At Cato At Liberty, Walter Olson raises a vexing problem that often flies under everyone’s radar. There’s a “legal system” for corporations that’s largely distinct from the one regular folks get to see, or even hear about. And it usually ends with something called a “DPA,” a deferred prosecution agreement, which is a settlement reached between the government and a corporation.
Deferred prosecution agreements and their close relatives non-prosecution agreements (DPAs/NPAs) have become a major tool of white-collar prosecution in recent years. Typically, a business defendant in exchange for escape from the costs and perils of trial agrees to some combination of cash payment, non-monetary steps such as a shakeup of its board or manager training, and submission to future oversight by DoJ or other monitors. Not unlike plea bargains in more conventional criminal prosecution, these deals dispense with the high cost of a trial; they also dispense with the need for the government to prove its allegations in the first place.
DPAs may also pledge a defendant to future behavior that a court would never have ordered, or conversely fail to include remedies that a court would probably have ordered. And they may be drawn up with the aim of shielding from harm — or, in some other cases, undermining — the interests of third parties, such as customers, employees, or business associates of the targeted defendant, or foreign governments.
The comparison to plea agreements may be unfortunate, as they are really nothing like plea agreements. Nobody gets indicted. Nobody gets arrested. Nobody spends a night or ten in jail. And there’s no perp walk. It starts with a target letter, and ends with nice cup of Earl Grey tea, during which a very well paid lawyer signs the DPA, hands over a check (not really, as it’s all done electronically) and they chuckle over golf course stories while the youngest member of the prosecution team trots over to a courtroom to have a judge sign off on the DPA to make it all official.
One of the facets of a DPA is that it putatively gives the government the right to go back into court if the corporation fails to keep its end of the DPA. Even though it’s already paid the money, there will be promises, such as “we’ll never be bad boys again,” which the government pretends it will enforce. And the DPA will entitle the government to oversee corporate compliance during those years, because Assistant United States Attorneys are really good at running multinational corporations the right way. So one of the conditions of the DPA is a waiver of the Speedy Trial Act, which requires a judge’s approval.
The Speedy Trial Act establishes time limits for the completion of various stages of a criminal prosecution. See 18 U.S.C. §§ 3161-3174. For instance, the Act requires the commencement of trial within seventy days of the filing of an information or indictment by the government. Id. § 3161(c)(1). The Act also excludes various pretrial periods from the running of that seventy-day time clock. Of particular relevance, the Act excludes “[a]ny period of delay during which prosecution is deferred by the attorney for the Government pursuant to written agreement with the defendant, with the approval of the court, for the purpose of allowing the defendant to demonstrate his good conduct.” Id. § 3161(h)(2).
But Washington, D.C. Judge Richard Leon decided not to play ball and sign off on a DPA, which resulted in the D.C. Circuit Court of Appeals teaching him a lesson in deference.
Now a three-judge panel of the D.C. Circuit has unanimously overruled Judge Leon. It pointed out that under well settled law, charging decisions are entrusted to the DoJ or other executive branch prosecutors, not the judiciary, and that judges may not intervene to insist that additional or more stringent charges be filed – and that is what the pattern in this case amounted to, in the appeals panel’s view.
So what if the DoJ crafts a private agreement with a corporation that avoids prosecution? What could be wrong with that?
As a matter of interpreting the Speedy Trial Act provision, the panel may well be right. And at the end of the day it’s hard to see how a court could scrutinize a DPA for adequacy (or whatever) without second-guessing the charging decisions, or without inducing the government to manipulate those decisions for the purpose of obtaining approval. Still, there’s something dismaying about the opinion. My earlier piece explained the rule-of-law concerns that scholars have voiced about DPAs. The Fokkeropinion, in sharp contrast, oozes with “trust your friendly prosecutor” language:
DPAs have become an increasingly important tool in the government’s efforts to hold defendants accountable. They afford prosecutors an intermediate alternative between, on one hand, allowing a defendant to evade responsibility altogether, and, on the other hand, seeking a conviction that the prosecution may believe would be difficult to obtain or would have undesirable collateral consequences for the defendant or innocent third parties. The agreements also give prosecutors the flexibility to structure arrangements that, in their view, best account for the defendant’s culpability and yield the most desirable long-term outcomes. (boldface added).
Yes. Well. Inquiring minds might want to know whether the conviction would be “difficult to obtain” for practical reasons—or because the charges are preposterous and brought for reasons bordering on extortion. Conversely, one would think that “undesirable consequences for the defendant” are the point of a criminal prosecution. What sorts of “collateral” consequences are we talking about, then—we’ll let the CEO off the hook because no one else can run Goldman Sachs?
On the one hand, if the law requires a federal judge to sign off on the DPA, as if he, you know, approves of it, then perhaps it ought to mean he approves of it. Judge Leon didn’t, and was told by the Circuit, just sign the friggin’ DPA when the government tells you to. Jeez. It’s not like you’re a judge or anything.
But aside from Judge Sri Srinivasan’s appreciation of settlements, and the harm that might possibly be done to every interested party other than the ones at the tea party, and reductivist view of the role of the federal judiciary, there is an unspoken reason why the courts are constrained to twist what appears as if it’s a resolution to a criminal prosecution into a pretzel to make sense of it. You can’t put a corporation into a prison cell.
If the CEO did something wrong, he can be prosecuted and imprisoned. Same with the guy on the loading dock, who gets thrown under the bus in the quickie plea that often goes along with the DPA. But the corporation will hire a new guy to replace the one sacrificed for the welfare of the enterprise, and life will go on. And the cost of the DPA will be passed along to the consumer as another unseen form of taxation.
Wally, ever the optimist, hopes that circuit court’s opinion in United States v. Fokker won’t be read as complete capitulation to the power of the executive branch, the DoJ, to run this secret legal system below the prying eyes of judges. But then, if judges started sticking their noses into corporate DPAs, the entire sham system of corporate prosecutions would unravel and destroy the Earl Grey tea market. Could you live with that mess on your conscience?