Abstract
Some societies used to impose liability on inanimate objects, a practice we’d now regard as silly and confused. When we punish corporations today, are we making similar mistakes? Here I consider some important sources of philosophical skepticism about imposing criminal liability on corporations, and I argue that they admit of answers, which places punishing corporations on stronger footing than punishing inanimate objects. First, I consider the eligibility challenge, which asserts that corporations are not the right kind of thing to be punished. Second, the reductionist challenge insists that corporate culpability always reduces to individual culpability. I suggest that progress can be made in addressing these challenges by asking the right law-focused questions and attending to recent developments in criminal law theory and moral philosophy.
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Notes
- 1.
For example, Albert Alschuler writes: “To superstitious people, villains need not breath[e]; they may include Exxon and the phone company. The corporation thus becomes for some of us…deodand. Just as primitive people hated and punished the wheel of a cart that had run someone over, or the horse that had thrown its rider, or the sword that murderer had used, some of us truly manage to hate the corporate entity” (see also Alschuler 1991, p. 312, see also Alschuler 2009, p. 1359).
- 2.
Admittedly, requiring a lethal object to be forfeit is not exactly the same as punishing it. But it comes close: a condemnatory label, deodand, is applied to the object itself and Holmes suggests this early legal procedure likely was “grounded in vengeance” (Holmes 1991, p. 2). Thus, it is not hard to imagine this practice morphing over time into one that genuinely does involve the imposition of criminal liability on the accursed thing.
- 3.
For example, as Christopher Kennedy notes, “[t]he mainstream of commentary…has settled on a utilitarian rationale for the corporate fine, with deterrence as its center-piece” (Kennedy 1985, p. 446).
- 4.
Analogous questions come up for other entities like partnerships and closely held corporations. But I focus mainly on large publicly held corporations as they tend to have the most sophisticated deliberative capabilities. Thus, the theoretical case for their eligibility for punishment is likely to be on the firmest footing. If we can’t justify punishing publicly held corporations, then there’s little hope that we’ll be able to justify punishing more informal entities. (But bear in mind that these arguments are more affected by the complexity of the entity’s information-sharing and decision-making procedures than its precise legal form.)
- 5.
Fines are the most common forms of corporate punishment. See, for example, U.S.S.G. § 8C1.1 (criminal fines for criminal purpose organizations), U.S.S.G. § 8C2.1-8 (criminal fines for other organizations). One worry about using fines to punish corporations is the “deterrence trap,” wherein fines cease to be effective as deterrents as the corporation subjected to them moves closer and closer to insolvency (Coffee 1982, p. 390). Another problem with using fines to punish corporations, as Larry Summers put it, is that “[m]anagers do not find it personally costly to part with even billions of dollars of their shareholders’ money” (Summers 2014).
- 6.
The main fairness worry here is often referred to as the “spillover problem” and rests on the observation that punishing corporations through fines inevitably spills over to harm innocent shareholders. As Glanville Williams argued, “a fine imposed on the corporation is in reality aimed against shareholders who are not…responsible for the crime, i.e., is aimed against innocent persons” (Williams 1961, p. 863).
- 7.
One might help solve the efficacy problem by using other kinds of punishments in addition to fines, such as imposing various conditions of corporate probation (U.S.S.G. § 8D1.4) or community service (U.S.S.G. § 8B1.3). If these fail, one might even consider the “corporate death penalty” for repeat-offender organizations, whereby the corporate charter would be revoked and operations halted (Ramirez 2005).
This still leaves the spillover problem, but it too admits of answers. First, one might reply that collateral consequences imposed on innocent shareholders are not intended, only foreseen. I have doubts about this reply, since also knowingly imposing harm on the innocent (even if not intentional) could also be a troubling outcome to be avoided. Second, and more plausibly, one might reply that virtually all punishments—and indeed most civil liability and regulatory actions—are prone to spilling over onto innocent people in close proximity to the primary target. Thus, one might reply, corporate criminal fines are no different than individual punishments or other legal actions when it comes to collateral consequences. It is just a general feature of any cost-imposing legal action, and so it can be justified as long as the good substantially outweighs the harm caused. Of course, this will be unsatisfying if one thinks the collateral consequences of punishment typically are particularly serious or burdensome, and so the only proper response is to do all we can to minimize all spillover onto the innocent caused by our punishment practices. This would apply both to individual punishments (and might ground, e.g. support programs for dependents of the incarcerated) and to corporate punishments. Thus, the third reply to the spillover problem specifically for corporate punishments is to seek to fix the problem with our laws by seeking ways to minimize the burdens that corporate punishments impose on shareholders. Some theorists have recently proposed just such reforms. For instance, Will Thomas defends a system of corporate criminal fines where the fines paid by the corporation are clawed back from managers found to be culpably involved in the crime for which the corporation was convicted (Thomas 2017).
