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Responsible Shares and Shared Responsibility: In Defense of Responsible Corporate Officer Liability

49 Pages Posted: 24 Oct 2014 Last revised: 3 Mar 2016

Amy J. Sepinwall

Department of Legal Studies and Business Ethics, The Wharton School, University of Pennsylvania

Date Written: October 22, 2014

Abstract

When a corporation commits a crime, whom may we hold criminally liable? One obvious set of defendants consists of the individuals who perpetrated the crime on the corporation's behalf. But according to the responsible corporate officer (RCO) doctrine, the government may also prosecute and punish those corporate executives who, although perhaps lacking "consciousness of wrongdoing," nonetheless have "a responsible share in the furtherance of the transaction which the statute outlaws." In other words, under the RCO doctrine, a corporate executive can come to bear criminal responsibility for an offense of her corporation that she neither participated in nor culpably failed to prevent. Just so long as the executive in question had the authority to prevent the corporate crime and failed to do so, she may be targeted in a criminal suit.

The RCO doctrine plainly poses a challenge to our traditional understanding of criminal culpability, according to which guilt is individual -- one may be held responsible only for a wrong one has personally committed, and only if one has done so with a guilty mind. Thus, RCO liability, while representing the most common instance of strict criminal liability, has been deemed "at odds with fundamental notions of our criminal justice system," and likened to the primitive doctrine of Frankpledge, under which innocent members of a group could be punished for the wrongful deed of one of their fellows. On the other hand, corporate crimes have an irreducibly collective aspect. If we take this aspect seriously, as this paper does, then departures from the paradigm of individual culpability may well be warranted. In particular, we may be justified in assigning responsibility not just to the corporate crime's immediate perpetrators but also to those who held prominent positions within the corporation at the time of the crime's occurrence, and this responsibility may license just the kind of criminal liability that the RCO doctrine contemplates. This paper seeks to determine the circumstances under which this extension of responsibility is permissible, and the grounds of its permissibility.

More specifically, the paper seeks to critique existing justifications for the doctrine by arguing that these mistakenly construe it as a kind of negligence liability, and in so doing deprive the doctrine of its transformative power. The paper next offers a defense of the doctrine according to which personal guilt is not necessary. The paper then contends with objections to the doctrine, arguing that we need not dispense with the doctrine altogether in order to avoid the concerns of its critics. What is needed instead is a set of guidelines that ensure against the doctrine's misuse or abuse. The paper ends with a specification of these guidelines.

Suggested Citation

Sepinwall, Amy J., Responsible Shares and Shared Responsibility: In Defense of Responsible Corporate Officer Liability (October 22, 2014). 2014 Columbia Business Law Review 371. Available at SSRN: https://ssrn.com/abstract=2513431 or http://dx.doi.org/10.2139/ssrn.2513431

Amy J. Sepinwall (Contact Author)

Department of Legal Studies and Business Ethics, The Wharton School, University of Pennsylvania ( email )

3730 Walnut Street
Suite 600
Philadelphia, PA 19104-6365
United States

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