Prosecutors in the Boardroom: Using Criminal Law to Regulate Corporate Conduct

8. The Prosecutor as Regulatory Agency

| 177 8 The Prosecutor as Regulatory Agency Rachel E. Barkow We live in an age when prosecutors are a significant source of corporate regulation. The terms of NPAs, DPAs, and state settlement agreements abound with regulations that go far beyond simple commands to companies to stop disobeying the law or to pay for prior violations. These agreements insist on new business models and practices, and they have contained regulations that have covered everything from personnel decisions to the rates companies charge customers. In many instances, prosecutors have not stopped with the regulation of single companies; they have commanded entire industries to comply with new terms. These prosecutorial commands have been imposed without legislative guidance, much less relatively clear rules or intelligible principles. Public law scholars have long examined the legitimacy and efficacy of regulation by the judiciary and regulatory agencies, both of which pose a direct challenge to the Constitution’s system of separated powers. In particular, judges and regulatory agencies have been closely scrutinized to determine whether they have the accountability, institutional competence, and procedural reliability to regulate. When prosecutors regulate, they, too, challenge the separation of powers. Yet the prosecutor as a source of regulation has largely escaped the attention of legal commentators. This chapter aims to remedy that oversight by considering prosecutor-imposed regulations using the same metrics that have long been applied to judges and regulatory agencies. The most sweeping regulations have come from the NY AG, but federal prosecutors have also imposed significant regulatory requirements on companies as part of NPAs and DPAs. This chapter will therefore consider the capacity of both state AGs and federal prosecutors to act as regulators.1 Section I begins by explaining the forces that give prosecutors the ability to step into a regulatory role. Section II describes prosecutor regulation by chron- 178 | Rachel E. Barkow iclingsomeofthemajorregulationsprosecutorshaveimposed.SectionIIIthen evaluatestheprosecutor’sofficeasaregulatoryagencybyconsideringitsdemocratic accountability, institutional competence, and procedural reliability. I. The Power to Regulate Prosecutors today exercise a broad range of authority. Their power to enforce the law is uncontroversial. More worrisome from a separation-of-powers perspective are the adjudicative and lawmaking activities that are becoming increasingly common in prosecutors’ offices around the country. Prosecutors have taken on adjudicative powers due to several dynamics.2 First, many criminal laws are written in broad terms, and often more than one law covers a defendant’s conduct.3 These laws typically authorize different sentences, so a prosecutor can select the sentence or sentencing range by choosing one law over another.4 This gives the prosecutor significant bargaining power because he or she can threaten to charge a defendant with a more serious crime if the defendant opts to take his or her case to trial. Second, many jurisdictions have turned to mandatory minimum sentences or sentencing guidelines, both of which limit judicial sentencing authority. The result is that a prosecutor’s charging decision is more likely to dictate a particular sentence or narrow sentencing range. Third, many jurisdictions, like the federal system, give defendants substantial sentencing discounts for cooperating with the government and accepting responsibility. Prosecutors typically control downward departures for cooperation, and acceptance of responsibility reductions are usually disallowed when defendants exercise their trial rights or are discounted when defendants wait until too close to the eve of trial before pleading guilty. The final keys to this system of prosecutorial dominance are the reluctance of the judiciary to police it and legislative efforts to foster it. Prosecutors can threaten defendants with more severe charges if they exercise their trial rights, and courts have refused to analyze these threats under the traditional unconstitutional conditions framework.5 For their part, legislators now pass laws with the goal of furthering this plea-bargaining framework. Instead of limiting prosecutorial discretion through narrower, more precise laws, legislatures continue to pass broadly worded statutes that increasingly include punishments that are more severe than the facts of the typical case in violation of the statute would justify. The end result is a criminal justice system in which upwards of 95 percent of convictions result from pleas instead of trials, and prosecutors are The Prosecutor as Regulatory Agency | 179 the adjudicators. The exercise of the trial right is simply too costly for most defendants, leaving prosecutors to decide a defendant’s liability and sentence. Corporate criminal liability is no exception to this overall regime of prosecutorial leverage, as earlier chapters have indicated. If anything, it is a more extreme...