- 8.
See infra note 14.
- 9.
Thanks to Samuel Buell for pressing me on this point.
- 10.
See Hart (2008, p. 5) discussing defective cases of punishment and the illicit “definitional stop” method of defining away difficult cases.
- 11.
One might reply that convicting a corporation or sword is costly not because of conceptual confusion, but because it amounts to a lie. (Thanks to Ambrose Lee for this suggestion.) However, to employ a legal fiction is not necessarily to lie, and even if it is, it’s not necessarily wrongful. Some legal fictions (plausibly just as with some lies) can be on balance justified, after all. Moreover, we could reduce the perception of this particular legal fiction being a wrongful lie if we call the practice punishment∗ rather than punishment. Thus, the current way of understanding the costliness premise needn’t generate a very weighty concern.
- 12.
As one scholar notes, “[i]n the United States, the doctrine of respondeat superior has been the most traditionally accepted method of imputing criminal liability to a corporation” (Kircher 2009, p. 157). Under respondeat superior, “a corporation is liable for the deeds of any of its agents or employees…as long as…[t]he agent was acting within the course and scope of his or her employment, having the authority to act for the corporation with respect to the particular corporate business which was conducted criminally [and] the agent acting, at least in part in furtherance of the corporation’s business interests” (internal alterations and quotation marks omitted) (Lederman 2000, pp. 654–655).
- 13.
For example, the Model Penal Code adopts a respondeat superior model but restricts it to the mental states of high corporate officials. Model Penal Code § 2.07(1)(c).
- 14.
As Berman describes it, retributivism is roughly the view that punishment is justified if, but only to the extent that, “it is deserved or otherwise fitting, right or appropriate, and not [necessarily because of] any good consequences that individual [punishment] may cause to be realized” (Berman 2015, p. 144). Or as Walen puts it, the retributive view holds that “it would be bad to punish a wrongdoer more than she deserves, where what she deserves must be in some way proportional to the gravity of her crime. Inflicting disproportionate punishment wrongs her just as…punishing an innocent person wrongs her” (Walen 2014, § 4.4; see also Gardner 2008, pp. xv–xvi).
Note that some might also think penal desert could encompass more than culpability—perhaps also facts about which wrong one committed (e.g. a killing vs. an attempted killing), which may not directly affect culpability. Still, I set aside this complication here because any plausible version of the desert constraint must at the very least also rule out punishments that are disproportionate to culpability. Moreover, it is the ineligibility for culpability that is the primary focus of skeptical arguments against corporate punishment—not the inability to capture different levels of harm.
- 15.
See supra note 7.
- 16.
Relatedly, Kenneth Silver argues that there is similar instability in the common view that corporations can be held accountable (or culpable) but do not have moral considerability. Taking corporations to be accountable (or culpable), he suggests, creates pressure to see them as having moral considerability (Silver Forthcoming). Thus, the ability to be culpable and having moral considerability plausibly go hand in hand.
- 17.
See 18 U.S.C. § 3553(2)(A), which provides that one of the purposes of punishment that sentencing courts shall consider is the need “to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense.”
- 18.
Note my discussion here presupposes the falsity of the kind of strong retributivism that sees giving wrongdoers their just deserts to be the only fundamental aim of the criminal law (the only thing that could justify criminalizing conduct and imposing punishment). I take it for granted that the criminal law, like most legal institutions, can have multiple purposes or justifying aims. For example, Berman notes the “converg[ence] on a desert-constrained pluralism” about the justifications of punishment and describes it as “something approaching a consensus” view (Berman 2015, pp. 141–42). See also 18 U.S.C. § 3553(2)(A)-(D), which lays out a variety of purposes that punishments should aim to serve.
- 19.
Of course, this would not preclude the car from being a justified purchase in some contexts—for example, if one has a use in mind for it that does not require good acceleration. Analogously, were we to reject retribution as one of the core purposes of punishment, then it would be no problem that there are difficulties in justifying corporate punishment on retributive grounds. While this is a possible response to the present challenge that is open to some consequentialist or rehabilitative theorists of the criminal law, I set it aside in what follows and instead continue to assume that retribution for culpable conduct is at least one of the important functions that punishment should serve.
