Caring About Corporate "Due Care": Why Criminal Respondeat Superior Liability Outreaches Its Justification
Respondeat superior liability permits the criminal prosecution of a corporation for the crimes of its employees absent proof of corporate ratification or involvement of corporate officers. As the doctrine currently stands, a corporation may be held criminally responsible for conduct that it specifically prohibited and that its employee went to great lengths to conceal. Evidence that a corporation took all reasonable steps to prevent the misconduct through a robust compliance program, for example, is simply irrelevant to the question of liability.
Courts have justified criminal respondeat superior on the grounds that it “increase[s] incentives for corporations to monitor and prevent illegal employee conduct.” This reasoning assumes that imposing broad liability and dire sanctions on corporations for their agents’ actions will prompt them to take steps to prevent the illegal conduct in the first instance, thus reducing the risk that employees will offend.
Although this justification is compelling, it leaves important practical questions unaddressed. For example, is there any evidence that criminal burden-shifting will result in an economically efficient investment in compliance? What is the likelihood that the risk of being terminated will deter an employee who is prepared to run the risk of criminal prosecution? While these questions have gained increased attention in recent years, the statistical data is simply lacking.
We propose instead to examine the doctrine of respondeat superior and the limits on liability that necessarily flow from it. That review leads inexorably to the conclusion that we have embraced the rule’s application in the criminal law while forgetting the logic of its deterrence-based rationale. Put simply, holding corporations strictly liable for employee wrongdoing in circumstances in which the corporation has taken all reasonable precautions to deter it—thus demonstrably satisfying the doctrine’s raison d’etre—shifts liability on “risk spreading” or “deep pocket” principles.Subscribe to ACLR