’s lack of certain constitutional protections; and, (2) a corporation’s exposure based on the doctrine of vicarious liability. Few deny that corporations should be held accountable for the actions of their representatives, but there is growing concern as to the collateral consequences of heightened government scrutiny. In the current enforcement environment a company oftentimes realizes that the only rational business decision for it to make is to plead to some crime (or alternatively to have a case hanging over its head through the use of a deferred prosecution agreement), pay a fine, and get closure. This course of action allows the company to focus on the future and protect shareholder value rather than subjecting itself to the chaos that a criminal indictment engenders. Business reality, however, does little to deter prosecutors from resorting to “overkill” approaches indeed, perhaps it encourages them. And while to some corporations may not be the most sympathetic of criminal defendants, they are comprised of many innocent individuals that often pay the price and carry the burden of a sometimes unfair and occasionally ill-informed government investigation.
Corporations as “Persons”
Over time, corporate entities have gained the benefit of many, but not all, constitutional protections. Corporations won the right to have their contracts upheld nearly thirty years after the United States ratified the constitution.[2] Beginning in the latter half of the nineteenth century, these entities slowly began acquiring a number of additional rights as “artificial persons” worthy of constitutional protection.
Corporations are creations of the law, existing only by permission of a state. It was believed that as such they could not claim the benefit of certain constitutional rights. Ironically, it was ratification of the Fourteenth Amendment to the United States Constitution in 1868, intended to clarify and protect the legal status of recently emancipated slaves, which provided the catalyst for expanded corporate rights. Less than twenty years after its passage, the United States Supreme Court unanimously declared in Santa Clara County v. Southern Pac. R.R. Co. that the Fourteenth Amendment=s equal protection clause also protected corporations.[3] In this case, the Supreme Court simply refused to allow the parties to argue whether the Fourteenth Amendment’s equal protection clause applied to corporations because all of the justices simply agreed that it did.[4] It is also interesting to note that this historic opinion focused less on the constitutional status of the corporation and more on the “important” issue of the day: the propriety of Santa Clara County’s tax assessment against the Southern Pacific railroad. Despite the Court’s lack of discussion on the corporate personhood issue, Santa Clara became the touchstone for several subsequent decisions that continued to recognize the corporation as an entity with constitutional rights analogous to those of a “natural” person.
As the Supreme Court continued to recognize, over the following fifty years, that corporations could rightfully claim the benefit and protection of particular constitutional rights, its focus eventually shifted away from the “personhood” of corporations and toward a discussion of the extent of these rights.[5] Consequently, today corporations can claim many rights supported by a long line of Supreme Court cases. Among the many rights available to the corporate entity, however, several are noticeably absent. The Court unquestionably denies the Fifth Amendment privilege against self-incrimination to corporations. In addition, corporations may not claim the benefit of the privileges and immunities clauses.[6] When, through some regulatory scheme, the government intensely supervises a particular industry, a corporation cannot claim a right against warrantless searches and seizures.[7] In denying certain rights, the Court often relies on the nature of the corporate form because it is publicly owned and regulated.[8]
Corporate Fourth Amendment Rights
In 1906, Hale v. Henkel[9] established that corporations have some level of Fourth Amendment protection against unreasonable searches and seizures (although as discussed later, it also established that corporation’s do not have a Fifth Amendment right against self-incrimination).[10] In its extensive discussion of corporate rights in this case, the Court included rights against takings without compensation, the right to due process, and the right to be free from discrimination under the Fourteenth Amendment.[11] In later decisions,[12] for certain industries, the Court has also carved out exceptions to the Fourth Amendment’s protection against unreasonable searches and seizures.[13] Although the right generally applies to corporations,[14] it does not apply to corporations doing business in highly regulated areas of commerce.[15] The Court has reasoned that extensive governmental supervision creates a diminished expectation of corporate privacy.[16]
Corporate Fifth Amendment Rights
Corporations do not receive the protection of the Fifth Amendment’s self-incrimination clause.[17] Beginning at the turn of the twentieth century the Supreme Court decided that corporations could not invoke the protection because they exist at the pleasure of the state and for the public good. That rationale, however, has been replaced by an understanding that corporations do not represent any individual person. Thus, the self-incrimination clause, which prevents a witness from testifying against himself, does not apply to the corporation. Despite this shift in the underlying theory, the law is consistent: corporate entities do not receive complete self-incrimination protection.
