Discussion Question

Student Replies:

Reply by John

Corporate criminal responsibility holds corporations liable for criminal offenses from their employees. If employees are directed or persuaded to perform illegal actions to benefit the company, I believe this is justified. There might be occasions when an individual is doing what they think is best for the corporation, though were never directed to act in an illegal manner.

An example can be taken from 1909 in New York Central & Hudson River Railroad v. U.S. This case shows how the Supreme Court held a corporation criminally liable for its employees’ actions. Those actions included promoting a provision for rebates on shipments, which were paid by the corporation, though staff never had written permission to do so. Since the employees “acted within the scope” of their authority, the company was held accountable.

Based on this and similar cases, I can see why corporations can be held liable. Especially in terms of fraud, many times employees are acting on behalf (and for the benefit) of their company. Often, these actions can either come from the top, or are simply ignored.

If it can be proven that an employee acted on their own and, for example, personally gained from a fraudulent transaction, I can see why that specific person should be held liable instead of the company. Supervisors most likely should have known there were legal issues, but at what point is the company responsible for every action? If it is recurring, this would be an issue where accountability starts at the top.

There are advantages and disadvantages to each side. Obviously, if a corporation can be held liable over an employee’s actions, this benefits the staff. They can act without fear of criminal consequences, though this might invite more reckless behavior. If an employee can be held accountable instead of the entire corporation, the corporation benefits as they would not have to be as concerned about scrutinizing staff and viewing them under a microscope.

 

Sources:

http://www.casebriefsummary.com/new-york-central-hudson-river-railroad-co-v-u-s/ (Links to an external site.)

https://www.lexology.com/library/detail.aspx?g=a87d8ace-7b5e-482b-a907-9a69e20f02cd (Links to an external site.)

 

Reply by Doe

I wholeheartedly believe that employees who commit corporate crimes should face criminal reprimanding. Criminal responsibility makes sense to me due to the fact that there are some high level executives that have gross misconduct. For example, Takata Corporation continues to produce malfunctioning airbags when they knew that they were faulty! These corporations should be criminally liable for the people that were killed because the executives knowingly continued production of a faulty product. This type of misconduct should definitely be punished by government agencies to send a message to other companies that they cannot do these kinds of things. Criminal liability is a colossally important label that companies do not want to have. Companies like Facebook or Google prefer a massive fine than a label that says that the company had any criminal wrongdoing. For example, Facebook was handed a five billion dollar fine from the FTC, which was basically a slap in the wrists for those megacompanies. Criminal wrongdoing has a major effect on the way companies act, and if criminal prosecution was more enforced, then I believe that more companies would think twice on any illegal activity that they might do. I think the way that the laws are set up now works somewhat well. If someone is working within the scope of their authority and there isn’t any evidence of knowingly doing illicit wrongdoings then they shouldn’t be punished, just fined. If an executive or an employee encourages or acts on illegal information, then a criminal trial should ensue. Criminal liability is a deterrent for any illegal activities in my opinion.

University of Notre Dame. “Should Corporate Criminal Liability Even Exist?: The Law School: University of Notre Dame.” The Law School, law.nd.edu/news-events/news/should-corporate-criminal-liability-even-exist/.