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Corporate Criminal Law Doesn’t Exist

Above Photo: Michael Morganstern / Knowable Magazine.

Corporate criminal law doesn’t exist. And it never has.

Corporate crime can be difficult to detect and hard to prosecute. Federal prosecutions of white-collar crime dropped by more than a third from 1998 to 2018, with corporations often able to pay fines rather than go to court.

That’s the conclusion of two rising young stars in the corporate crime academic world – Iowa Law School Professor Mihailis Diamantis and Michigan Ross School of Business Professor Will Thomas in a new article titled – But We Haven’t Got Corporate Criminal Law!

“For more than a century, pearl-clutching abolitionists have decried the conceptual puzzles and supposed injustices of corporate criminal liability,” Diamantis and Thomas write.

“Meanwhile, enthusiastic proponents of corporate criminal law have celebrated a system that they believe can deliver justice for victims and effective punishment to corporate malefactors.”

“The abolitionists won long ago, through craftiness rather than force of reason. By arguing that the United States should get rid of corporate criminal law, abolitionists have staged a debate that presumes corporate criminal law in fact exists. It does not, and it never has. The greatest trick the abolitionist ever pulled was convincing everyone to think otherwise and then duping their opponents into arguing for the status quo.”

“Criminal justice has four distinctive features – it utilizes uniquely demanding procedure to target the worst offenders with the harshest penalties and society’s deepest moral condemnation.”

“The United States’ purported system of corporate criminal justice lacks all four features. The biggest corporate criminals routinely side-step all criminal procedure and any possibility of conviction by cutting deals with prosecutors, trading paltry fines and empty promises of reform for government press releases praising their cooperation. The real question is not whether the United States should retain corporate criminal law, but what it would take for the United States to have a corporate criminal justice system in the first place.”

Diamantis and Thomas use the federal criminal investigation of Boeing as a case in point.

“The Department of Justice’s recent resolution of an inquiry into Boeing will serve as a running example of the sort of theatrical pageantry that some people call ‘corporate criminal law’ today,” they write. “In 2018-19, faulty autopilot systems on Boeing 737 Max planes crashed two passenger flights in Indonesia and Ethiopia, killing all 346 people on board.”

“While Boeing initially tried to blame the pilots, the planes’ black boxes revealed that autopilot systems, responding to defective optical sensors, tipped both planes into a nose-dive and prevented manual override. Investigation revealed that the 737 Max was a rush job. Developers cut corners on safety protocols. Managers ignored warnings. Executives exerted ‘undue pressure’ on the Federal Aviation Administration to greenlight the flight system prematurely. Sales teams kept customers in the dark about the overhauls, resisting airlines’ requests to train their pilots. Many individuals at Boeing made mistakes, but corporate-level vices were a driving force: a cavalier attitude toward safety, closed channels of communications for voicing concern, and a corporate culture that set profit as its only lodestar. These were deeply ingrained corporate defects that could not arise overnight. It may be unsurprising, then, that the Department of Justice inquiry was not Boeing’s first federal investigation for inadequate attention to safety. Less than three years before the first crash, the FAA settled an investigation into Boeing over related safety concerns. As part of the deal, Boeing had promised to improve its safety protocols. It clearly pulled the wool over authorities’ eyes.”

“Massive loss of life. Prior offenses. Clear corporate-wide fault. Boeing’s case is just about as bad as it gets. Here, if anywhere, one would expect corporate criminal law to be on full display, with all its silver bells, gold trim, and ivory buttons. Yet authorities’ threadbare approach to Boeing’s misconduct was cut from the usual cloth, and as such it lacked all the trappings of criminal enforcement.”

Diamantis and Thomas argue that the heart of the problem “is that prosecutor and corporate interest often align.”

“Both want to avoid trial. This is a familiar feature of criminal law more generally. For many types of crime, neither prosecutors nor suspects relish the expense and uncertainty of trial. Additionally, for corporate crime in particular, both strive to avoid the economic and political fallout of corporate conviction. . . .they resolve the vast majority of charges through negotiated deals, effectively side-stepping the trial process—98% in 2020.”

And why no stigma when it comes to corporate crime?

“That corporate punishment is threadbare of the kind of stigma associated with general punishment is indicative of a broader phenomenon: corporate criminal law just isn’t conventionally stigmatizing in the way that the general criminal law is,” the authors write. “We don’t tend to call corporations killers when they kill; thieves when they steal –  arsonists, sex traffickers, or any of the other vibrantly stigmatic epithets that surrounds the criminal law. Perhaps the criminal law would be better for it without these conventional trappings of stigma and condemnation, if even it is possible to do away with them. Regardless, these deeply rooted trappings of the criminal law we find around here remain curiously invisible when it comes to corporate criminals.”

Diamantis and Thomas will present their paper at a symposium next week at Georgetown Law Center titled – Imagining a World Without Corporate Criminal Law Symposium.

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