In 1906, the Hale Court noted that a corporation is an entity separate from its officer. In that case, the witness was a corporate officer who had been subpoenaed by a grand jury to testify and provide corporate records. The Court reasoned that since the Fifth Amendment does not prevent a witness from testifying about third parties, it does not prevent a person from testifying about a corporation:
The Amendment is limited to a person who shall be compelled in any criminal case to be a witness against himself, and if he cannot set up the privilege of a third person, he certainly cannot set up the privilege of a corporation.[18]
With respect to documents, the Hale Court cited Boyd v. United States[19] recognizing that people had the personal right against producing self-incriminating documents. But because the subpoena for corporate documents requires the witness to incriminate a third party corporation, and not himself, the Fifth Amendment does not apply.[20] The Court went on to explain that the disclosure was necessary to investigate the corporation because investigations would fail without the compelled documents:
If, whenever an officer or employee of a corporation were summoned before a grand jury as a witness he could refuse to produce the books and documents of such corporation, upon the ground that they would incriminate the corporation itself, it would result in the failure of a large number of cases where the [crime] was determinable only upon the examination of such papers . . . [W]e are of the opinion that there is a clear distinction in this particular between an individual and a corporation, and that the latter has no right to refuse to submit its books and papers for an examination at the suit of the State.
The Court then described the personal rights of individual citizens, who owe no public duty when they conduct their personal lives and business.[21] On the other hand, it held that a corporation exists for the public good and is subject to state regulations and the provisions of its charter.[22] Because the corporate books were available for state inspection, the corporation could not claim the benefit of the Fifth Amendment right against producing self-incriminating documents.[23]
After Hale, the differences between personal rights and corporate rights under the Fifth Amendment increased. In 1911, Wilson v. United States concluded that private papers deserved Fifth Amendment protection under Boyd, whereas “public records and official documents” did not.[24] There, Wilson claimed that because corporate records that would incriminate him were in his possession, the Fifth Amendment protected him from producing them.[25] The Court rejected this custodial argument and held that under Hale, custody was irrelevant. Rather, corporate records are by their nature subject to regulation and therefore public, non protected items,[26] “the visitorial power [of the state] which exists with respect to the corporation of necessity reaches the corporate books, without regard to the conduct of the custodian.”[27]
United States v. White[28] applied Hale and Wilson to documents of a labor union, holding that “[s]ince the privilege against self-incrimination is a purely personal one; it cannot be utilized by or on behalf of any organization, such as a corporation.”[29] In White, the labor union was not incorporated, but the Court stated that the privilege historically protected “only the natural individual from compulsory incrimination through his own testimony or personal records.”[30] The White Court referred to the union as a “collective group,” unfit for Fifth Amendment protection of its documents.[31] The Court abandoned reliance on the state’s power to review the corporate books and relied on the representative capacity of the officer:
The test is whether . . . a particular type of organization has a character so impersonal in the scope of its membership and activities that it cannot be said to embody or represent the purely private or personal interests of its constituents, but rather to embody their common or group interests only. If so, the privilege cannot be invoked on behalf of the organization or its representatives in their official capacity.[32]
In Bellis v. United States,[33] the Court considered whether a small law firm qualified as an organization under White.[34] The firm had an institutional identity; was subject to the state partnership statutes; kept financial books and records as an organization that Bellis, in a representative capacity, was holding; and existed, at least partially, for group interests.[35] Therefore, the Court found the White doctrine applied and the firm constituted an organization; the documents did not meet the self-incrimination clause, and Bellis was required to produce the documents in his representative capacity on behalf of the organization.[36]
Bellis also demonstrates the Court’s shift away from focusing on the property rights of the documents and towards an emphasis on the “privacy or confidentiality” that an individual person has attached to the documents.[37] This rationale harmonized Supreme Court case law on collective entities because organizational documents are virtually always less private than personal documents. The Court stated that the “Fifth Amendment respects a private inner sanctum of individual feeling and thought . . . which necessarily includes an individual’s papers and effects to the extent that the privilege bars their compulsory production and authentication – and proscribes state intrusion to extract self-condemnation.”[38] With organizational documents, however, no such privacy exists.[39]
This line of cases developed into what is known as the “collective entity doctrine,” which stands to this day.[40] The relatively recent case, Braswell v. United States, makes clear that the Court likely does not want to question the collective entity doctrine. After surveying the history of this doctrine, the Court stated, “[t]he plain mandate of these decisions is that . . . a corporate custodian . . . may not resist a subpoena for corporate records on Fifth Amendment grounds.”[41] The Supreme Court has not taken any major collective entity case since Braswell.[42]
Oddly enough, it seems that the logic underlying the denial of Fifth Amendment protection to a corporation with respect to the right against self-incrimination would require the same result when analyzing the attorney-client privilege. No one, however, has made the slightest suggestion that corporations do not have both attorney-client and work product privileges respecting their work with legal counsel. Ironically, it has been the “dual curse” of vicarious liability and a lack of a Fifth Amendment privilege that has forced corporations to rely more and more on the limited source of protection against an overreaching government found in the attorney-client and work product privilege.
