I was reading the Supreme Court decision in AT&T Mobility vs. Concepcion, which gutted class arbitration. In Justice Scalia’s opinion for the Court, he wrote about how class arbitration doesn’t have the same characteristics as individual arbitration: the stakes are much higher, but the limitations on review still exist. Scalia wrote:
“We find it hard to believe that defendants would bet the company with no effective means of review….”
Reading that line brought to mind an argument I’ve heard several times from the FCPA Professor, Mike Koehler. Prof. Koehler argues that the Department of Justice has had too easy of a time with their interpretations of the FCPA. Because corporations are terrified of prosecution—for good reason—they rarely challenge the legal aspects of charging decisions. It is the DOJ’s recent prioritization of prosecution of individuals that has yielded legal challenges. Two come immediately to mind: Judge Scheindlin writing on what “the written law of the country” is vis-a-vis bribery, and the Carson/Lindsay/O’Shea SOE challenges. The only other real decision in this area that I can bring to mind is the 5th Circuit decision in Kay (deciding what “obtain or retain business” means vis-a-vis lowered customs duties). And even that was based on the prosecution of an individual.
Add to that the DOJ’s almost-100% conviction rate (see today’s FCPA Prof. for their sole loss), and 100% appellate victory rate (at least for now), and companies are in the same situation Scalia decries in the AT&T case. Companies are placed in a position of betting the company whenever the DOJ comes calling, and because the DOJ has never been successfully challenged, no compliance officer or in-house counsel will recommend fighting the charge, even if legally it’s a questionable situation. Corporations will always cooperate and settle. (Yes, I’m aware that Lindsay Manufacturing went to trial too. In my mind, it’s the exception that proves the rule).
For corporations being investigated or potentially charged by the DOJ, there are, in fact, no meaningful avenues of judicial review.
Prof. Koehler labels this “prosecutorial common law.”
I understand Prof. Koehler’s concern, and I don’t have a good answer. As much as I appreciate the situation companies are in, we’re still talking about bribery. I find it hard to find a place in my heart to pity a corporation that has gone into a market and bribed officials to receive a benefit. Bribery, as the UK government says, “blights lives.” It damages the social structure, causes mistrust and ridicule of government and distrust of the rule of law. It distorts the market and creates massive corporate inefficiencies. It makes life harder in markets where, speaking frankly, the citizenry has it hard enough. And the DOJ isn’t out to “get” companies, they’re out to “get” companies who bribe. In general, they’ve done an excellent job of sticking to their priorities, and it’s hard to think of any case that’s resulted in a true injustice. In short, the DOJ has garnered a significant amount of power to itself, but I think they’ve done a pretty damn fine job with that power. And I’m willing to let them run with it. That’s just me.
Professor Koehler’s blog, FCPA Professor, can be found here.
The AT&T case, AT&T Mobility vs. Concepcion, can be found here.
Judge Scheindlin’s decision can be found here.
The Fifth Circuit decision in US v. Kay can be found here.
This afternoon, Tom Fox and I will be recording another episode of This Week in FCPA. Check back tonight for the post.