Katten Muchin Partner Steven Solow on Worker Endangerment and Collective Knowledge

Ask anyone involved in the field of corporate crime about a memo issued by Deputy Attorney General Sally Yates, and they will start talking about the Yates memo issued in September of 2015.

Steven Solow Katten Muchin

Steven Solow
Katten Muchin

That memo addresses the question of individual accountability for corporate wrongdoing. And it gained traction in the field because it struck fear in the hearts of corporate America, promising as it did a renewed focus on individual wrongdoing.

But there was another Yates memo that didn’t get as much attention.

It was issued in December 2015 and it addressed the often neglected question of prosecution of worker safety violations.

An average day in the United States is marked by 13 workplace fatalities, nearly 150 deaths from occupational diseases, and about 9,000 nonfatal injuries and illnesses.

And yet there are only a handful of criminal prosecutions under the Occupational Safety and Health Act every year – a total of three in 2013, for example.

The main reason is that a violation under the law for a workplace death is misdemeanor – punishable by only six months in prison.

The December 2015 Yates urged prosecutors to find other ways to bring to justice those who endanger workers.

“Prosecutors can make enforcement meaningful by charging other serious offenses that often occur in association with OSH Act violations – including false statements, obstruction of justice, witness tampering, conspiracy, and environmental and endangerment crimes,” Yates wrote. “With penalties ranging from 5 to 20 years incarceration, plus significant fines, these felony provisions provide additional important tools to deter and punish workplace safety crimes.”

Steven Solow is co-chair of the Environmental and Workplace Safety practice at Katten Muchin in Washington, D.C.

“That initiative recognizes the relatively low level of sanction in the OSH Act,” Solow told Corporate Crime Reporter in an interview last week.

“It seeks to leverage the far higher sanctions available in other laws that could be applicable.”

Not every worker death is a criminal case. Wouldn’t you agree that if there are 4,500 worker death cases a year, then this area is being under prosecuted?

“I look at a case that was prosecuted when I was head of the Environmental Crimes Section. Allan Elias ordered a worker into a tank that he knew contained cyanide. And after working in the tank he emerged feeling dizzy. And the worker said — we don’t want to go back in without proper protective equipment. And he as their boss ordered them back in. And one of the employees collapsed in that tank and survived, but was permanently brain damaged as a result. I had no doubt about bringing that case. I had no doubt about the criminal conviction or the sentence — 17 years for Allan Elias.”

“The difficulty we are facing here goes to the way that the government has regulated workplace safety — it is different from other environmental crimes cases.”

“Take the area of the Clean Water Act. If a company wants to take water, utilize it in its process and then return that water to a lake or river, it has to have a permit. The permit says — you can take water, you can use it, and you can put it back, but here are the pollution limits of what you put back in. They can be heat, chemicals, solids — all kinds of things.”

“But it’s binary. The question is — did you have a permit — yes or no? And if you had a permit, did you comply with the permit?”

“Workplace safety was regulated in an entirely different way. The government has essentially turned over to industry the regulation of what it will do in order to make the workplaces safe. One standard is known as recognized and generally accepted good engineering practices (RAGAGEP). That is the legal standard that a company has to meet.”

“If something goes wrong and the question is — did you comply with the standard? — it’s not the same binary standard as a Clean Water Act permit. The difficulty of combining that with the notion of collective intent or collective knowledge creates uncertainty and vagueness.”

“There have been some cases where companies required to have workplace safety programs utterly failed to have them, even though they should have. And they were criminally prosecuted.”

“The more difficult cases will be — did you meet the standard? Did you have a good enough engineering practice, even though an unwanted event occurred?”

“That’s one way. But the government will also be looking at whether the company falsified tests or changed test results or tampered with a monitoring method. But if the government is going to look at good engineering practices, the question is — what is good?”

“With the Yates memo, there is this notion of trying to leverage the broader power of the other statutes that are available, including Title 18, to try and bring prosecutions in the workplace safety area without having to change the laws,” Solow said. “Environmental laws have been subject to something of a freeze over the last 30 years because of the inability in Washington for there to be any real back and forth and give and take on law reform. As a result, the statutes have stayed in place. I don’t see a significant change in the provision you are referring to under the OSH Act, which provides for a misdemeanor penalty in the case of a fatality. Instead, there will be a push to use other laws.”

“Remember, in a criminal case there is no germaneness standard for a criminal investigation. Once the government begins to criminally investigate, it can take its investigation wherever it wants. If a case began because of a concern over a workplace safety violation, everyone involved has to recognize that that investigation has to look at other environmental obligations, seeing whether they were properly handled and investigating the background of those.”

“Expressly stated in the Yates initiative is exactly that notion. Once the government has begun an inquiry that may have been started because of a significant loss of containment and a release into the environment, or harm to human health, they may begin to look far more broadly at other areas of compliance as a way to bring a case.”

“The government tells you what it is going to do and then it does it. The headline is — the government has said — it is going to make these cases a priority, it is going to leverage these other statutes. And it should therefore surprise no one in a year or less or a little more that there is an uptick in these cases. Sometimes people say the cases are up or down. The fact is, there is never a huge number of these cases. There are about 35 prosecutors in the Environmental Crimes Section. There are assistant U.S. Attorneys across the country who are interested in this area, who bring cases in this area. And there is a relatively limited number of trained agents in this space.”

“It’s not that we will see a massive uptick. But the question is — how will the government proceed in this space and advance its goals? And what kind of goals will it use?”

“The one issue that is most problematic and worthy of attention over the next months and years is the question of collective knowledge or collective intent.”

Solow wrote an article recently titled — What Does a Corporation Have to Know to Be Criminally Prosecuted? The focus is on the Pacific Gas & Electric case.

“PG&E was convicted in August of this year of five counts of violating various regulatory standards. In September 2010, a natural gas transmission line owned and operated by the company ruptured. And a fire killed eight people and injured 58 people and damaged numerous homes.”

“The question in all of these cases will be – once an unwanted event like that occurs, was it a crime? It was the first time in over 30 years that the Justice Department successfully prosecuted a company under the theory of corporate collective knowledge. It included a jury instruction that may have led the jury to convict the company for a knowing and willful violation based on the collective knowledge of the company’s employees without any evidence that any single employee acted willfully. Going back to 1909 and the Supreme Court’s holding in New York Central and Hudson River Railroad, the Supreme Court said — you can hold a corporation liable if someone in the company acts criminally because they are responsible for their employees acting within the scope of their employment.”

“Collective intent means that the government can take pieces of knowledge in the minds of different people within the organization and then say — well, the company can be held liable on the theory that the company knew in a collective sense all of these pieces of knowledge.”

“You can find a company guilty even if no individual within the company can be found guilty. That is a bold break from past practice. And it raises some interesting questions of fair notice.”

“The notion should be that when you get to work each day, you will have a pretty good idea whether your actions were criminal. It’s a well known statement that ignorance of the law is no defense. But it is also a maxim of constitutional fair notice that you should be able to know what is a crime. An ordinary person should be able to understand what conduct is prohibited. If each person is engaged in a piece of conduct that is otherwise innocent, it starts to feel odd to say you can bring that all together and charge a crime — without something more. And the something more would be something like a company intentionally, willfully compartmentalizing information. It’s going to be interesting to see whether the workplace safety initiative combines with this notion of corporate collective knowledge. That would be inconsistent with Deputy Yates’ September memo on individual responsibility.”

[For the complete q/a format Interview with Steven Solow, see page 30 Corporate Crime Reporter 43(12), November 7, 2016, print edition only]

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