To Strengthen Corporate Criminal Law, Get Rid of the Doctrine of Respondeat Superior

Corporate criminal law is built atop the doctrine of respondeat superior.

Will Thomas
University of Michigan
Ross School of Business

Under that doctrine a corporation can be convicted for virtually any crime committed by its employees. 

Critics of corporate criminal law argue that this rule of attribution exposes corporations to criminal liability that is neither just or efficient. It’s overbroad, they say.

But little attention has been paid to the other downside of respondeat superior – that it is too narrow, that it captures too little misconduct.

Will Thomas, an assistant professor at the University of Michigan’s Ross School of Business, argues that the underbreadth problems are both more serious and more intractable than the overbreadth problems.

Thomas is the author of Corporate Criminal Law Is Too Broad – Worse, It’s Too Narrow.

Would it fair to say that you would be in favor of eliminating the doctrine of respondeat superior?

“Yes. Eliminating the doctrine is almost certainly the way to go,” Thomas told Corporate Crime Reporter in an interview last month.

“You will hear from people who favor corporate criminal justice – they will all of a sudden hesitate. They think – if we rein in this doctrine, won’t it be that much harder to prosecute cases? If the doctrine is overbroad, that is not good in an ideal world. But in a practical world, maybe an overbroad doctrine is not a bad thing – it allows you to bring more cases.”  

“I’m hoping that this paper makes the point that the doctrine itself is making it harder to bring important cases. Getting rid of the doctrine not only will lead to a better, more principled approach to attribution, it will also open up cases that right now might be difficult for a prosecutor to bring. It expands our options rather than retracts them.”

“The settled wisdom is that the underlying doctrine is too broad. Why? On one hand, there is a large community of people who for political or ideological or other reasons dislike the idea of corporate criminal law. And if you dislike the institution, it’s always convenient to point out that there is a major flaw in the institution.”

“On the other hand there are people like me who are on board with the idea of corporate criminal justice. Society needs some way to hold organizations criminally responsible. One way to build credibility in that space is to acknowledge the weakness in the doctrines that we actually have. For me, corporate criminal justice is an important topic. We shouldn’t just have a legal institution that goes around and whacks corporations on the head because we don’t like them. The word justice is important here.” 

“I agree with the complaint that the doctrine is too broad. In the article I say – the critics are all correct to say that the doctrine is too broad. But it is also too underbroad. And in focusing so much on the first problem, you have discounted just how severe and pressing the latter problem is.”

Let’s get into the weeds. In what way is it too broad and too narrow?

“In the paper I look at the core legal doctrine – respondeat superior. It determines how and when we attribute misconduct to a corporate entity instead of to an employee inside that entity.”

“Under the terms of that doctrine a corporation can be charged with any crime carried out by one of its employees. With respect to overbreadth, people over the years have constructed examples where the employee did commit a crime, but it seems unjust or not sensible to turn around and charge the corporation with that crime.”

“The classic example here is embezzlement. Employee steals from the employer. Intuitively, the company is the victim of the crime. But under specific factual circumstances, it’s possible that if a court applied the rule of respondeat superior strictly, then the company could be charged with embezzlement. In that case, the corporation would be both the victim of the crime and the perpetrator of the crime.”

Has that ever happened?

“There is actually one case. And it took some idiosyncratic facts for the court to get there. But it is pointed to in every article published about respondeat superior as proof that the doctrine is overbroad. Even the court in that case said – there is something a little dodgy going on here.”

“But the number of cases that people can identify are few and far between. Many of them date back to the 1940s and 1950s. It’s much more a theoretical worry than a practical on the ground big problem.”

In what sense is the doctrine too narrow?

“By insisting that a corporation is incapable of committing a crime unless one single employee commits every single element of that crime, the doctrine precludes from corporate criminal law all sorts of widespread systemic wrongs that can be carried out through the corporate form.”

“These are events where the wrongdoing is spread out among many employees instead of being committed by one single employee. Or they are events where it’s practically impossible after the fact to trace the wrongdoing to one specific person. And not necessarily because the company is covering something up, but because what a corporation does is to synthesize contributions from hundreds and sometimes thousands of people in a way that is hard to unwind or run in reverse.”

“It’s going to be practically hard or impossible to figure out who was the one person, or even if there was one person, responsible for the mental state, the actus reus – everything the criminal law requires.”

Is there a real life example where the narrowness of corporate criminal law precluded the criminal prosecution of a major corporation for major crimes?

“This was a tricky problem for the paper to work around. The Justice Department, for very good, independent reasons, does not ever talk about the prosecutions it does not bring. That is good. We don’t want the government going around saying – this corporation committed the crime but we are not going to prosecute them so they can never clear their name. Don’t go around saying people committed crimes if you are not going to prosecute.” 

“We don’t hear from the Department of Justice that there are large companies they didn’t prosecute because they couldn’t build a case. On the other hand, we can certainly point to lots of  cases over the years where it seems as if there was systemic wrongdoing, but no charges were ever brought.”

“And give credit to prosecutors. They are savvy, sophisticated actors. A given prosecutor might be able to work around, manage or mitigate this constraint by either some creative fact finding that finds one individual, or just through an assertion of prosecutorial power, telling a company – you really want to settle this case because it’s not worth going to the mat. That said, one big concern I have about enforcement is that there is a small firm bias built into this doctrine of respondeat superior. It is always going to be much easier to find the one bad actor within a corporation when the corporation is really small. Whereas with really big organizations, that’s a much more daunting task.”

“As it turns out, over fifty percent of our corporate prosecutions are aimed at really small corporations, corporations with fewer than 50 employees.” 

“Is that a prosecutorial bias? It doesn’t strike me that there is a principled reason to have a small firm bias. If anything, we should probably prefer a bias in favor of prosecuting large firm, large-scale misconduct because that is where the societal harm is greatest.”

“The kinds of cases we want to capture are these big, widespread socially destructive activities that are not traced back to one bad apple, but are instead corporate crimes in the deepest sense. They are crimes committed by the whole corporation. And if that is your target, suddenly the doctrine of respondeat superior seems laughably out of step.”

“My worry is that the doctrine is targeted at capturing, at best, peripheral cases, weird factually bizarre cases of criminal wrongdoing. People say that the doctrine is overbroad because it is capturing cases it shouldn’t. And I agree. But my main complaint is that all the cases it is capturing are right on the periphery of cases we should care about.”

“The bigger problem isn’t that it is capturing too many cases. The bigger problem is that the doctrine is not hitting anywhere near the center of the target.”

[For the complete q/a format Interview with Will Thomas, see 35 Corporate Crime Reporter 26(11), June 28, 2021, print edition only.]

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