The Business Ethics Blog

Two current stories in the news about corporations, as entities, being held responsible for the behaviour of their employees.

First, from the NY Times, is this one about the US Supreme Court’s consideration of Exxon’s culpability for the 1989 Exxon Valdez oil spill
Justices Take Up Battle Over Exxon Valdez Damages

Next, this story from the National Post is about a Canadian company convicted of criminal negligence in the death of one of its workers:
Sentencing for workplace death a first

At stake in both cases is (among other issues) the extent to which a corporation can be held responsible for the actions of its employees. The NYT story puts that front and centre. The NP story kind of misses that angle (perhaps because it focused on the question of criminal sanctions as opposed to sanctions handed out by a regulatory tribunal). In the Exxon case, the issue of specifically corporate responsibility is front and centre. At issue was whether,

Exxon was a “grave wrongdoer” itself, not just vicariously through the negligence of the ship’s captain, Joseph J. Hazelwood, who company officials left in charge of the ship despite having been informed that he was an alcoholic who had resumed drinking.

The NYT quotes Chief Justice John G. Roberts Jr. on this issue:

“I don’t see what more a corporation can do” to protect itself from employees who violate explicit company policy, like a no-drinking rule….

What both stories need to make clearer is that what is at stake here is criminal liability for the corporation itself, as an entity, above and beyond whatever criminal (or civil) liability might be borne by particular individuals within the corporation. It’s a big and important topic.

To many, the question of corporate responsibility is a no-brainer: corporations sometimes do bad things, and hence they should be punishable under the law. But at least two major complications arise. One has to do with the very idea of a corporation — a legal abstraction, a composite entity — bearing criminal responsibility. Under the Anglo-American legal system, criminal responsibility requires what lawyers call “mens rea”, a guilty mind. Corporations don’t literally have minds, so they can’t literally have guilty minds. Courts have, for many years, however, gotten past this by considering high executives of a corporation to be its “mind,” and their intent can (in the right circumstances) be taken to represent the intentions of the corporation. In the Canadian case cited above, one issue that is likely to have arisen is whether the managers of the company, aware as some of them apparently were of the overriding of a safety device, had the guilty frame of mind required to hold the company, as a whole, criminally responsible. The other big issue is this: if we assume that corporations can be criminally responsible for their actions (or actions taken in their name), under what circumstances can they also be criminally responsible for the reckless actions of their employees, where those employees are violating corporate policy?

Most people, I think, will agree that there are times when it makes sense to hold corporations criminally responsible. And lots of people will certainly find it desirable to do so. After all, when bad things happen, someone (something?) needs to be punished. We have the same intuition about punishing people who commit crimes while they are sufficiently intoxicated to make it apparently impossible for them to form criminal intentions. But the idea that someone/thing “ought” to be be punished still leaves open the question of what theoretical framework we wrap around that idea for particular kinds of cases, and such a framework is absolutely required if justice is to be meted out in an evenhanded manner.