Corporate Sixth Amendment Rights
The Sixth Amendment’s application to corporations has not received the same depth of judicial attention as the Fourth and Fifth Amendments. In fact, in its one and only opportunity to the address whether the Sixth Amendment’s primary protection — the right to a jury trial — applied to a corporation, the Supreme Court declined to reach the issue.[43] Until it does, however, there is a clear trend of lower courts ruling that the Sixth Amendment and its jury trial right do protect corporations, notwithstanding some academic criticism.
In Armour Packing Co. v. United States,[44] a contemporary of Hale v. Henkel, the Supreme Court applied the Sixth Amendment — although not its jury trial provision — to corporations charged with violating the Elkins Act. The Court concluded that the corporations were “the accused” for purposes of the Sixth Amendment’s requirement that “crimes [must] be prosecuted and punished in the state or district where the same are committed.”[45] Several decades later, the jury trial provision of the Sixth Amendment came into view when the Sixth Circuit in United States v. R.L. Polk and Co., relying on “the fundamental principle that corporations enjoy the same rights as individuals to trial by jury,” held that the district judge could not impose a $35,000 fine on a corporation accused of criminal contempt in the absence of a jury trial.[46] The Polk court’s holding has been reaffirmed several times over the years. In United States v. Troxler Hosiery Co., the Fourth Circuit stated that “[a] corporation does not have the same right not to incriminate itself as does a natural person, but it does enjoy the same rights as individuals to trial by jury.”[47] As recently as August 2005, the Sixth Circuit held that a district court committed plain error when it sentenced a corporation to a monetary fine in the absence of a jury trial.[48] Despite the fact that most of these cases arise in the context of criminal contempt proceedings, the Sixth Amendment applies to other criminal offenses as well.[49] This group of decisions demonstrates an identifiable trend in the circuits granting corporations the sort of protection that the Sixth Amendment provides individuals. And even though the Supreme Court has not weighed in on this precise issue, the lower court decisions provide ample support for a corporate defendant asserting its right to a jury trial.
As a practical matter, a corporate defendant must take into account that the Sixth Amendment’s guarantee of a jury trial applies only to “serious” offenses.[50] “Petty” offenses, on the other hand, do not require a jury.[51] There is debate as to what level of punishment makes a crime “serious.” In Muniz v. Hoffman, the Court avoided having to decide if corporations are entitled to a jury trial by deciding that a $10,000 fine “is not of such magnitude that the union was deprived of whatever right to jury trial it might have under the Sixth Amendment.”[52] The Court shunned a bright-line test to distinguish “petty” offenses from those of a “serious” nature, as other courts have done.[53] The Second Circuit, however, in United States v. Twentieth Century Fox Film Corp. adopted a bright line test—a fine of $100,000—and vacated a judgment imposing a $500,000 fine because there was no jury trial.[54] Still, courts will likely examine a corporation’s ability to pay a fine as a measure of its seriousness of the charge.[55]
Some scholars have argued that Sixth Amendment protections available to natural persons should not be applicable to corporations, claiming that “there is no rational constitutional principle available for such a decision,”[56] and that there is a lack of “compelling authority for the proposition that corporations enjoy the Sixth Amendment right to trial by jury.”[57] Despite the disapproval of some in academia, until the Supreme Court speaks clearly on this issue, corporations may forcefully argue for a jury trial in situations where a “serious” offense is at issue.
Vicarious Liability Subjects Corporations to a Broad Spectrum of Criminal Liability.
