An email from the Washington Legal Foundation reports that:
Washington Legal Foundation today asked the U.S. Supreme Court to review (and ultimately overturn) a divided Eighth Circuit ruling that upheld a term of imprisonment for two executives of Quality Egg LLC under the “responsible corporate officer” (RCO) doctrine—a rare instance of strict supervisory liability in the criminal law. In a brief filed in United States v. DeCoster, WLF argues that by depriving the defendants of their liberty based on employee misconduct of which defendants were unaware, the decision below expands the RCO doctrine far beyond what Supreme Court precedent or the Due Process Clause permits.
The case arises from the sentencing appeals of Austin and Peter DeCoster, the former CEO and COO, respectively, of Iowa-based Quality Egg. After a Salmonella outbreak at the company’s facilities in 2010, it voluntarily recalled hundreds of millions of shell eggs. Despite their cooperating fully with the Food and Drug Administration’s (FDA) investigation, the government charged both DeCosters with criminally violating the Food, Drug, and Cosmetic Act (FDCA). They pled guilty to one count each of introducing adulterated foods into interstate commerce, but because they had no knowledge of the statutory violation or the conduct that led to it, they pled guilty based solely on their status as “responsible corporate officers” at the time of the offense.
Urging review, WLF’s brief argues that although the Supreme Court has permitted criminal liability in the absence of mens rea in the narrow category of public welfare offenses, it has done so on the understanding that penalties imposed in such cases will be relatively small and conviction will not gravely damage offenders’ reputations. If the Eighth Circuit’s holding in this case is allowed to stand, WLF contends, it would expand the RCO doctrine far beyond the constitutional bounds the Supreme Court first articulated when adopting it over 70 years ago.
Upon filing its brief, WLF issued the following statement by Senior Litigation Counsel Cory Andrews: “FDA officials give every indication they view the draconian penalties imposed here—including the prison terms—as a model for similar cases. Either they don’t understand the limits of the ‘responsible corporate officer’ doctrine, or else they are deliberately acting contrary to Supreme Court precedent.”
UCLA SJD alum Martin Petrin has the leading article on the RCO doctrine:
The recent oil spill disaster in the Gulf of Mexico and ensuing questions of accountability have brought a controversial legal tool to the forefront, the “responsible corporate officer doctrine.” This doctrine allows courts to hold individuals that exercise control over business policies or activities personally liable for failing to prevent statutory offenses by subordinates, even if they themselves were not aware of any wrongdoing.
For corporate officials, the RCO doctrine is dangerous because of its ability to sidestep the usual requirements that apply to holding corporate agents responsible. Moreover, from their viewpoint, the doctrine is troubling in that it extends statutory duties of legal entities to their “responsible corporate officers” as an additional class of defendants. Examined from a broader perspective, the RCO doctrine may also result in additional costs, contribute to overdeterrence, and undermine the notion of limited liability.
This Article explains how the RCO doctrine runs contrary to established tort, criminal, and corporate law principles and why it represents an unwarranted augmentation of corporate agents’ duties. It then proceeds to explain that current justifications of the doctrine are not convincing and explores the doctrine’s negative effects. Finally, the Article advances the idea of a “cautious approach” to applying the RCO doctrine, arguing that legislatures and courts should reduce the RCO doctrine to rare and clearly delineated instances of statutory liability for intentional or knowing misconduct.
Petrin, Martin, Circumscribing the ‘Prosecutor’s Ticket to Tag the Elite’ – A Critique of the Responsible Corporate Officer Doctrine (2012). Temple Law Review, Vol. 84, No. 2, p. 283, Winter 2012. Available at SSRN: http://ssrn.com/abstract=1808344