Monday, July 28, 2008

More On The Federal Erosion of Business Civil Liberities

When Does Criminal Risk Arise?

In the prior blogs on this subject I have said that you and your clients are in an environment in which criminal prosecution could occur without reasonable expectation, and that enforcement agencies have demonstrated little judgment in exercising restraint.

In addition, other than expressing written outrage at some prosecutorial misconduct, the Federal Courts have demonstrated little inclination to exercise judicial sanctions to restrain or discourage even the most outrageous conduct.

I hope I convinced you that the extent of the potential liability is far greater than you imagined. After over 30 years of practice, the WLF report surprised me when it described the extent of potential federal criminal liability.

The next issue is whether the criminal laws are sufficiently clear that you can give your client advice with some reasonable degree of certainty that if they follow it they will avoid criminal exposure. The answer is no for two reasons.

The first is that many of these laws and regulations defy reasonable understanding. “I believe we have five people in the agency who understand what ‘hazardous waste’ is.” United States v. White . 766 F. Supp 873,882 (E.D. Wash. 1991). “Businesses and individuals are faced with a ‘regulatory hydra’, and regulatory terms suggestive of “Alice in Wonderland’ as one court put it . United States v Mills, 817 F. Supp 1546, 1548 (N.D. Fla. 1993)

The second is that the courts have diluted the mens rea requirement to the point of meaninglessness. One court in 1987 found the mens rea requirement was met when no individual in a company had the necessary intent, but combined they reached a “critical mass” under the so called “collective knowledge” doctrine.

As the WLF reports notes what makes matters worse is that targets of criminal prosecution include not only individuals who actually committed the regulatory offense, but also the company under the doctrine of vicarious liability, and corporate officers, under the so called responsible corporate officer doctrine, even though they were neither aware of nor condoned the conduct.

You have got your work cut out for you.

-Larry Salibra
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1 comment:

ACC said...

The cite to the report is “Special Report: Federal Erosion of Business Civil Liberties. It is available from WLF by calling 202-588-0302 or from their website at