Corporations are vulnerable to all the acts of their employees and agents under the doctrine of vicarious liability.[58] In recognizing corporate criminal liability, the Courts have borrowed directly from the doctrine of respondeat superior, “which imposes vicarious civil liability for an agent’s torts that were undertaken within the scope of the agent’s employment.”[59] The Supreme Court, in 1909, first held that a corporation could be held criminally liable for the acts or omissions of its agents:
Applying the principle governing civil liability, we go only a step further in holding that the act of the agent, while exercising authority delegated to him . . . may be controlled, in the interest of public policy, by imputing his act to his employer and imposing penalties upon the corporation for which he is acting in the premises.[60]
At the federal level, courts assess corporate criminal liability by engaging in a two-step analysis, examining (1) whether the agent’s actions were within the scope of employment; and (2) whether the agent acted with intent to benefit the corporation.[61] In order for a corporation to be held criminally liable for the actions of its agents, the agent must be acting within the scope of his or her employment.[62] As one commentator explained, “the scope-of-employment” standard shields the corporation from liability only for those crimes that are unrelated to the employment relationship — say if an office messenger elects to hold up a convenience store on his way back to the office.”[63] The standard offers little protection “if the employee’s crime has any connection to the employment relationship.”[64]
An agent acts within the scope of employment if the agent has actual or apparent authority to engage in the act in question.[65] Apparent authority is authority “which outsiders would normally assume the agent to have, judging from his position with the company and the circumstances surrounding his past conduct.”[66] Put another way, an employee is acting with apparent authority if a third party reasonably believes that the agent has the authority to perform the act in question.[67]
While this analysis can be very fact-specific,[68] there is precedent for corporations being held liable for conduct of very low-level employees so long as they were acting within their scope of employment.[69] For example, in United States v. Dye Constr. Co., the Court found a company criminally liable for the willful violation of OSHA regulations for failing properly to shore up a trench — even though it was only the superintendent, foreman, and back-hoe operator who oversaw completion of the project — because the three workers were acting within the sphere of their employment: “There is no doubt as to the authority of the superintendent, the foreman and the back hoe operator.”[70] One commentator has noted, “[i]t is the function delegated to the corporate officer or agent which determines his power to engage the corporation in a criminal transaction rather than the title or position he holds.”[71] In sum, corporations may be vicariously liable for the acts of even lower-level employees when such acts are within the scope of the employee’s authority.
The “Intent to Benefit the Corporation” Requirement
In order for a corporation to be held criminally liable for the actions of its agents, the agent must also be acting with intent to benefit the corporation.[72] The corporation, however, need not benefit from the employee’s actions; the employee’s mere intent to benefit the corporation is sufficient.[73] For example, in United States v. Automated Med. Labs., agents of a subsidiary that collected and sold blood plasma were charged with making and using false documents in an effort to win FDA approval of their product.[74] In affirming the lower court’s conviction of the parent company, the Court stated that “whether the agent’s actions ultimately redounded to the benefit of the corporation is less significant than whether the agent acted with the intent to benefit the corporation.”[75] Intent may also be found whenever the employees’ actions are not hostile to the interests of the corporation.[76] Furthermore, it is not necessary that the employee be primarily concerned with benefiting the corporation.[77] As long as there is either intended or actual benefit to the corporation, this aspect of the standard is met.
Collective Knowledge Doctrine
The artificial nature of a corporation has both benefits and burdens. Its “fictitious” nature also makes it vulnerable to criminal liability in ways that may seem counterintuitive. For instance, a corporation can be held criminally liable even if no single person employed by it has the requisite knowledge or intent to commit a crime.[78] A corporation can be held criminally liable after the relevant agents are acquitted of the same crime.[79] And, a corporation can be held criminally liable for the conduct of its agents even if there is a company policy in effect that specifically prohibits that conduct.[80]
The collective knowledge doctrine imputes to a corporation the sum knowledge of all or some of its employees.[81] In other words, even if no one person has the requisite knowledge to commit a crime, the corporation can, as the sum of its parts, be guilty of a crime. The doctrine was generally recognized in United States v. Bank of New England, N.A.[82] In that case, the bank was found guilty of failing to file Currency Transaction Reports (CTRs) on cash withdrawals made by one of its agents.[83] In her instructions to the jury, the trial judge stated that “if any employee knew that multiple checks would require the filing of reports, the bank knew it, provided the employee knew it within the scope of his employment.”[84] In reaffirming the conviction and the trial judge’s instructions, the appellate court indicated that “[a] collective knowledge instruction is entirely appropriate in the context of corporate criminal liability. The acts of a corporation are . . . simply the acts of all of its employees operating within the scope of their employment.”[85] The Court continued, “corporations compartmentalize knowledge, subdividing the elements of specific duties and operations into smaller components. The aggregate of those components constitutes the corporation’s knowledge of a particular operation.”[86] Finally, the Court indicated that:
[A] corporation cannot plead innocence by asserting that the information obtained by several employees was not acquired by any one individual who then would have comprehended its full import. Rather, the corporation is considered to have acquired the collective knowledge of its employees and is held responsible for their failure to act accordingly.[87]
(emphasis added). Consequently, a corporation can be liable even if no single employee is at fault.[88]
A corporation can also be held liable for the acts of its agents even where the corporation has implemented policies explicitly prohibiting the potentially criminal behavior.[89] The leading case on this subject is United States v. Hilton Hotels Corp., which involved the efforts of a number of hotels, restaurants, and other Portland businesses to attract convention business to the city.[90] In order to attract conventions, the hotels and restaurants organized an association and asked members to make contributions.[91] Hotel members were to give preferential treatment to suppliers who made contributions to the association.[92] At trial, the manager of one of the defendant-appellant hotels testified “that it was the hotel’s policy to purchase supplies solely on the basis of price, quality, and service.”[93] Additionally, this manager stated that, on two occasions, he had “told the hotel’s purchasing agent that he was to take no part in the boycott.”[94] The “purchasing agent confirmed the receipt of these instructions, but admitted that, despite them, he had threatened a supplier with loss of the hotel’s business unless the supplier paid the association assessment.”[95] In upholding the lower court’s finding of corporate liability, based on the acts of the company’s agent, the court reaffirmed the following set of jury instructions from the lower court:
A corporation is responsible for acts and statements of its agents, done or made within the scope of their employment, even though their conduct may be contrary to their actual instructions or contrary to the corporation’s stated policies.[96]
Thus, corporate liability can attach even when a corporation has an explicit policy prohibiting the conduct.
