DOJ Issues New Guidance to Avoid “Piling On” in Corporate Enforcement Actions

Featured Expert Contributor, White Collar Crime & Corporate Compliance

Brower_GregGregory A. Brower, a Shareholder with Brownstein Hyatt Farber Schreck, LLP in Las Vegas, NV and Washington, DC.

*Ed. Note: This is Greg’s inaugural commentary as a featured expert contributor. Greg is a member of WLF’s Legal Policy Advisory Board, and has extensive experience in law enforcement as a former United States Attorney and Deputy General Counsel of the FBI. He also served five terms in the Nevada legislature, where he was Chairman of the Senate Judiciary Committee.

Last month, in several speeches delivered in New York City to separate groups of white collar defense lawyers, Deputy Attorney General Rod Rosenstein announced a new U.S. Department of Justice (DOJ) policy concerning the proper coordination of penalties in corporate criminal cases.  This new policy, implemented by way of a new section in the U.S. Attorneys’ Manual (and a tweak to an existing provision), seeks to address the problem of “piling on” of multiple penalties by multiple enforcement entities in the context of corporate resolutions.

In making this announcement, DAG Rosenstein explained that the new policy is intended to discourage “disproportionate enforcement of laws by multiple authorities” and to achieve “reasonable and proportionate outcomes in corporate investigations.”

Specifically, the new policy requires DOJ attorneys to “coordinate with one another to avoid the unnecessary imposition of duplicative fines, penalties, and/or forfeiture against [a] company,” and further directs DOJ personnel to “endeavor, as appropriate, to … consider the amount of fines, penalties, and/or forfeiture paid to federal, state, or local or foreign law enforcement authorities that are seeking to resolve a case with a company for the same misconduct.”  Rosenstein pitched the new policy as a way to avoid the “piling on” of fines and penalties by multiple agencies “in relation to investigations of the same misconduct.”

This new policy has four key parts.  First, it reaffirms the principle that “the federal government’s criminal enforcement authority should not be used against … company[ies] for purposes unrelated to the investigation and persecution of a possible crime,” including using “the threat of criminal prosecution solely to persuade a company to pay a larger settlement in a civil case.”

Second, the new policy includes a clear direction to DOJ components to “coordinate with one another [to] achieve an overall equitable result,” including “crediting and apportionment of financial penalties, fines, and forfeitures, and other means of avoiding disproportionate punishment.”

Third, the DOJ attorneys are encouraged “when possible” to coordinate with other federal, state, and foreign authorities seeking to resolve a case based on the same misconduct.

Fourth, the policy sets forth a list of relevant factors that DOJ attorneys may use to evaluate whether multiple penalties may actually serve the interests of justice in a particular case.

In addition to this new four-part policy, Rosenstein highlighted the creation of a new DOJ Working Group on Corporate Enforcement and Accountability whose members will come from Main Justice, the U.S. Attorneys offices, and the FBI.  The group is tasked with seeking ways to enhance deterrence by “promot[ing] consistency in [DOJ’s] white collar efforts.”

This new policy is more of a clarification than a shift.  Corporate defendants have long argued, with some success, that “piling on” is unfair and unwarranted.  This announcement follows a recent, similar policy pronouncement in the context of Foreign Corrupt Practices Act enforcement actions.  As with all new policies, the test will come with its application.  While a logical and most welcome move in the right direction, the new policy allows for subjective interpretation of subjective criteria.  Nevertheless, this first “Rosenstein Memo” will clearly have the power of the DAG’s clear intent behind it for those defendants who believe that a DOJ attorney isn’t quite adhering to the spirit of the new policy.

Increasingly, anticorruption investigations include cooperation between agencies and ever between governments, thus subjecting companies to multiple and arguably duplicative penalties.  This can often amount to “overdeterrence” which can be both inefficient and unfair.  For this reason, this new policy clearly seems to be a step in the right direction, and defense attorneys would be well-advised to aggressively hold DOJ to it.

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