On Sept. 9, 2015, the U.S. Department of Justice issued new guidance (“DOJ Guidance”) instructing DOJ criminal and civil attorneys to place a greater emphasis on accountability of the individuals responsible for corporate wrongdoing. The DOJ Guidance makes clear that fighting corporate misconduct is the DOJ’s top priority and indicates that one of the most effective ways to fight corporate misconduct is by holding accountable the individuals who perpetrated the wrongdoing. The DOJ Guidance identifies six key steps that should be implemented in any DOJ investigation of corporate misconduct and states that in the upcoming months the DOJ will be working to turn these policies into everyday practice. These six steps are summarized below.
1. To be eligible for any cooperation credit, companies must disclose to the DOJ all relevant facts about the individuals involved in corporate misconduct.
The DOJ Guidance indicates that to be eligible for any cooperation credit, the company must identify all individuals involved in the misconduct, regardless of their position, status or seniority, and disclose to the DOJ all facts regarding the misconduct. If a company declines to provide all facts related to such individuals, its cooperation will not be considered by the DOJ as a mitigating factor. The DOJ Guidance instructs the DOJ attorneys to thoroughly review all information provided by companies and compare it to the results of their own investigation to confirm that the information provided is complete and does not downplay the role of any responsible individual.
2. Both criminal and civil corporate investigations need to focus on individuals from the inception of the investigation.
The DOJ Guidance explains that focusing on building cases against individual wrongdoers at the outset accomplishes several of the DOJ’s goals. First, it maximizes DOJ’s ability to determine the facts and extent of any corporate misconduct. Second, it increases the likelihood that individuals with knowledge of corporate misconduct will provide information against individuals higher up the corporate hierarchy. Third, it optimizes the chances that the resolution of an investigation involving misconduct will include civil or criminal charges not just against the corporation but also against responsible individuals.
3. Criminal and civil attorneys handling corporate investigations should routinely communicate with one another.
The DOJ Guidance instructs criminal attorneys handling corporate investigations to notify civil attorneys as early as possible of conduct that might trigger individual civil liability, even if criminal liability continues to be sought. Similarly, civil attorneys who believe that a particular individual identified in the course of a corporate investigation should be subject to a criminal inquiry are instructed to promptly refer the matter to criminal attorneys, regardless of the civil corporate investigation status.
4. Absent extraordinary circumstances, no corporate resolution will provide protection from criminal or civil liability for any individuals.
The DOJ Guidance acknowledges that in some cases the DOJ may resolve a matter with the company before resolving matters with responsible individuals and states that in such cases DOJ attorneys should preserve the ability to pursue those individuals. Due to the importance of holding responsible individuals accountable, absent extraordinary circumstances or approved DOJ policy such as the Antitrust Division's Corporate Leniency Policy, DOJ lawyers are instructed not to agree to a corporate resolution that includes an agreement to dismiss charges against, or provide immunity for, individual officers or employees. The DOJ Guidance states that the same principle would apply in civil corporate matters and absent extraordinary circumstances, the DOJ should not release claims related to individual liability based on corporate settlement releases.
5. Corporate cases should not be resolved without a plan to resolve related individual cases before the statute of limitations expires.
The DOJ Guidance provides that if the investigation of individual misconduct has not concluded by the time authorization is sought to resolve the case against the corporation, the prosecution or corporate authorization memorandum should identify the potentially liable individuals, describe the current status of the investigation and the investigative work that remains to be done and outline an investigative plan to bring the matter to resolution prior to the end of the applicable statute of limitations period. The DOJ Guidance further states that delays in the corporate investigation should not affect the DOJ’s ability to pursue potentially culpable individuals. Thus, in situations where a tolling agreement is necessary, the DOJ Guidance instructs DOJ attorneys to make efforts to either resolve the matter against culpable individuals before the limitations period expires or preserve the ability to charge individuals by tolling the limitations period.
6. Civil attorneys should evaluate whether to bring suit against an individual based on considerations beyond that individual's ability to pay.
The DOJ Guidance emphasizes that the fact that an individual may not have sufficient resources to satisfy a significant judgment should not determine whether to bring suit. Rather, in deciding whether to file a civil action against an individual, the DOJ attorneys should evaluate whether the person's misconduct was serious, whether it is actionable, whether the evidence will likely be sufficient to obtain a judgment and whether pursuing the action represents an important federal interest. While acknowledging that certain cases against individuals may not provide high monetary return on the DOJ’s investment in the case, the DOJ Guidance indicates that pursuing such cases in civil matters will lead to significant long-term deterrence.
While the impact of the DOJ Guidance on the DOJ enforcement actions remains to be seen, the DOJ Guidance reflects the DOJ’s initiative to place a greater focus on individual accountability in investigations of corporate misconduct.