One might believe that because a corporation’s liability is derivative of its employees and agents, it cannot be found guilty of a crime if its employee is acquitted of the crime. Not so. Courts have indicated that the agent’s “conduct can be used to sustain a verdict against [the corporation] despite the fact that [the agent] was himself acquitted.”[97]
Conclusion
Constitutional rights in the criminal context are most frequently thought to belong to individuals. The right to remain silent when questioned by the government, the right to a jury trial when charged with a crime, and the right to be secure in your “person and papers” from governmental intrusion are all considered to be personal protections. Not much thought, however, has been given to the rights of the corporate criminal defendant. Given the current enforcement environment, consider that corporations are not even mentioned in the Constitution of the United States itself. Nevertheless, the law confers a number of constitutional rights upon the corporate form and honors its ability to invoke these rights and to enforce them in court. Corporate constitutional rights, however, are not co-extensive with those afforded to natural persons. While this intuitively make senses, very little is intuitive about which rights a corporation receives. Importantly, it should be remembered that a corporation may be deemed to have the collective knowledge of its employees. Consequently, under certain circumstances, if a corporate employee commits an illegal act that employees’ guilt may be attributed to the corporation itself. All of these dynamics illustrate the importance of understanding fully the unique and sometimes problematic relationships between a corporate entity and the individuals who govern, manage, and work for it and its shareholders. In the context of governmental investigations and regulatory inquiries, the importance of understanding what rights inure to a company, and their historical evolution, is just as important as understanding the better known individual rights of natural persons in similar circumstances.
[1] John C. Coffee, Jr.,
Making the Punishment Fit the Corporation: The Problem of Finding an Optimal Corporation Criminal Sanction, 1 N. Ill. U. L. Rev. 3, 4 (1980) (quoting Edward, First Baron of Thurlow, Land Chancellor of England).
[2] The seminal case in which the U.S. Supreme Court declared it unconstitutional for a state to interfere with a corporation’s freedom to contract was
Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518 (1819). In that case Dartmouth College sued to prevent the state of New Hampshire from reforming its college charter. The Court held that a corporate charter formed a contract between the state and the school, and that reforming that contract would violate the contracts clause of Article I of the Constitution.
[3] Santa Clara County v. Southern Pac. R.R. Co., 118 U.S. 394 (1886).
[4] Natasha N. Aljalian,
Note: Fourteenth Amendment Personhood: Fact or Fiction?, 73 St. John’s L. Rev. 495, 502 (1999) (citing
Southern Pacific, 118 U.S. at 396: “The court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws, applies to . . . corporations. We are . . . of [the] opinion that it does.”).
[5] Carl J. Mayer,
Personalizing the Impersonal: Corporations and the Bill of Rights, 41 Hastings L.J. 577 (1990) at 579, 661, Appendix I;
The Corporation=s Bill of Rights (listing the provisions of the Bill of Rights along with cases granting or denying those rights to corporate entities); Appendix II,
Other Corporate Rights Under the Constitution (same for remaining amendments and constitutional provisions).
[6] Pembina Mining Co. v. Pennsylvania, 125 U.S. 181, 189 (1888);
Bank of Augusta v. Earle, 38 U.S. 519, 589-91 (1839) (
dicta).
[7] Colonnade Catering Corp. v. United States, 397 U.S. 72 (1969) (liquor);
United States v. Biswell, 406 U.S. 311 (1977) (firearms);
Donovan v. Dewey, 452 U.S. 594 (1981) (mining).
