Second Circuit Affirms Ionia Management Case

The Second Circuit Court of Appeals focused on the standard for convicting a company of criminal charges for acts of its managers and employees in US v. Ionia.

The Second Circuit declined to change the standards for corporate criminal liability and keeps Respondeat Superior in place.

The court found there was ample evidence that the crew acted within the scope of their employment and acted within in their authority in committing the bad acts. There was also evidence that the company benefited from these bad acts.

Unfortunately, the court chose not to take into account whether the company had effective policies and procedures to deter and detect criminal actions.

“Adding such an element is contrary to the precedent of our Circuit on this issue. See Twentieth Century Fox Film Corp., 882 F. 2d at 660 (holding that a compliance program, “however extensive, does not immunize the corporation from liability when its employees, acting within the scope of their authority, fail to comply with the law”). And this remains so regardless of asserted new Supreme Court cases in other areas of the law. As the District Court instructed the jury here, a corporate compliance program may be relevant to whether an employee was acting in the scope of his employment, but it is not a separate element.”

There was some hope that the court would alter the doctrine of respondeat superior and include a good faith defense or limit the doctrine to higher level employees. A company can be brought down by lower level employees violating company policies.

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  1. Respondeat Superior and Compliance | Compliance Building - August 6, 2009

    […] in January, a company was found criminally liable for the action of its employees. (Second Circuit Affirms Ionia Management Case.) Under respondeat superior (Latin for “let the master answer”) a company can be held […]