Source: https://www.stinson.com/Resources/Alerts/2019_Alerts/Proposed_CEAA_-_Bending_the_Space-Time_Continuum_to_Find_Criminal_Culpability_of_Corporate_Executives.aspx
Timestamp: 2019-04-23 06:09:00+00:00

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Two core principles of American criminal liability are: (1) a crime does not occur unless the accused has both criminal intent (mens rea) and commits a criminal act (actus reus); and (2) the intent and the act must occur at the same time.1 Many commentators have decried the "responsible corporate officer" or "Park" doctrine—which creates criminal liability for corporate executives working in the FDA space when a crime is committed on their watch and they were in a position to do something about it—on the grounds that it is a strict liability crime or, as courts have interpreted it, requires only a negligence standard of mens rea.
This week, Senator Elizabeth Warren introduced the Corporate Executive Accountability Act (CEAA). As written, under the CEAA a corporate executive cannot know he is committing a crime at the time it is happening, and may not know for years after. This is troubling as a matter of law, and it also poses a risk of bad practice for criminal practitioners on both the prosecution and defense side.
The Food Drug and Cosmetic Act (FDCA) criminalizes certain violations of the Act.3 As the Supreme Court has noted, the Act does not require “consciousness of wrongdoing” to assign criminal liability. See United States v. Park2. In other words, it is a strict liability statute. Individuals who take part in the prohibited actions—such as introducing adulterated or misbranded food or drugs into interstate commerce—can be found guilty without any showing of mens rea.
On the one hand, the CEAA might merit praise for making explicit on its face what the courts have had to interpret into the Park doctrine. Specifically, the statute requires on its face a finding beyond a reasonable doubt that the corporate executive acted negligently. Putting this language into the statute avoids criticisms that courts are overreaching or legislating by judicially finding a mens rea threshold that Congress did not impose.
On the other hand, is the proposition that the corporate executive's potential criminal liability is made contingent on a completely separate act that is unrelated to the underlying alleged violation—e.g., the conviction or settlement of the corporation. It is not unusual for a corporation to "throw an individual under the bus" by revealing the findings of an internal investigation to the government in exchange for a better outcome for the company. But it is a wholly different animal to make the charging and disposition of another entity a necessary element of the corporate executive's crime.
Since no "guilty mind" can be attributed to the executive at the time that this "element" of his crime is committed, there is no contemporaneity of criminal intent and unlawful act. Hence, under basic principles of criminal jurisprudence, there can be no crime by the executive. Moreover, the act of the corporation, e.g., pleading guilty, is not one that is within the ambit or purview of his job as corporate executive.8 He has neither control over nor responsibility for this element – i.e., it is not a crime the corporate executive can choose (or not) to commit. This is the sort of vicarious liability that critics of the Park doctrine fear. That is, the CEAA takes Park even further by applying it to a wide swath of state and federal laws. And the law creates necessary complications and potential due process issues by hinging criminal liability on the acts of others that take place long after the alleged underlying violation.
As drafted, the CEAA has a number of practical implications that are problematic. First, by tying the criminal liability of an executive officer to a conviction or settlement of the corporation, the CEAA is taking away discretion from line prosecutors about how best to charge and prosecute their cases. The “Yates Memo” issued by the Department of Justice in the fall of 2015 stated that prosecutors should focus on individuals from the inception of the investigation. If the criminal act of the executive is not “complete” until the corporation is found guilty or enters a settlement agreement, this will hinder the ability of prosecutors to work the investigation in the manner they deem most appropriate.
Indeed, even if there is a non-prosecution agreement (NPA) for the corporation, problems abound for the prosecutor. For, in deciding whether to offer an NPA, a prosecutor is supposed to assess whether the cooperation provided by the recipient of the NPA is vital to pursue a conviction of someone who has greater relative culpability.9 In the case of the CEAA, there is created a perverse incentive for the government to forego the felony prosecution of a company whose behavior (or the behavior of the main actors) was, say, reckless (or greater), in order to pursue the misdemeanor prosecution of someone who acted negligently.
Second, the CEAA raises a number of complicated legal issues. For instance, when does the statute of limitations start to run for the “negligence crimes” given that the crime is not “complete” until months or years after the underlying alleged violation? Does a “violation” of civil law include instances where the underlying alleged violation of state or federal law occurred while the corporation was “operating” under a civil judgment for money damages? Not only are these questions difficult to answer, but the answers themselves may raise additional legal questions and problems.
Finally, by tying executive criminal liability to the conviction or settlement of the corporation, the CEAA is actually working against the stated policy goals of its sponsor. If a company goes to trial and wins, its executives cannot be prosecuted under the CEAA. Although it may seem unlikely that an executive would be found guilty when the corporation was not, that is the exact scenario that occurred in one of the cases on which the Supreme Court’s Park decision was based. In United States v. Dotterweich10, prosecutors brought charges against a pharmaceutical company and its president for alleged violations of the FDCA. The jury found the corporation not guilty, but found the president guilty. If the goal of the CEAA is to make it easier to prosecute executives—as the sponsor of the bill has stated—then hinging executive criminal liability on the outcome of the corporation’s liability is a strange manner to achieve that goal.
See United States v. Apfelbaum, 445 U.S. 115, 131 (1980) (“In the criminal law, both a culpable mens rea and a criminal actus reus are generally required for an offense to occur.”); 1 Wayne R. LaFave, Substantive Criminal Law § 6.3(a) (3d. ed. 2018) (“[I]t is a basic premise of Anglo-American criminal law that the physical conduct and criminal mind must concur.”); United States v. Bailey, 444 U.S. 394, 402, 100 S. Ct. 624, 630–31, 62 L. Ed. 2d 575 (1980) (“Criminal liability is normally based upon the concurrence of two factors, ‘an evil-meaning mind and an evil-doing hand.”).
See 21 U.S.C. § 333(a).
421 U.S. 658, 670–71 (1975).
Park, 421 U.S. at 670.
See, e.g., Park, 421 U.S. at 679 (Stewart, J. dissenting); United States v. DeCoster, 828 F.3d 626, 636-37 (8th Cir. 2016) (Gruender, J., concurring) (Park requires a finding of negligence, else it would improperly render defendant "vicariously liable for violations of others").
Cf. Smith v. United States, 568 U.S. 106 (2013) (“meeting of the minds … constitutes the conspiracy”); United States v. Johnson, 789 F.3d 934, 940 n.1 (9th Cir. 2015) (“The essence of a conspiracy is a ‘meeting of the minds’.”).
See LaFave, supra, § 6.3(a); United States v. Schwarte, 645 F.3d 1022, 1032 (8th Cir. 2011) (requiring that a defendant’s mens rea must “actuate” the actus reus).
For more information on the Corporate Executive Accountability Act, please contact Joel Schwartz, Nicci Warr, Bill Thomson, Jeremy Root, John Munich, Sean Colligan or the Stinson Leonard Street contact with whom you regularly work.

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