[8] David Graver, Comment:
Personal Bodies: A Corporeal Theory of Corporate Personhood, 6 U. Chi. L. Sch. Roundtable 235 (1999) at 237-39; Mayer,
supra note 5, at 578-82.
[9] 201 U.S. 43 (1906). Unlike the other rights discussed in
Hale, the Court refused to provide the Fifth Amendment right against self-incrimination to corporations. The Court held that an officer could not refuse to produce corporate documents because a corporation was subject to public regulation. Hale is the benchmark by which the Supreme Court has consistently denied Fifth Amendment protection to corporations despite allowing other Constitutional rights to apply.
[12] Id.; see also Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922) (holding that a corporation may invoke the Fifth Amendment right to be compensated for governmental takings);
Marshall v. Barlow’s, Inc., 436 U.S. 307, 324-25 (1978) (reaffirming that corporations have the right against unreasonable regulatory searches (
i.e., without warrant) conducted by Occupational Safety & Health Administration (OSHA) inspectors).
[13] Hale, 201 U.S. at 76.
[15] See Colonnade Catering, 397 U.S. 72 (liquor);
Biswell, 406 U.S. 311 (firearms);
Donovan, 452 U.S. 594 (mining); Mayer,
supra note 5, at 664 (listing cases in which corporations cannot invoke the right against searches and seizures).
[17] Hale v. Henkel, 201 U.S. 43 (1906).
[19] 116 U.S. 616 (1886).
[20] Hale, 201 U.S. at 74.
[21] Id. (an individual’s constitutional rights as a citizen include the right to conduct private business without public disclosure, to contract freely, and to receive due process before losing rights – including the privilege against self-incrimination).
[24] Wilson v. United States, 221 U.S. 361, 379-80 (1911).
[25] Id. at 379;
see also Dreier v. United States, 221 U.S. 394, 400 (1911) (companion case to Wilson holding that a corporate officer can not claim a self-incrimination privilege for himself when the subpoena requests corporate documents);
Grant v. United States, 227 U.S. 74, 80 (1913) (same).
[28] 322 U.S. 694 (1944).
[29] Id. at 699 (emphasis added).
[31] To this day, it is difficult to discern when an “organization” exists for Fifth Amendment purposes.
See Robert B. Mosteller,
Simplifying Subpoena Law: Taking the Fifth Amendment Seriously, 73 Va. L. Rev. 1 (1987); Alice W. Yao, Comment:
Former Corporate Officers and Employees in the Context of the Collective Entity and Act of Production Doctrines, 68 U. Chi. L. Rev. 1487 (2001) (concluding that the key difference between the act of production doctrine and the collective entity doctrine is the formality of the business);
cf. United States v. Doe, 465 U.S. 605 (1984) (a sole proprietorship is not an organization, so the documents of a sole proprietorship are subject to the proprietor’s personal Fifth Amendment rights).
[32] White, 322 U.S. at 701.
[38] Id. at 91. Note this decision predates
Fisher, the seminal case for the act of production doctrine.
[39] Id. at 92. (noting that the right of access by others is “understood as a recognition that corporate records do not contain the requisite element of privacy or confidentiality essential for the privilege to attach”);
see also Yao,
supra note , at 1494 (“The Supreme Court’s jurisprudence has evolved from focusing on a property rights rationale to focusing on an agency rationale for the collective entity doctrine.”) (citing
Braswell v. United States, 487 U.S. 99, 109 (1988) (the “agency rationale undergirding the collective entity doctrine . . . survives”)).
[40] See Braswell, supra note , at 102,
see also Yao,
supra note , at 1488, 1493-95 (“it is well established that such artificial entities corporations are not protected by the Fifth Amendment”).
[41] Braswell, 487 U.S. at 108-09.
[42] See e.g., United States v. Hubbell, 530 U.S. 27 (2000);
Baltimore City Dep’t of Social Servs. v. Bouknight, 493 U.S. 549 (1990); and
Doe v. United States, 487 U.S. 201 (1988).
[43] Muniz v. Hoffman, 422 U.S. 454, 477 (1975) (declining to reach or decide whether a corporation or labor union has a constitutional right to a jury trial in a criminal contempt case);
see also U.S. v. Greenpeace, Inc., 314 F.Supp.2d 1252, 1261 (S.D. Fla. 2004) (“The Supreme Court has not definitively addressed whether the right to a jury trial in criminal cases protects corporations as well as individuals, preferring to leave the question open.”).
[44] 209 U.S. 56, 76-77 (1908).
[46] 438 F.2d 377, 379 (6th Cir. 1971).
[47] 681 F.2d 934, 935 n. 1 (4th Cir.1982) (citing
Polk, 438 F.2d at 379).
