Let Organizational Sentencing Get Creative

Earlier this month a United Kingdom court took their turn on stage in the world-wide Apple v. Samsung dispute over copyright infringement. The court upheld a July ruling which took a slap at Apple. This slap did not consist of incarceration or a monetary fine, but instead brought Apple a taste of public shame. The court ruled that Apple must place a link to the ruling on its webpage run advertisements in prominent British magazines saying that Apple is not a copycat. The appeal court stated, “The acknowledgment must come from the horse’s mouth.”[1] This was a small demonstration of a court taking steps to actually hit an organization where it hurts.  In this particular case, Apple was required to tarnish its image.

            While corporations are not people, they are in many regards citizens of their respective states. This privilege of citizenship comes with a great deal of protections and rights, but also comes with responsibilities and obligations.  Some of these duties are spelled out in the law, and violations require criminal and/or civil proceedings. In this day one has to ask, “How do you properly punish a corporation?”  After all, you cannot incarcerate a corporation and fines often do not seem to truly satisfy the full scope of such a punishment’s intentions.  This article will make a case that legislators and justices should widen the options for organizational probation and consider expanding the option of “creative sentencing”.

            Let’s begin with a straight forward example of credit card malpractice leading to a class-action suit against the issuing bank. Generally the bulk of plaintiffs receive a multi-page pamphlet written in strict legal jargon with microscopic font. Upon full reading and hoop jumping plaintiffs find that they are entitled to a miniscule portion of the settlement that may be enough to buy them a cup of coffee or if they are lucky, a nice dinner. The bank has undoubtedly harmed a large number of individuals, but is such a settlement truly appropriate? Is this settlement designed to make every plaintiff whole, or to simply punish the bank with a fine that seems much smaller when it is spread over millions of victims? Is the bank able to absorb this fine, as an acceptable loss, into the cost of doing business? It seems that it is too easy to satisfy the class-action claim and leave something else unsettled. I argue that it would be fitting to take from the UK court and order some additional judgment against the bank such as media ads that share what they did and offer a public apology or adding a easy to read disclaimer to with the same information to their business solicitations over a reasonable period of time.

            Michael McDermott, a Town Justice in Somers, NY, discusses some great examples of judicial creativity from across the country.  These include: “Judge Michael A. Martone in Troy, Michigan, sentenced two teenage alcohol offenders to view an autopsy at the county morgue to show them the effects of alcohol on the body in an attempt to demonstrate what could happen to them if they did not stop abusing alcohol.”, “In a Portland, Main Court, a Bowdoin college graduate convicted of smuggling several thousand pounds of marijuana was sentenced to set up and run an AIDS hospice. The Judge explained that the city needed the hospice, and the smuggler had the organizational and business savvy to make it work.”, and former judge, now Congressman Ted Poe was especially fond of the creative sentence as he, “[s]entenced a hair dresser, convicted of damaging a neighbor’s house, to cut hair at the Texas Center for the Retarded and School for the Blind. . . required Defendants sentenced to probation to grow vegetables in large gardens situated on their property and donate the food to the Houston Food Bank. . .  required Defendants who stole valuable books from a collector to spend time working in the public library or reading books to children. . . routinely has sentenced electricians, carpenters, plumbers and painters to help restore the Battleship TEXAS which was dry-docked at the Houston Ship Canal”[2]. While some of these types of sentences and judicial discretion are not without controversy, does it not seem requisite and just that we extend these methods to organizations? 

            Concerning criminal penalties Professor Richard Gruner wrote about how the Sentencing Reform Act of 1984 (SRA) set the stage for organizational probation which provided, “Sentencing courts have broad discretion to develop probation conditions matched to corporate defendants and their crimes.”[3] Groner importantly lays out four important purposes of sentencing under the SRA which include show the seriousness of the offense with concern for respecting the law, provide deterrence of future criminal conduct, protect the public, and rehabilitate the defendant.

These goals grasp the spirit of both utilitarian and deontological theories of justice by calling for the moral retribution by the offender while maximizing benefits to society at large. In order to relate this to my prior bank example let us switch the theater from a civil class action brought by injured card holders to a criminal fraud brought by the Department of Justice. Michael Loucks a DOJ attorney discussed the complexity of federal organizational sentencing. The SRA has led to the compilation of complex formulas that relate to the range of fines a judge may impose. One of the mitigating factors that could benefit a defendant is to have an “effective corporate compliance program.” Loucks argues that in this day such a program is essential for every organization and if it does not exist the judge may order it as part of the sentence.[4] Thus, if our bank has such a program it is likely to be held less culpable for the errors of an employee. However, if they do not, the fine will in all likelihood be greater and the court will limit the liberty of the organization by forcing it to establish such a program under supervision. While this is an example of probationary measures, it should serve as the starting point in probation sentencing rather than the finish line. However, I still fail to see how this fully satisfies either theory of justice.

Professor Martin Harrell discusses some movement in this direction since passage of the SRA. The SRA established the United States Sentencing Commission to “establish sentencing policies and practices for the federal criminal justice system”. The Commission considered the economic school of thought which believes that fines are satisfactory as punishment as well as corporate reformist arguments which request more probation and non-monetary sanctions. The Commission adopted an approach that favored the reformer’s view by establishing four general principles in sentencing.  These principles are: resources taken should be used to make a victim whole rather than be considered punishment, if the organization’s operations were primarily for criminal purposes the fines should be significantly higher, fines should be based on severity and culpability, and sanctions should deter future criminal behavior.[5] Clearly these guidelines show a trend towards letting the punishment fit the crime rather than simply allowing for criminal behavior to be a cost of doing business.

Although the trend does seem to be moving in the right direction, baby steps do not constitute the leap that is necessary to send the appropriate message. Some of the greatest harms that have occurred in our society over the past decade have been caused by organizations. In some cases individuals have been held criminally responsible and subsequently punished, but in others the singling out of individuals has been much more difficult. Perhaps offending members of organizations could be sentenced to a level of community involvement which helps to re-establish any lost link in the symbiotic relationship between persons and corporate citizens. 

Fines simply do not satisfy the purpose of sentencing organizational defendants, as it may be all too easy for such a fine to be considered part of the cost of doing business. Federal statutes have allowed for levels of organizational probation which has taken steps to punish corporations in a manner that helps rectify the offense while deterring future crimes. This judicial discretion should be extended to civil courts as well as state courts. Such a change is not likely to arise out of a dramatic paradigm shift, but will likely continue as a gradual slide as we watch the steps that have already been implemented evolve in policy and judicial discourse. Such standards will not cause unjust harm to the corporate world, but would in fact strengthen the relationship between ordinary and corporate citizens.




[2] Michael J. McDermott, Creative Sentencing Around the United States, 30 Westchester B.J. 17 (2003).

[3] Richard Gruner, To Let the Punishment Fit the Organization: Sanctioning Corporate Offenders Through Corporate Probation, 16 Am. J. Crim. L. 1  (1988).

[4] Michael K. Loucks, Corporate Criminal Liability: Compliance Programs, Boston B.J., MARCH/APRIL 1997, at 8

[5] Martin Harrell, Organizational Environmental Crime and the Sentencing Reform Act of 1984: Combining Fines with Restitution, Remedial Orders, Community Service, and Probation to Benefit the Environment While Punishing the Guilty, 6 Vill. Envtl. L.J. 243 (1995).