The Senior Management Mens Rea: Another Stab at a Workable Integration of Organizational Culpability into Corporate Criminal Liability

Abstract

As in civil lawsuits, corporate criminal liability at the federal level and in many states is imposed using a strict respondent superior standard: corporations are criminally liable for the wrongdoing of their agents committed within the scope of their authority for the benefit of the corporation. The remaining jurisdictions follow some variation of the Model Penal Code standard, a narrower approach than the federal rule, finding corporate liability only where the board of directors or other high-level managers “authorized, requested, commanded, performed or recklessly tolerated” the offense. These liability standards, which rely on imputing mental states to individual agents, are fatally over- and under- inclusive because they fail, without justification, to differentiate between the non-blameworthy organizations and those which are genuinely culpable. This Note contends that the disconnect between organizational blameworthiness and liability under the current individualistic liability scheme warrants overhauling the standard for holding organizations criminally liable.

That organizations demonstrate culpability independent of their individual agents has long been recognized both in other areas of the law and competing academic conceptualizations of organizational criminal liability. Accordingly, this Note builds from the existing academic models of genuine organizational culpability and suggests a standard that uses an approximation of the senior management mens rea (SMMR). This SMMR should be used as a proxy for the corporate mens rea by using both (1) subjective mental states of senior management and (2) reasonable inferences of senior management’s culpability derived from organizational variables commonly recognized as contributing to organizational culpability. These variables should serve as non-subjective circumstantial evidence of culpability. This model, which embodies the understanding of genuine organizational culpability and ensures true organizational blameworthiness, can be weaved seamlessly into the current criminal statutes in a form that courts can more consistently understand and apply than other academic proposals.

Part I of this Note explains the development and shortcomings of the present standards of corporate criminal liability. Part II discusses the theoretical underpinnings of independent organizational action and intention in organizational theory. Part II also outlines the means by which the law and legal scholars have incorporated the understanding of genuine organizational culpability into models assessing independent organizational culpability. Finally, Part II explores the shortcomings of the prevailing academic models. Specifically, it focuses on William Laufer’s model of constructive corporate fault, one of the most substantively sound and practical academic models to date. Part III advocates a new liability standard, the SMMR, and specifically examines its implementation-based utility over competing proposals.

Keywords: corporate criminal liability, corporate mens rea, corporate mental state, corporate crime, organizational culpability, corporate culpability, organizational mens rea, organizational mental state, organizational sentencing, corporate culpability, organizational culpability, management culpability

JEL Classification: K22