[48] United States v. Yang, 144 F.3d 521, 523-24 (6th Cir. 2005).
[49] Frank v. United States, 395 U.S. 147, 148 (1969).
[50] Baldwin v. New York, 399 U.S. 66, 68-69 (1970).
[51] Taylor v. Hayes, 418 U.S. 488, 495 (1974).
[53] See also Yang, 144 F.3d at 523 (“We have no occasion to define precisely the standard against which to judge the seriousness of a fine imposed on a corporation”).
[54] 882 F.2d 656, 663 (2d Cir. 1989) (holding that in criminal contempt cases where the fine exceeds $100,000, a corporation has a right to a jury trial).
[55] Troxler Hosiery, 681 F.2d at 936 n. 2. (“when a corporation is the contemnor,
Muniz requires that the right to a jury trial be gauged, somehow, according to the ratio of the fine imposed and the defendant’s ability to pay”).
[56] See Alan L. Adelstein, A Corporation’s Right to a Jury Trial Under the Sixth Amendment, 27 U.C. Davis L. Rev. 375, 455 (1994).
[57] F. Joseph Warin & Michael D. Bopp, Corporations, Criminal Contempt And the Constitution, 1997 Colum. Bus. L. Rev. 1, 23 n. 100 (1997) (questioning holding and reasoning of
United States v. R.L. Polk and Co.).
[58] United States v. Basic Constr. Co., 711 F.2d 570, 573 (4th Cir. 1983);
see also New York Cent. & Hudson River Co. v. United States, 212 U.S. 481, 493,
aff’d, 212 U.S. 500 (1909);
United States v. Jorgensen, 144 F.3d 550, 560 (8th Cir. 1998);
U.S. v. Investment Enters., Inc., 10 F.3d 263, 266 (5th Cir. 1993);
Mylan Labs., Inc. v. Akzo, 2 F.3d 56, 63 (4th Cir. 1993);
United States v. Automated Med. Labs., Inc., 770 F.2d 399, 406-07 (4th Cir. 1985); Julie R. O’Sullivan,
Federal White Collar Crime, 2d ed. (2003).
[59] David Overlock Stewart,
Basics of Criminal Liability for Corporations and Their Officials, and Use of Compliance Programs and Internal Investigations, 22 Public Contract L.J. 81, 82 (1992); Harvey L. Pitt & Karl A. Groskaufmanis,
Minimizing Corporate Civil and Criminal Liability: A Second Look at Corporate Codes of Conduct, 78 Geo. L.J. 1559, 1562-74 (1990).
[60] New York Cent., 212 U.S. at 494.
[61] United States v. Twentieth Century Fox Film Corp., 882 F.2d 656, 660 (2d Cir. 1989);
A.I. Credit Corp. v. Legion Ins. Co., 265 F.3d 630, 637 (7th Cir. 2001) (explaining that any actions by a corporate agent within the scope of his employment are attributable to the corporation);
Gutter v. DuPont De Nemours, 124 F. Supp. 2d 1291, 1312 (S.D. Fla. 2000) (noting that for corporation to be liable for employee’s act, the act must be within the scope of employment);
see also United States v. Photogrammetric Data Serv., 259 F.3d 229, 242 (4th Cir. 2001) (holding that a corporation can act only through the conduct of its agents); Tania Brief & Terrell McSweeny,
Corporate Criminal Liability, 40 Am. Crim. L. Rev. 337, 340 (2003).
[62] Twentieth Century Fox, 882 F.2d at 660;
A.I. Credit, 265 F.3d at 637 (7th Cir. 2001) (explaining that any actions by a corporate agent within the scope of his employment are attributable to the corporation);
Gutter, 124 F. Supp. 2d at 1312 (noting that for corporation to be liable for employee’s act, the act must be within the scope of employment);
see also Photogrammetric, 259 F.3d at 242 (holding that a corporation can act only through the conduct of its agents). Tania Brief & Terrell McSweeny,
Corporate Criminal Liability, 40 Am. Crim. L. Rev. at 340.
[63] Stewart,
supra note 47, at 83.
[64] Id. See also Myers v. Bennett Law Offices, 238 F.3d 1068, 1073 (9th Cir. 2001) (rejecting the fact that employee acted outside the scope of authority because employee had at least apparent authority to take actions);
Investment Enters., 10 F.3d at 266 (indicating that a corporation is criminally liable for the unlawful acts of its agents, provided that the conduct is within the scope of the agent’s authority whether actual or apparent).
[65] Myers, 238 F.3d at 1073.
[66] United States v. Bi-Company Pavers, Inc., 741 F.2d 730, 737 (5th Cir. 1984).
