By Andrew C. Whitman, ACLR Featured Online Contributor
The Department of Justice should make it clear that prosecutors have discretion in deciding whether to consider collateral consequences in non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs). NPAs and DPAs are a “third way” for federal prosecutors, between going forward with a prosecution against a corporation and exonerating them completely. They are essentially a settlement between the corporation and the prosecutorial agency, often including monetary payments and promises to reform the corporation’s practices and compliance systems. They are typically performed outside of court. Collateral consequences occur when an investigation or prosecution creates consequences not directly imposed by any agreement or sentence.1 In the corporate law context, these can include, for example, additional civil law suits,2 debarment,3 and systemic risk associated with sweeping penalties.4
Currently, the guidance given to federal prosecutors about whether they should consider collateral consequences is ambiguous. In Section 9-28.300 of the US Attorney’s Manual, prosecutors are told that they “should” take certain enumerated factors, including collateral consequences, into account.5 In Section 9-28.1000, the section entitled “Collateral Consequences,” however, prosecutors are told that they “may” take collateral consequences into account.6 The current “should” language is itself a reduction in rhetoric from the previous version of the Manual, which said that prosecutors “must” take collateral consequences into account.7
Many argue that prosecutors should be required to take these collateral consequences into account when resolving a criminal corporate investigation. These arguments have some merit. Simply being the subject of an investigation is costly. Once a corporation has been targeted, and especially once they enter into a DPA, there are scores of plaintiffs attorneys ready bring a class action or shareholders suit for breach of fiduciary duties or of the securities laws. Since litigation and discovery in these cases is typically more expensive than the cost of settling the lawsuit, corporations often pay their way out of the problem through settlement.
By allowing a prosecutor to ignore these collateral consequences when making deals, we can conceptualize the prosecutor as imposing a de facto punishment on a corporation. They are essentially penalizing a company using the legal justice system in order to deter or punish certain behavior. This is problematic because these punishments may be arbitrary, and prosecutors are generally not the party the justice system gives the authority to set punishment. On an abstract level, maintaining sentencing uniformity has been particularly stressed since the 1980’s, when Congress created the U.S. Sentencing Commission and first promulgated the U.S. Sentencing Guidelines. These guidelines provide a determinate range of sentences for judges to apply to convicted criminals. By adopting this determinate model, we rejected the previous discretionary approach that gave judges nearly unbridled discretion to decide what punishment was just.8 Giving prosecutors such discretion to enforce laws against those who have not been convicted of any crime would appear to be a substantial violation of due process.
Counter-arguments, however, counsel in favor of wide prosecutorial discretion in considering collateral consequences. First, it is not within the expertise of prosecutors to consider all of the potential consequences of engaging in a DPA. It’s their job to bring claims, not weigh the effect these claims may have based on the sentences they want. The primary body to decide punishment is the legislature. The Supreme Court9 has held that though the Sentencing Guidelines cannot bind judges completely, they remain the starting point in analyzing sentencing.10 To the extent that there is room for discretion, judges have an obligation to consider collateral consequences.11 For example, under the Application Notes to the Sentencing Guidelines, the Manual notes, “If criminal and civil sanctions are unlikely to make victims whole, this may provide a basis for a higher fine within the guideline fine range.” Prosecutors are not politically accountable. They are not generalists, like judges and legislatures, and it is too much to ask prosecutors to justify each prosecution, or lack thereof, in terms of unknown future consequences. Their job is to prosecute crimes, not to spend precious resources determining what consequences may occur.
In addition to being outside the expertise of prosecutors to identify collateral consequences, it is also outside their job description to pass judgment on the decisions of the legislature to provide multiple remedies for the same action. If Delaware wanted to remove the ability of shareholders to sue for violations of the Federal Corrupt Practices Act if they had already paid criminal fines, they could do so. Requiring prosecutors to consider the legislature’s remedies holistically would infringe upon the legislature’s role as lawmaker.
Lastly, prosecutors should be given discretion in this arena because corporations are sophisticated parties able to bargain for themselves to achieve a beneficial plea deal. Requiring prosecutors to consider all collateral consequences would be putting the onus on the wrong party; defendants are much more capable of identifying subsequent consequences. While giving prosecutors discretion makes punishment less determinate, this is less worrisome than it might otherwise be because of relatively equal bargaining power. Defendants agree to the terms of these agreements in lieu of prosecution and, unlike less wealthy defendants,12 have the full ability to bargain.
One caveat to allowing prosecutorial discretion is that prosecutors should not prosecute for the primary purpose of obtaining collateral consequences. This sort of behavior places the prosecutor firmly in the role of sentencer, which, as discussed earlier, is outside of their competency. While this requirement might be difficult to implement, allowing courts to approve DPAs and review the transcript of conversations might allow judges to gain insight into the motivations of prosecutors. There would also be no need for a subjectivity requirement; judges could look at a situation under an objective standard. In any case, a rule against this sort of behavior in the U.S. Attorney’s manual would help prevent the greatest cases of abuse. This article argues that the Manual should implement these reforms, as well as make clear that prosecutors have full discretion in deciding whether to consider collateral consequences.