BEWARE THE PERILS OF THE RESPONSIBLE CORPORATE OFFICER DOCTRINE IN THE UNITED STATES
Two decisions rendered 32 years apart by the US Supreme Court have established a treacherous concept: the ‘responsible corporate officer doctrine’ (RCOD), also referred to as the ‘Park Doctrine’. In each case, the Supreme Court upheld the criminal conviction of corporate officers for crimes against the public welfare without requiring evidence that they participated in, or had knowledge of, the core criminal activity. The resulting strict liability theory has been interpreted as permitting the prosecution of corporate directors and officers (D&Os) for criminal offences without the need to establish their intent or personal involvement in any wrongful conduct.
The RCOD targets employees for company misconduct. To date, it has been used mainly in the pharmaceutical and medical device industries, pursuant to the US Food, Drug and Cosmetic Act (FDCA). That statute allows the government to obtain a conviction when three standards are met: (i) that “the prohibited act took place somewhere within the company”; (ii) “the defendant’s position within the company was one that gave him or her responsibility and authority either to prevent the violation or correct it”; and (iii) that he or she did not do so. The RCOD is unique because its roots are in strict and vicarious liability. Thus, courts can hold executives accountable, separate from, and in addition to, charges against their corporation, and penalties can include imprisonment, fines and disqualification from the company.
Jul-Sep 2018 Issue
Solon Group, Inc.