[67] Myers, 238 F.3d at 1073 n.2 (explaining that “a party claiming apparent authority of an agent must prove . . . that the acting party subjectively believed that the agent had authority to act for the principal and . . . that the subjective belief in the agent’s authority was objectively reasonable.”).
[68] In re Hellenic Inc., 252 F.3d 391, 395 (5th Cir. 2001);
United States v. Josleyn, 206 F.3d 144, 159 (1st Cir. 2000) (“Whether knowledge can be imputed depends on a fact-specific assessment of the particular individual’s authority within the company.”).
[69] United States v. Dye Constr. Co., 510 F.2d 78, 82 (10th Cir. 1975).
[71] Kathleen F. Brickey,
Corporate Criminal Liability: A Primer for Corporate Counsel, 40 Bus. Lawyer 129, 131 (1984) (internal quotation marks omitted).
[72] MylanLabs. Inc. v. Akzo N.V., 2 F.3d 56, 63 (4th Cir. 1993) (failing to find that subsidiaries’ employees intended to benefit parent Akzo).
[73] Automated Med. Labs., 770 F.2d at 401.
[76] See, Cox v. Administrator U.S. Steel & Carnegie, 17 F.3d 1386, 1404 (11th Cir. 1994).
[77] Automated Med. Labs., 770 F.2d at 407 (upholding corporation’s conviction where corporation’s agents acted “at least in part” to benefit corporation).
[78] United States v. Farm & Home Sav. Ass’n, 932 F.2d 1256, 1259 (8th Cir. 1991) (holding that if multiple employees participated in illegal transactions, knowledge of such transactions may be imputed to employer);
United States v. Penagaricano-Soler, 911 F.2d 833, 843 (1st Cir. 1990) (imputing to a corporation various employees’ collective knowledge obtained within the scope of their employment);
United States v. Bank of New England, N.A., 821 F.2d 844, 856 (1st Cir. 1987);
see also Gutter, 124 F. Supp. 2d at 1309 (“The knowledge necessary to adversely affect the corporation need not be possessed by a single corporate agent; the cumulative knowledge of several agents can be imputed to the corporation.”).
[79] United States v. LBS Bank-New York, Inc., 757 F. Supp. 496, 502 (E.D. Pa. 1990);
see also United States v. General Motors, 121 F.2d 376, 411 (7th Cir. 1941) (finding that if a corporation and its employees are indicted for conspiracy, the corporation can be found liable even if all of the individual defendants are exonerated).
[80] United States v. Hilton Hotels Corp., 467 F.2d 1000 (9th Cir. 1972);
see also Twentieth Century Fox, 882 F.2d at 660 (“We agree with the District Court that Fox’s compliance program, however extensive, does not immunize the corporation from liability when its employees, acting within the scope of their authority, fail to comply with the law and the consent decree.”).
[81] Farm & Home Sav., 932 F.2d at 1259 (8th Cir. 1991) (holding that if multiple employees participated in illegal transactions, knowledge of such transactions may be imputed to employer);
Penagaricano-Soler, 911 F.2d at 843 (imputing to a corporation various employees’ collective knowledge obtained within the scope of their employment);
Bank of New England, 821 F.2d at 856;
see also Gutter, 124 F. Supp. 2d at 1309 (“The knowledge necessary to adversely affect the corporation need not be possessed by a single corporate agent; the cumulative knowledge of several agents can be imputed to the corporation.”).
[87] Id. (emphasis added) (quoting
United States v. T.I.ME.-D.C., Inc., 381 F.Supp. 730, 738(W.D.W.Va. 1974)).
[89] United States v. Portac, Inc., 869 F.2d 1288, 1293 (9th Cir. 1989) (affirming company’s conviction although supervisor of agent who committed infraction had expressly told agent that company did not permit violations of law);
Automated Med. Labs., 770 F.2d at 407 (“The fact that many of [employees’] actions were unlawful and contrary to corporate policy does not absolve [the defendant corporation] of legal responsibility for their acts.”).
[90] 467 F.2d 1000 (9th Cir. 1972);
see also Twentieth Century Fox, 882 F.2d at 660 (“We agree with the District Court that Fox’s compliance program, however extensive, does not immunize the corporation from liability when its employees, acting within the scope of their authority, fail to comply with the law and the consent decree.”).
[91] Hilton Hotels, 467 F.2d at 1002.
[97] LBS Bank-New York, 757 F. Supp. at 502;
see also General Motors, 121 F.2d at 411 (finding that if a corporation and its employees are indicted for conspiracy, the corporation can be found liable even if all of the individual defendants are exonerated).
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