DOJ Slackens Focus on Individual Liability to Facilitate Corporate Resolutions

December 5, 2018By Anne K. Walsh

Last week, DOJ announced that it had concluded a year-long review of its individual accountability policy and that it had made changes to reflect a more efficient and practical position in its investigations of companies. As you may recall, in 2015, then-Deputy Attorney General Sally Yates issued a memorandum (“Yates memo”) directing DOJ prosecutors to pursue culpable individuals in all civil and criminal investigations involving corporate misconduct.  We reported here on the initial issuance of the policy and clarifying statements. The latest changes, described by DAG Rod Rosenstein, reform DOJ policy to provide more potential for companies to earn cooperation credit and to resolve cases more quickly.  FDA-regulated companies should welcome these developments, although some additional clarity still is necessary.

For criminal cases, the revised DOJ policy takes into account the problem companies face when it is difficult, if not impossible, to identify every individual who was “substantially involved in or responsible for” the criminal conduct regardless of relative culpability, like in cases in which there was corporate-wide direction that was routinely followed.  DOJ recognizes that the former policy was not practical and potentially could result in a waste of limited government resources.  Thus, DOJ policy now makes clear that investigations should not be delayed merely to collect information about individuals whose involvement was not substantial or not likely to be prosecuted.  DOJ encourages companies to engage in dialogue with the government, and puts the burden on the company seeking cooperation credit to explain any restrictions it faces from providing full information.

In civil matters, in which the primary goal is to recover money to the government fisc, DOJ policy is even more flexible and returns more discretion to the civil attorneys to resolve matters without having to pursue individual liability. As Rosenstein explained, “[DOJ] civil litigators simply cannot take the time to pursue civil cases against every individual employee who may be liable for misconduct, and we cannot afford to delay corporate resolutions because a bureaucratic rule suggests that companies need to continue investigating until they identify all involved employees and reach an agreement with the government about their roles.”  Thus, the revised policy permits DOJ civil attorneys to award gradations of cooperation credit rather than have to select between a binary choice of no credit or full credit. The policy also permits civil attorneys to consider an individual’s ability-to-pay in deciding whether to pursue a civil case, which makes sense to conserve investigative (and judicial resources) in cases that are unlikely to yield any monetary recovery.

The Justice Manual (“JM”), formerly known as the U.S. Attorney’s Manual, reflects these changes in sections related to civil and criminal investigations.  Although the JM contains examples of circumstances in which cooperation credit can be awarded despite full information about individual culpability, it remains to be seen how these changes are implemented by the various AUSAs throughout the country.  Overall, the revised policy leans toward facilitating corporate resolutions more quickly and efficiently, which is a goal both sides of an investigation typically can share.

Categories: Enforcement