Opinion ID: 561245
Heading Depth: 2
Heading Rank: 4

Heading: The Responsible Corporate Officer Doctrine

Text: 54 D'Allesandro, the President and owner of MacDonald & Watson, contends that his conviction under RCRA, Sec. 3008(d)(1), 42 U.S.C. Sec. 6928(d)(1), must be vacated because the district court incorrectly charged the jury regarding the element of knowledge in the case of a corporate officer. 12 Section 3008(d)(1) penalizes Any person who.... (1) knowingly transports or causes to be transported any hazardous waste identified or listed under this subchapter.... to a facility which does not have a permit..... (Emphasis supplied.) In his closing, the prosecutor conceded that the government had no direct evidence that Eugene D'Allesandro actually knew that the Master Chemical shipments were coming in, i.e., were being transported to the Poe Street Lot under contract with his company. The prosecution did present evidence, however, that D'Allesandro was not only the President and owner of MacDonald & Watson but was a hands-on manager of that relatively small firm. There was also proof that that firm leased the Poe Street Lot from NIC, and managed it, and that D'Allesandro's subordinates had contracted for and transported the Master Chemical waste for disposal at that site. The government argued that D'Allesandro was guilty of violating Sec. 3008(d)(1) because, as the responsible corporate officer, he was in a position to ensure compliance with RCRA and had failed to do so even after being warned by a consultant on two earlier occasions that other shipments of toluene-contaminated soil had been received from other customers, and that such material violated NIC's permit. In the government's view, any failure to prove D'Allesandro's actual knowledge of the Master Chemical contract and shipments was irrelevant to his criminal responsibility under Sec. 3008(d)(1) for those shipments. 55 The court apparently accepted the government's theory. It instructed the jury as follows: 56 When an individual Defendant is also a corporate officer, the Government may prove that individual's knowledge in either of two ways. The first way is to demonstrate that the Defendant had actual knowledge of the act in question. The second way is to establish that the defendant was what is called a responsible officer of the corporation committing the act. In order to prove that a person is a responsible corporate officer three things must be shown. 57 First, it must be shown that the person is an officer of the corporation, not merely an employee. 58 Second, it must be shown that the officer had direct responsibility for the activities that are alleged to be illegal. Simply being an officer or even the president of a corporation is not enough. The Government must prove that the person had a responsibility to supervise the activities in question. 59 And the third requirement is that the officer must have known or believed that the illegal activity of the type alleged occurred. 60 The court's phrasing of the third element at first glance seems ambiguous: it could be read to require actual knowledge of the Master Chemical shipments themselves. We are satisfied, however, that the court meant only what it literally said: D'Allesandro must have known or believed that illegal shipments of the type alleged had previously occurred. This tied into evidence that D'Allesandro had been advised of two earlier shipments of toluene-contaminated waste, and was told that such waste could not legally be received. For the court to require a finding that D'Allesandro knew of the alleged shipments themselves (i.e., the Master Chemical shipments), would have duplicated the court's earlier instruction on actual knowledge, and was not in accord with the government's theory. 13 61 D'Allesandro challenges this instruction, contending that the use of the responsible corporate officer doctrine is improper under Sec. 3008(d)(1) which expressly calls for proof of knowledge, i.e., requires scienter. The government responds that the district court properly adapted the responsible corporate officer doctrine traditionally applied to strict liability offenses to this case, instructing the jury to find knowledge that the illegal activity of the type alleged occurred,--a finding that, together with the first two, made it reasonable to infer knowledge of the particular violation. We agree with D'Allesandro that the jury instructions improperly allowed the jury to find him guilty without finding he had actual knowledge of the alleged transportation of hazardous waste on July 30 and 31, 1986, from Master Chemical Company, Boston, Massachusetts, to NIC's site, knowledge being an element the statute requires. 14 We must, therefore, vacate his conviction. 