26. Suppose a corporation has for decades polluted a river on which a major city is located with toxic waste known to increase the incidence of certain forms of cancer.
Which one of the following scenarios would most closely conform to the author’s views regarding how corporate wrongdoing is most effectively addressed?
The use of criminal sanctions against corporations
is well established, but the practice has recently come
under fire from legal theorists who maintain that
corporations should be held civilly rather than criminally
(5) liable for wrongdoing. Civil liability, these theorists
argue, shares important features with criminal liability:
both impose punishment on a company, both aim at
deterrence, and both degrade a company’s reputation.
Yet, they claim, civil liability is better able to determine
(10) appropriate levels of damages. Furthermore, because
criminal liability causes a greater loss of reputation, its
overall cost to corporations is far higher than that of civil
liability; this additional cost is borne by society at large
in the form of higher product prices. Finally, civil
(15) liability is also more cost-effective from the point of
view of the government: the greater procedural
protections of criminal law make deterrence through
criminal prosecution extremely expensive.
Even if it is less economical, however, criminal
(20) liability is a much stronger deterrent. The considerable
enforcement powers involved, including the ability to
detain and question corporate officials, are themselves
significant deterrents. Furthermore, the fact that private
civil litigation requires an identifiable victim with the
(25) necessary resources to commence litigation weakens its
deterrent impact. Most importantly, the main function of
criminal law is to censure wrongdoing and to emphasize
that society forcefully rejects such conduct. Civil liability
is ill suited for this purpose.
(30) Other legal theorists who do not object to criminal
sanctions per se argue that individuals within
corporations, rather than corporations themselves, are the
appropriate target of criminal prosecution in cases
involving corporate wrongdoing. They maintain that
(35) individuals within corporations are more responsive to
deterrence because they generally fear prosecution and
the loss of employment that can result from it.
Additionally, they say, punishment of a corporation, in
the form of a fine, essentially punishes shareholders,
(40) creditors, employees who may be laid off, and ultimately
the public, which is forced to absorb higher prices.
However, this approach is also misguided.
Corporations often bury responsibility within complex
hierarchies, with the result that no individual responsible
(45) for corporate misdeeds can be identified. Another
problem is that under this approach, a corporation will
often find it cheaper to designate and compensate an
internal scapegoat to face prosecution than to refrain
from wrongdoing. The most effective way to ensure that
(50) corporations improve their practices is to hold
corporations themselves criminally liable for their
conduct. Indeed, criminal liability works on shareholders
as well as corporate officers and employees: because
criminal punishment of corporations decreases their
(55) wealth, it can motivate shareholders to push for better
corporate practices. Arguments that shareholders and
employees need economic protection are outweighed by
the greater societal interest in ensuring the safety of
employees, the public, and the environment.