Mihailis Diamantis on the Disappearing Victims of Corporate Crime

Who are the victims of corporate crime?

Mihailis Diamantis
Professor of Law
University of Iowa College of Law

Search the law schools, the business schools, the schools of criminology, and you will find no field of corporate victimology.

“What does it mean not to have a corporate victimology? It means to me an inadequate attention to the victims of corporate crime,” Iowa Law Professor Mihailis Diamantis told Corporate Crime Reporter in an interview last week. “I don’t know anyone who can provide to me data on who the victims of corporate crime are, or tend to be, in what sectors, what sorts of crimes.”

“There is a reason for this. And part of it is that so many of these large high profile corporate crime cases end up getting resolved in the back room deferral process with the Department of Justice.” 

“What comes out of the process is not a conviction, not a recognition of the injury done to the victims, not even labeling. The corporation is never branded a felon or a publicly corrupt entity. Instead what you have is a sanitized version of the facts that is a carefully tailored settlement, with the corporation going over every word.” 

“It is put out for public consumption along with a document that largely focuses on how the Department of Justice and the corporation are going to relate going forward for the next three to five years. The victims are left out of the picture. We don’t recognize the victims. We don’t even know who the victims are. We should be doing better by the victims. And there are a lot of victims of corporate crime.”

“There is a book that Bill Laufer and a co-editor are pulling together specifically on this topic of corporate victimology. I’m contributing a chapter to it.”

You have written an article recently titled The Extended Corporate Mind: When Corporations Use AI to Break the Law. 

Are there actually cases where corporations use AI to break the law and prosecutors say – we can’t prosecute this because there is no individual to blame?

“There are some cases. It’s hard to identify them because you never see the cases that don’t come to court. A leading contender would be the Uber case. They had an incident with a pedestrian down in Arizona. It involved a self-driving car. There was a pedestrian crossing the street with a bicycle. And Uber self-driving technology failed to identify the pedestrian as a human being and didn’t engage the braking system in time. The car knocked the pedestrian over and killed the pedestrian.”

“There was some interest in bringing civil actions against Uber. There was also some interest in bringing criminal manslaughter actions against somebody. A pedestrian was just hit in the middle of the road. The prosecutor down there is reported to have declined to prosecute because of a failure to find an individual employee of Uber who could satisfy the mens rea requirements of a manslaughter prosecution.”

“There was a victim here. The criminal justice system should at least have some tools for investigating a criminal justice remedy.”

Do corporations see a way around liability by supplanting employees with AI?

“I’m not aware of a corporate memo where they say – let’s use algorithms instead of employees so that we can avoid criminal prosecution. But we do see corporations using algorithms to avoid criminal and civil liability. It’s not the first time that corporations have exploited the nuances of the definition of who counts as an employee to limit their liability.” 

“There is an ongoing discussion now, one which has a decades long history, as to whether or not independent contractors can count as employees. There is a long history of corporations trying to reclassify employees as independent contractors. One, they don’t want to pay benefits they have to pay to employees. And two, it limits their liability.” 

Why did you end up on the other side of the ledger – studying corporate crime instead of working for law firms defending corporate criminals?

“I learned during my two and a half years of practicing at Debevoise that I am just a scholar at heart. The thing I got most excited about at Debevoise is when I found an issue in corporate crime that tickled the philosophy nerves that I had been cultivating in undergrad and in the start of graduate school. I wanted to be involved in the theory rather than the practice. That is where my heart was.”

As a lawyer, you are looking out for your career. Writing critically about corporate crime might not be the best career move.

“I would agree, but I would also say that the tenure system in academia is a wonderful buffer against these sorts of concerns. It has never once crossed my mind to worry about potential retaliation from any big corporation that I call out in my papers.” 

“But there is a more subtle element and that is indoctrination to corporate principles. I would not be surprised if someone said – Diamantis, we have observed in you some patterns that suggest that in your two and a half years at Debevoise, you developed an above average capacity to empathize with corporate actors. I believe it. But I also believe it would help my scholarship rather than hurt it.” 

“The criminal law system with respect to corporations is just broken. Whether it just goes too far or falls short, it is just bad on both sides.”

You would get rid of the doctrine of respondeat superior. But there is no current reform effort to do so. If there were such an effort, would big business be an ally?

“On the whole, big business would be opposed. I’m not sure that respondeat superior is either pro big business or anti big business. It is what it is and cuts the wrong lines. If you want to get rid of the doctrine of respondeat superior and replace it with something else, it’s going to cut against different lines in ways that are not pro or anti big business, but would just do a better job at criminal justice fundamentals.”

“If somebody is taking a long shot business oriented view, they might say – now we have a mix of good and bad. They are proposing to go through a different mix of good and bad. Why would we go through the uncertainty? If there is one thing that businesses hate it’s uncertainty.” 

“The other thing is that on the whole, the criminal justice process is working out pretty well for big business. On the whole, even if respondeat superior itself is neither pro nor anti big business, the criminal justice process is very business favorable. These big cases end up in deferred prosecution agreements. And that’s in part because the doctrine of respondeat superior is so defective that the prosecutors don’t want to go through the process. Instead, they cut these deals with corporations in the back rooms. Bill Laufer calls it the corporate compliance game, where there is an alignment of interests between the corporate suspect and the prosecution to resolve the case as quickly as possible, to get some number they can get to flash in front of the public, in the headlines. It looks like a big number. But in the grand scheme of things, it’s not really that big. And then everyone moves on. The corporation goes back to business and the Department of Justice to the next big case.”

[For the complete q/a format Interview with Mihailis Diamantis, see 35 Corporate Crime Reporter 27(12), July 5, 2021, print edition only.]

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