Respondeat Superior Flashcards
Commonwealth v. Beneficial Finance Co (Mass 1971)
A corporation may be held criminally liable for the actions of its employees if those employees are placed in a position of authority to act for, and on behalf of, the corporation in handling particular corporate business.
People v. Lessoff & Berger (NY 1994)
a law partnership may be indicted if only one partner is involved with the crimes
US v. Hilton Hotels (9th Cir. 1972)
as a general rule a corporation is liable under the Sherman Act for the acts of its agents in the scope of their employment, even though contrary to general corporate policy and express instructions to the agent
criminal intent -
collective knowledge
With respect to the knowledge element of a crime, an institution may be deemed to possess the collective knowledge of its employees. (US v. Bank of New England)
US v. Pacific Gas and Electric Company N.D.Cal. 2015
If corporation has a legal duty to prevent violations, and knowledge of all employees (when aggregated) shows failure to discharge that duty, then corporation “willfully” disregarded that duty
MPC Rules
Broad liability but limited by due diligence defense. If proof that “the high managerial agent having supervisory responsibility over the subject matter of the offense employed due diligence to prevent its commission” exonerates the corporation from criminal liability.
State v. Chapman Dodge Center, Inc. La. 1983
MPC - Holding: insufficient intent shown, since manager not authorized to do what he did. General manager is not high enough in the hierarchy and Swindle had said taxes are to be paid; did follow up with employees and paid taxes as soon as discovered had not been paid…doesn’t seem like fraudulent intent
Personal Liability
For direct participation or responsible corporate officers
US v. Wise 1962
Even though the acts Wise committed were corporate acts in the sense that they were imputable to the corporation, the Court found no evidence of legislative intent to exempt corporate officers and agents from personal liability for conduct they engage in. Can’t use corporate entity as a shield
Accomplice liability
18 U.S.C. § 2: Aiders and abettors who assist in the planning of a crime or who induce or encourage others to commit the crime are punishable as principals (Federal complicity statute doesn’t make a distinction between principals and accessories)
Examples: telling someone to destroy records, make false entries, etc.
US v. Dotterweich (1943)
The Court ruled that the manager could be held criminally responsible for the violation even though there was no evidence that he knew the drugs were misbranded and adulterated or that he personally participated in shipping them.
- the Act “puts the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger.” As long as he shared “responsibility in the business process resulting in unlawful distribution,” he would be personally liable
- occurred on your watch as supervisor
- seismic shock at the time
- since Dotterweich, most individuals prosecuted under FDCA held relatively high office or had general authority over the business enterprise
US v. Park (Park Doctrine)
Crime of omission - CEO not directly responsible for warehouse conditions, but knew about it. Even if there is no affirmative wrongdoing, the manager of a corporation can be prosecuted under the Federal Food, Drug, and Cosmetic Act. Strict liability crime under this act. The Act imposes not only a positive duty to seek out and remedy violations when they occur but also, and primarily, a duty to implement measures that will insure that violations will not occur.
US v. Jorgensen (8th Cir. 1998
“a defendant can be held criminally responsible for the acts of other people who are officers, employees or other agents of the company if the defendant is in a “responsible relationship.” Seems to expand Park to crimes of specific intent
US v. Iverson
- Holding: D was someone who had authority to exercise control over the activity causing the discharge (even though no official position)…that is enough for RCO if other elements are met.
- Similarity to statute in Park seems important. So now under CWA test for RCO liability is:
- D knew about pollutant discharge
- D had authority and capacity to prevent it
- D failed to do so (regardless of official position)
Indemnification
- Generally, firm can indemnify and purchase insurance for D&O unless statute prohibits or if agent acted in bad faith, etc.
- FCPA prohibits indemnification for fines
- If indemnification/insurance covers directors then many monetary penalties may have less bite.