- 20.
For example, Alexander and Ferzan take it that “insufficient concern [is] the essence of culpability” (Alexander and Ferzan 2009, pp. 67–68). For Westen, “a person is normatively blameworthy for engaging in conduct that a statute prohibits if he was motivated by an attitude of disrespect for the interests that the statute seeks to protect” (Westen 2006, pp. 373–374). Tadros similarly takes it that if a defendant “is convicted of a serious offence, the state communicates…that [his] behavior manifested an inappropriate regard for other citizens and their interests” (Tadros 2005, p. 250).
- 21.
Moore’s position comes close to this, though includes additional sophistication. Husak puts it more cautiously in arguing “we should recognize a presumption that the criminal law should derive from, be based on, conform to, or mirror critical morality” (Husak 2016, p. 34).
- 22.
Thus, one would seem to manifest insufficient regard for the legally relevant reasons by stealing even if it is done with good motives. But morality may reach a different result, holding such conduct to demonstrate less insufficient regard for the larger, more fine-grained set of moral reasons. This difference (if genuine) would stem from the requirements of institutional design that constrain criminal culpability but not moral blameworthiness.
- 23.
Similarly, Pettit and List argue that corporations can have decision-making structures that satisfy the three main preconditions for responsibility: (1) facing normatively significant choices; (2) having the understanding and access to evidence required for making normative judgments about the options; and (3) having the control needed to choose among the options (Pettit and List2011, pp. 158–163).
- 24.
Compare Thomas’ claim that “inasmuch as corporate attitudes derive from the contributions of individuals who themselves are uncontroversially moral agents…it would be surprising that every emergent corporate attitude would be stripped of normative content” (Thomas 2017, p. 613).
- 25.
Individuals are composites too. Nobody is inclined to say “there is no such thing as individual action or responsibility, only the action and responsibility of single neurons.”
- 26.
Here is the argument schematically spelled out. The suppressed assumption underlies (1).
-
(1)
In some cases, a culpability deficit exists.
-
(2)
If (1), then there is a role for the notion of corporate culpability to play that can’t be fully accounted for in terms of individual culpability.
-
(3)
If there is a genuine role for corporate culpability to play that can’t be fully accounted for in terms of individual culpability, then (4).
-
(4)
Therefore, corporate culpability is not always reducible to individual culpability.
-
(1)
- 27.
Admittedly, the argument may not be wholly different in kind, but it is substantially different in degree.
- 28.
Even if one accepts this kind of argument for the legal irreducibility of corporate culpability, objections may remain. (Thanks to Kim Ferzan for these.) Suppose a corporation convicted of a crime consists of four individuals A, B, C, and D. Suppose we are confident that A, B, and C, but not D, are culpable for their actions related to the crime—but the total culpability for the corporation’s crime should not be fully legally reducible to the wrongs of A, B, and C for the reasons given above (i.e. how invasive this would make the criminal law, etc.). In this case, would it not be unfair to D (who ex hypothesi is innocent) if the corporation is punished, since the corporation consists of A, B, C, and D?
There are two points in response. While I accept that a corporation consists of its members, there is more to a corporation that just a list of the people within it. The corporation is also to be identified with its organizational structure and its procedures, customs, ethos, as well as goals and priorities, plus ways of sharing information and reaching decisions. Thus, there are a range of properties that plausibly may reflect insufficient regard within a corporation beyond just the insufficient regard within an individual.
The second response is that punishing the corporation is not identical to punishing each of A, B, C, and D. After all, even after convicting the corporation of a crime, there is a separate question of how the punishment—be it a fine or some restriction on corporate activity—is to be distributed among the people within it. There are ways to design corporate punishments of corporations so as to spare some members or employees the pain while focusing it on others. Thus, it does not follow that punishing the corporation in this case will entail imposing any punishment on D—if corporate punishment is carried out in a way that spares D. Cf. Thomas (2017) (distinguishing conviction from distribution of punishment within the corporation). (For similar reasons, it also is not necessarily unfair to punish a corporation of which D is a member in a scenario where D is culpable but happens to be outside the jurisdiction. This is not an end run around jurisdictional boundaries because convicting the corporation is not necessarily the same as punishing each of its members individually.)
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Sarch, A. (2019). Skepticism About Corporate Punishment Revisited. In: Alexander, L., Kessler Ferzan, K. (eds) The Palgrave Handbook of Applied Ethics and the Criminal Law. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-22811-8_10
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