62 The seminal cases regarding the responsible corporate officer doctrine are United States v. Dotterweich, 320 U.S. 277, 64 S.Ct. 134, 88 L.Ed. 48 (1943), and United States v. Park, 421 U.S. 658, 95 S.Ct. 1903, 44 L.Ed.2d 489 (1975). These cases concerned misdemeanor charges under the Federal Food, Drug, and Cosmetic Act, 52 Stat. 1040, 21 U.S.C. Secs. 301-392, as amended, relating to the handling or shipping of adulterated or misbranded drugs or food. The offenses alleged in the informations failed to state a knowledge element, and the Court found that they, in fact, dispensed with a scienter requirement, placing the burden of acting at hazard upon a person otherwise innocent but standing in responsible relation to a public danger. Dotterweich, 320 U.S. at 277, 64 S.Ct. at 135. The Court in Park clarified that corporate officer liability in that situation requires only a finding that the officer had authority with respect to the conditions that formed the basis of the alleged violations. But while Dotterweich and Park thus reflect what is now clear and well-established law in respect to public welfare statutes and regulations lacking an express knowledge or other scienter requirement, we know of no precedent for failing to give effect to a knowledge requirement that Congress has expressly included in a criminal statute. Park, 421 U.S. at 674, 95 S.Ct. at 1912. Especially is that so where, as here, the crime is a felony carrying possible imprisonment of five years and, for a second offense, ten. 63 The district court, nonetheless, applied here a form of the responsible corporate officer doctrine established in Dotterweich and Park for strict liability misdemeanors, as a substitute means for proving the explicit knowledge element of this RCRA felony, 42 U.S.C. Sec. 6928(d)(1). As an alternative to finding actual knowledge, the district court permitted the prosecution to constructively establish defendant's knowledge if the jury found the following: (1) that the defendant was a corporate officer; (2) with responsibility to supervise the allegedly illegal activities; and (3) knew or believed that the illegal activity of the type alleged occurred. As previously stated, the third element did not necessitate proof of knowledge of the Master Chemical shipments charged in the indictment, but simply proof of earlier occasions when D'Allesandro was told his firm had improperly accepted toluene-contaminated soil. 64 Contrary to the government's assertions, this instruction did more than simply permit the jury, if it wished, to infer knowledge of the Master Chemical shipments from relevant circumstantial evidence including D'Allesandro's responsibilities and activities as a corporate executive. With respect to circumstantial evidence, the district court properly instructed elsewhere that knowledge did not have to be proven by direct evidence but could be inferred from the defendant's conduct and other facts and circumstances. The court also instructed that the element of knowledge could be satisfied by proof of willful blindness. 15 These instructions allowed the jury to consider whether relevant circumstantial evidence established that D'Allesandro actually knew of the charged Master Chemical shipments. These would have sufficed had it merely been the court's purpose to point out that knowledge could be established by circumstantial evidence, although the court could, had it wished, have elaborated on the extent to which D'Allesandro's responsibilities and duties might lead to a reasonable inference that he knew of the Master Chemical transaction. 65 Instead, the district court charged, in effect, that proof that D'Allesandro was a responsible corporate officer would conclusively prove the element of his knowledge of the Master Chemical shipments. The jury was told that knowledge could be proven in either of two ways. Besides demonstrating actual knowledge, the government could simply establish the defendant was a responsible corporate officer--the latter by showing three things, none of which, individually or collectively, necessarily established his actual knowledge of the illegal transportation charged. Under the district court's instruction, the jury's belief that the responsible corporate officer lacked actual knowledge of, and had not willfully blinded himself to, the criminal transportation alleged would be insufficient for acquittal so long as the officer knew or even erroneously believed that illegal activity of the same type had occurred on another occasion. 66 We have found no case, and the government cites none, where a jury was instructed that the defendant could be convicted of a federal crime expressly requiring knowledge as an element, solely by reason of a conclusive, or mandatory presumption of knowledge of the facts constituting the offense. See Carella v. California, 491 U.S. 263, 109 S.Ct. 2419, 105 L.Ed.2d 218 (1989) (per curiam); Francis v. Franklin, 471 U.S. 307, 314 & n. 2, 105 S.Ct. 1965, 1971 & n. 2, 85 L.Ed.2d 344 (1985); Hill v. Maloney, 927 F.2d 646, 648 & n. 3 (1st Cir.1990); see also Contract Courier Services, Inc. v. Research and Special Programs Admin., U.S. Dept. of Transportation, 924 F.2d 112, 114 (7th Cir.1991); cf. Cheek v. United States, --- U.S. ----, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991). The government's primary reliance on the Third Circuit's more limited decision in Johnson & Towers, 741 F.2d 662, 670, is misplaced. There, the court of appeals concluded that knowingly applies to all elements of the offense, including permit status, in RCRA Sec. 3008(d)(2)(A). The court of appeals advised that proof of knowledge of the permit requirement and the nonexistence of the permit did not impose a great burden because