April/May 2010 / Governance
Prosecutors Dust Off the Responsible Corporate Officer Doctrine
Both federal and state prosecutors are ramping up their use of the Responsible Corporate Officer Doctrine, which, the authors write, “seeks to hold corporate leadership responsible for organizational non-compliance, even if the officer or director had no involvement with or knowledge of the challenged conduct.” Under the RCOD, officers and directors can under certain circumstances be prosecuted for misdemeanor criminal offenses.
The doctrine is based on two Supreme Court decisions, 32 years apart, both involving violations of the Federal Food, Drug and Cosmetic Act (FDCA), and recent prosecutions have targeted health care industry executives, including a general counsel. But the RCOD also has been applied to violations of the Sherman Act, federal securities laws and state environmental laws, and the authors suggest it could be applied more widely still.
Legal defenses have been problematic. Some courts have recognized an “impossibility defense,” where violations had occurred despite “extraordinary care” taken by the defendant.
With little guidance from regulators available, the authors advise a general strategy of compliance upgrades.
