Corporate Crime, Overcriminalization, and the Failure of American Public Morality

Abstract

Corporate crime presents an unusual case of American legal exceptionalism. In terms of substantive legal doctrine, it is neither recent nor completely exceptional: the practice of holding corporate entities criminally liable goes back at least 150 years, in both the United States and other systems based on English common law, and occasionally has appeared elsewhere. Where America is exceptional is in its enforcement efforts, and in the social and political context in which the idea of “corporate crime” was invented and promoted.

Outside of the United States, corporate criminal liability as a legal doctrine appears to be gaining ground, especially within some of the EU countries. However, it is unlikely that such changes have or ever will produce the incidence or rigor of criminal law enforcement against corporations observed in the United States, because of profound differences in the legal and political systems.

Within the United States, there have been dramatic changes since 1991, not in the scope of liability doctrines but in enforcement structures. Since that time, previous legal constraints on corporate criminal punishment have been removed, and enforcement policy has begun to spin out of control. This reflects in part the broader problem that America is overcriminalized in general. Compared with peer Western nations having similar crime rates, the United States has an incarceration rate 5-10 times higher, and approximately 5 times higher than the global average. This same pattern of severity extends to corporate criminal prosecutions. Unlike individuals in general, corporations also are subject to a robust system of parallel and cumulative enforcement actions under regulatory law and even private civil lawsuits. Ironically, efforts to reform unduly expansive civil tort law may be accompanied or followed by further expansion in criminal law enforcement. This produces a disproportionate rise in legal compliance costs, and thereby undermines global competitiveness, destroying firms and even entire industries.

Most Western societies treat criminal law enforcement primarily as a morality play and not a principal component of law enforcement. Their punishment practices indicate that their systems recognize the potentially destructive effect of over-reliance on the criminal sanction. In this respect, the American system has lost its compass.