such knowledge might, in a proper case, be inferred. Relying on the Supreme Court's decision in United States v. International Minerals & Chemical Corp., 402 U.S. 558, 563, 91 S.Ct. 1697, 1700, 29 L.Ed.2d 178 (1971), 16 the court of appeals emphasized that under certain regulatory statutes requiring 'knowing' conduct, the government need prove only knowledge of the actions taken and not of the statute forbidding them. Johnson & Towers, 741 F.2d at 669; 17 see also United States v. Dee, 912 F.2d 741, 745-46 (4th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1307, 113 L.Ed.2d 242 (1991) (knowledge of RCRA's prohibitions may be presumed; instruction that defendants had to know substances involved were chemicals, without requiring knowledge they were hazardous, was harmless error); United States v. Sellers, 926 F.2d 410, 416 (5th Cir.1991) (assuming arguendo that district court erred in failing to instruct that government must prove defendant knew waste was hazardous under 42 U.S.C. Sec. 6928(d)(2)(A), error was not plain). Thus, this case supports only the position that knowledge of the law may be inferred, 18 and does not address knowledge of acts. 67 The government's citation of three additional cases in support of its assertion that other courts have sanctioned application of instructions such as those given here is also incorrect. In the first, United States v. Frezzo Brothers, Inc., 602 F.2d 1123 (3d Cir.1979), cert. denied, 444 U.S. 1074, 100 S.Ct. 1020, 62 L.Ed.2d 756 (1980), the defendants were convicted of willfully or negligently discharging pollutants into a navigable water of the United States without a permit in violation of 33 U.S.C. Secs. 1311(a), 1319(c). Since defendants could have been found guilty solely based on negligence, no presumption of knowledge was necessary to sustain the convictions. Likewise, in the second, United States v. Cattle King Packing Co., Inc., 793 F.2d 232 (10th Cir.), cert. denied, 479 U.S. 985, 107 S.Ct. 573, 93 L.Ed.2d 577 (1986), the responsible corporate officer instruction was sufficient only to put to the jury the issue of the defendant's responsibility for meat inspection violations, which did not require scienter. The jury was also, however, instructed that it must find defendant had intent to defraud for purposes of convicting on charges of fraudulent violations, and another instruction specifically instructed that for all counts but one the crimes charged in this indictment require proof of specific intent before the defendants can be convicted. Cattle King, 793 F.2d at 241; see also United States v. Hiland, 909 F.2d 1114, 1128 & n. 18 (8th Cir.1990). 68 Finally, in the third, United States v. Andreadis, 366 F.2d 423 (2d Cir.1966), cert. denied, 385 U.S. 1001, 87 S.Ct. 703, 17 L.Ed.2d 541 (1967), the defendant president of a company was convicted of fraud in advertising and contested the sufficiency of the evidence. Regarding the element of knowledge that the advertising claims were false, the court of appeals concluded that the jury could infer that the defendant had the requisite knowledge of the advertisements' falsity, 366 F.2d at 430. The court's citation to cases concerning fraudulent intent makes clear that its use of the word infer relates simply to an inference based on circumstantial evidence. See United States v. Lichota, 351 F.2d 81, 90 (6th Cir.1965), cert. denied, 382 U.S. 1027, 86 S.Ct. 647, 15 L.Ed.2d 540 (1966). Having held that the evidence of knowledge was sufficient, the court alternatively noted that the defendant had an affirmative duty to insure that the advertising agency's claims on behalf of his product were true, and might, having failed totally to discharge this responsibility in even the slightest measure, therefore be charged with knowledge. Andreadis, 366 F.2d at 430. We understand the Andreadis and other courts to simply state that willful blindness may be inferred from circumstantial evidence, and do not think such cases sanction an independent instruction for jury findings concerning scienter. See Stone v. United States, 113 F.2d 70, 75 (6th Cir.1940) (Scienter may be inferred where the lack of knowledge consists of ignorance of facts which any ordinary person under similar circumstances should have known.). 19 69 We agree with the decisions discussed above that knowledge may be inferred from circumstantial evidence, including position and responsibility of defendants such as corporate officers, as well as information provided to those defendants on prior occasions. Further, willful blindness to the facts constituting the offense may be sufficient to establish knowledge. However, the district court erred by instructing the jury that proof that a defendant was a responsible corporate officer, as described, would suffice to conclusively establish the element of knowledge expressly required under Sec. 3008(d)(1). Simply because a responsible corporate officer believed that on a prior occasion illegal transportation occurred, he did not necessarily possess knowledge of the violation charged. In a crime having knowledge as an express element, a mere showing of official responsibility under Dotterweich and Park is not an adequate substitute for direct or circumstantial proof of knowledge. 20