When it comes to corporate crime, retribution and incapacitation get a bad rap.

Now comes William Robert Thomas.

William Robert Thomas
Harvard Law School
Cambridge, Massachusetts

Thomas is a Climenko Fellow and Lecturer on Law at Harvard Law School.

He wants to rehabilitate retribution and incapacitation for corporate crime.

To that end, he has written a law review article titled – Incapacitating Criminal Corporations (forthcoming Vanderbilt Law Review, 2019).

“If there is any consensus in the fractious debates over corporate punishment, it is this: a corporation cannot be imprisoned, incarcerated, jailed, or otherwise locked up,” Thomas writes.

“Whatever fiction the criminal law entertains about corporate personhood, having an actual body to kick – and, by extension, a body to throw into prison – is not one of them.”

“The ambition of this project is not to reject this obvious point, but rather to challenge the less-obvious claim it has come to represent – incapacitation, despite long being a textbook justification for punishing individuals, does not bear on the criminal law of corporations.”

Thomas argues that incapacitation both can and should serve as a justification for punishing criminal corporations.

“Sanctions we already impose in or just outside the criminal law can be better understood as efforts to incapacitate, rather than to deter or rehabilitate, a criminal corporation,” he writes. “Indeed, reevaluating our understanding of penal incapacitation provides reason to think that we have similar and perhaps stronger reasons for incapacitating corporate persons than we do individuals.”

“Although rehabilitation has gained traction in past decades as a basis for punishing corporations, incapacitation stands as a more realistic, more administrable, alternative. This is because a principle of rehabilitation has led to a practice of imposing on corporations intricately designed, but dubiously effective, compliance and internal governance reforms. Incapacitation, by contrast, lends itself to clear, discrete prohibitions for which the criminal law is better situated to justify, impose, and monitor.”

“I am pushing back on a pervasive belief that incapacitation does not, and somehow cannot, provide a justification for corporate punishment –  even though it is a dominant justification for punishing individuals,” Thomas told Corporate Crime Reporter in an interview last week.
“The central rationale being offered when people rule out incapacitation of corporations is that a company can’t go to jail. That’s true, but a bit conceptually shortsighted. Just because we can’t imprison a corporation doesn’t mean the criminal law can’t incapacitate it.”

“The project seeks to distract from a very specific kind of punishment to focus instead on the logic of the underlying justification. And once we do that, we start to see that there are lots of ways that the criminal law can incapacitate a corporation. It could close the company down. It could force it to suspend a line of business. It can require the company to quit certain relationships with clients or counterparties. It could force it to divest from physical plant.”

“Those are some examples of things that ordinarily we would describe as incapacitative.”

Give an example of an incapacitation that works and compare it to a rehabilitation effort that doesn’t work.

“Let’s think about BP pre-Deep Water Horizon. BP had an infamously problematic safety culture. If you were to look at the West Texas refinery, one of BP’s largest, it had 30 fatalities across five separate incidents.”

“All of them traced to the same underlying problem – the company was failing to implement safety protocol procedures it knew it needed, but just wasn’t going forward with them.”

“There were lots of efforts to get BP to reform into the kind of company that wouldn’t cause these kinds of harms. When we look back, BP spent something on the order of $2 billion implementing compliance reforms. They were unsuccessful. And part of the reason they were unsuccessful was because these compliance reforms were largely window dressing that weren’t addressing the underlying safety issues.”

“This is an instance where we spent a lot of time and money trying to rehabilitate a corporation without much success.”

“The way we solved the West Texas refinery problem was by divesting BP of the West Texas refinery. This was not done for the purpose of incapacitation, although it had an incapacitative effect. BP was actually forced to sell this property because of a wholly separate institutional problem – Deep Water Horizon. But since that plant has been sold to a competitor, most of those safety problems have been resolved and the plant has become significantly safer.”

“We rarely have the federal government saying to a corporation – you can no longer participate in this space. But that is a cheaper solution and a more effective solution.”

Rehabilitation has gained traction for corporate crime at the expense of incapacitation even though you argue that incapacitation is a more realistic alternative. In your paper, you don’t raise the question of corporate power. What role did corporate power have in placing corporate wrongdoing outside of this incapacitation framework?

“The corporate criminal bar has been very effective at marshaling support for an argument that corporate activity is valuable. We don’t want to do anything to overdeter. We should be very careful about criminalizing and punishing corporations. And likewise, if you punish a corporation too hard, you can’t control that punishment. It’s going to spiral out of control. You have this worry that any sanction you impose is going to lead to a corporate death penalty. And on the other side of things, you have the story of rehabilitation. Which is just saying – hey, let’s make this company better. Who wouldn’t opt for a story that says — let’s make the company better? It’s a much more attractive story to the press. It fits well with the use of deferred and non prosecution agreements by federal prosecutors. Of course, a company is going to agree to a deal that says – all parties have agreed to a deal that will make his company a better company going forward.”

“There is an allure of rehabilitation that has been propped up both by prosecutors and by the corporations. At the same time, concerns related to any incapacitative sanctions have been dramatically overblown.”

The corporate bar has driven the corporate criminal system into this deferred and non prosecution practice and away from guilty pleas. Would a shift from rehabilitation to incapacitation lead to a shift back to corporate criminal pleas?

“I’m optimistic that trending toward incapacitation would at least put pressure on this continued reliance on deferred and non prosecution agreements. A big motivating force in the move to prosecution agreements were these existential threats posed by these handful of collateral consequences.”

Can you see the Business Roundtable, the CATO Institute, the corporate lobbies getting behind a project to rehabilitate retribution and incapacitation for corporate criminals?

“The political story is always a tricky one. Corporate crime is already so under prosecuted relative to the rest of criminal law. It’s a rounding error of the federal docket. It is clear that these reforms are being motivated by a particularly aggressive corporate bar. To the extent we want to transition the way we think about the justifications for corporate punishment, there is always going to be resistance.”

“Currently, the rehabilitative model serves the interests of lots of established players. Managers are not particularly threatened by a regime that is supposedly making the company better, even if it is ultimately unsuccessful as a strategy and a waste of money. And it’s a waste of money that can be easily written off.”

“And likewise, there are reasons why prosecutors like rehabilitation. It’s much easier to get somebody to enter into a prosecution agreement where the agreement says – we both agree that you are going to reform yourself, as opposed to – we both agree that you are going to be prevented from doing these things going forward.”

You raise probation. But probation would necessitate a guilty plea instead of a deferred or non prosecution agreement. It would necessitate a probation officer instead of a corporate monitor. And a move back to the traditional way we handled corporate criminal prosecutions.

“That’s right. I’m sympathetic to why the prosecution agreement model came about, but fundamentally it’s not in our long term interest.”

[For the complete q/a transcript Interview with William Robert Thomas, see 33 Corporate Crime Reporter 5(11), Monday February 4, 2019, print edition only.]